Tips for choosing the best crypto trading bot

Looking for the best crypto trading bot but not sure how to get started? We are here to help!

A crypto trading bot uses an algorithm that tracks the live crypto market and analyzes it using technical indicators such as trends and moving averages. It then provides buy and sell signals based on the analysis. Simply put, crypto trading robots buy/sell crypto on your behalf.

However, keep in mind that crypto trading robots are not perfect. Since cryptocurrencies are highly volatile, bots can sometimes generate false signals. For example, the robot may calculate a downward trend while the market is actually moving upwards.

As with independent trading, there is an inherent risk factor that comes with cryptocurrency trading robots. As always, it is recommended not to invest more than you can afford to lose.

How to choose the best crypto trading bot?

There is no doubt that crypto trading robots can make trading easier for you. There are many different types of bots on the market. For example, some robots follow a long-term strategy and follow the trends, while others follow the more aggressive pulse strategies.

However, beginners may have trouble deciding which bot to use.

To help you, we have put together some tips for choosing the best crypto trading bot.

Do some market research

Before choosing your first crypto trading bot, do some market research and monitor the changes. This will help you determine the overall sentiment in the market.

We also suggest going through any recent crypto events and knowing which coins are performing the best.

Is the market currently trading within a range? or is there significant volatility with rapid lows and highs? Your choice of bot will change depending on the strategy you want to rely on. It is best determined by analyzing market conditions.

So, some basic knowledge of cryptocurrencies and technical analysis is a prerequisite to effectively use a crypto trading bot.

Check the credibility

The importance of researching the bot you want to use cannot be stressed enough. Security and trust factor are both crucial because literally anyone can create and publish a trading bot on the internet. However, these bots usually have access to your exchange account to buy/sell crypto on your behalf. Then analyze the bot’s reputation in the industry. Alternatively, you can create your own trade fine if you have the prerequisites. Have you heard of the bitcode method?

Check the exchanges it supports

Cryptocurrency trading robots are usually not compatible with all exchanges. So before choosing a bot, double check that it works with your preferred exchange. A solid bot will be compatible with multiple cryptocurrency exchanges. However, this is the characteristic of the more advanced and premium bots.

Some common mistakes to avoid

Before starting with crypto trading robots, it is important to know about some common mistakes.

Relies on past performance

As a crypto trader, you should remember that past performance does not guarantee a good future. That’s because trends and market conditioning are constantly changing.

There is always a chance that a bot that has performed very well in the last 6 months will fail in the next 6 months if it follows the same strategy. Due to changes in the global market, the existing strategy of the bot may no longer apply.

Instead of relying on past results, try to understand which strategy is best suited for the current market and then choose a trading robot accordingly.

Being reckless and impatient

Sometimes trading robots will close and open positions within microseconds or seconds. However, being patient is the key here. Newbies often switch robots too quickly without waiting for market conditions to become favorable for the robot to perform well.

For example, a short-only bot would be neutral if the market is currently in an uptrend, making higher highs and higher lows. But as soon as there is a downturn in the market and prices start to fall, the robot will be ready to perform. So before moving all your funds to another bot, it is wiser to wait until the right market conditions occur.

Choose risky coins to start

It is of course tempting to choose coins that have a higher potential for returns. However, these altcoins are much riskier and more volatile compared to established cryptocurrencies such as Ethereum and Bitcoin. Before you get completely used to the cryptocurrency market, it’s a good idea to stick with Ethereum and Bitcoin.

Conclusion

Indeed, choosing your first cryptocurrency trading robot can be difficult. However, now you know about the biggest mistakes beginners make when choosing trading robots, along with tips on choosing the best robots. With these tips in mind, we hope it will be easy for you. By keeping at the top of your assessment set (1) accuracy and adaptability, (2) the power of a combined human and artificial intelligence, and (3) flexibility and choice in how you deploy and use your solution, you can have a more effective bot- management strategy.