Best Automated Crypto Trading Bots

Updated: Mar 2

Learn what crypto trading bots are, how to leverage them for cryptocurrency trading, and generate passive income.

 

Key Takeaways

  • A crypto trading bot is software that uses predefined algorithms to execute trades automatically.

  • Trading bots have been proved profitable in the traditional market, and they may be in the cryptosphere.

  • The basic idea for crypto trading bots is to make the most of algorithmic trading by purchasing, selling, and holding assets quickly and efficiently.

Explore these article sections

  1. What are crypto trading bots

  2. Can crypto trading bots generate money?

  3. How do crypto bots work?

  4. Best crypto trading bots 2022

  5. Cryptohopper

  6. Hummingbot

  7. 3commas

  8. 5 Ways to use crypto bots to generate passive income


Trading bots offer some benefits over manual trading by using simple rules to make buy/sell orders. For instance, they are more automated; they monitor the markets in real-time and only place trades when money is to be made. For traders, this can mean less time spent glued to price charts and refreshing web pages, but it usually means completely giving up control of the trading process.


WHAT ARE CRYPTO TRADING BOTS?

A crypto trading bot is software that uses predefined algorithms to execute trades automatically. It uses technological solutions like AI and can open or close orders faster than human traders. An automated trading bot works by executing trade orders based on established criteria. They can do this by following signals and executing buy/sell orders based on the technical analysis indicators.


A significant benefit of these bots is that they trade 24/7 in fractions of seconds without getting tired or distracted. The basic idea is for crypto trading bots to make the most of algorithmic trading by purchasing, selling, and holding assets quickly and efficiently.


Can crypto trading bots generate money?

A cryptocurrency trading bot can use a bunch of technical analysis indicators to generate buy/sell signals from the charts and execute the orders on trader accounts when they appear. Similar bots have been used before in traditional markets, with great success. Thus, they may be profitable in the crypto space.


How do crypto bots work?DO CRYPTO BOTS WORK?

Trading bots monitor cryptocurrency markets and place buy/sell orders on behalf of a trader. They fall under the same umbrella as algorithmic trading programs. They collect as much market data as possible, using various input sources from the social media platform and news websites to the trading signals from other bots, and analyze them in real-time. A typical bot can use several indicators with different settings for each one, get into buy/sell mode based on some strategy or programming code, get out of that mode when certain conditions are fulfilled.


Crypto bots automate buying/selling processes for traders based on technical analysis indicators that the traders select (like moving averages). Of course, the traders need some programming skills to set them up properly. If not: some offer fully automated crypto trading bots without coding knowledge/experience required (but at a cost). Let's find out more below.


BEST CRYPTO TRADING BOTS 2022


1) Cryptohopper

Cryptohopper automated crypto trading bot
Cryptohopper

Cryptohopper is a cryptocurrency trading bot that provides fully automated trading solutions for people without programming skills. It has an attractive, simple yet professional design. The web platform is easy to navigate through, and using it doesn't require any extra effort. The set-up takes only a few minutes. Their dashboard provides a variety of market data, which traders can use to make more informed decisions with the help of the technical analysis indicators they offer.

The web platform provides detailed explanations on connecting exchanges with their software, what parameters are used for each indicator etc.


2) Hummingbot

Hummingbot automated crypto trading bot
Hummingbot

Hummingbot is a crypto trading bot that allows people to trade cryptocurrencies quickly and effortlessly by solving many of the problems related to crypto trading. Additionally, it’s an affordable alternative to some other popular solutions out there. It's free to use and offers a 14-day trial period for people who want to test it before buying the subscription.


Hummingbot has reliable and optimized technical indicators for trading where traders can choose any of the preset strategies or create their own. It's also straightforward to set up with 24/7 support. Hummingbot offers a fully automated trading solution, so traders don't have to monitor the charts all day long. However, their signals aren't free, meaning they offer a paid service.


3) 3commas

3commas automated crypto trading bot
3commas

3commas is a simple cryptocurrency bot whose main aim is to make cryptocurrency trading accessible for everyone, regardless of their programming skills. It analyzes the markets and executes trades on behalf of the trader as long as they have chosen a trading strategy and set up the parameters (entry/exit price, take profit/stop-loss levels etc.). The bot is meant to assist traders in creating passive income while also offering security measures to prevent losses in a market collapse.


It was launched as an international cryptocurrency trading firm in September 2017, offering a range of automated trade bots for major platforms. They provide an advanced web-based crypto trading platform that traders can configure with just a few clicks, supports several exchanges, integrates technical analysis indicators and market data to help traders make informed decisions in real-time. However, there's a monthly fee for using the full version of their bot, which means that traders can use it for free for a limited time only.



5 WAYS TO LEVERAGE CRYPTO BOTS IN GENERATING PASSIVE INCOME

  • Trading hours: Many bots allow the trader to set up a few different strategies and run them 24/7, with different timeframes for each strategy (e.g., one approach could be based on daily charts whereas another is based on hourly charts). This is the most popular method of making a profit through automated trading, and it's quite straightforward. Traders run their strategies all day and night and let them do their job of making markets work for them.

  • Automated trade triggers: Some bots allow traders to configure specific triggers which would automatically execute trades on their behalf, such as market entry/exit signals, buy/sell limits etc. The idea is that this way, traders can leave something like a "lingering order" every time the market reaches a certain level of volatility, which would essentially get activated when the technical indicators generate clear entry/exit signals.

  • Algorithmic trading: This method of passive income generation relies on strategies that follow trending subjects in the crypto space and make bets on their performance over time (i.e., to appreciate or depreciate).

  • Social trading: Automated trading bots allow traders to copy other traders' portfolios and their investment decisions using tailored algorithms that mimic their trading strategies. This way, traders can just "follow the smart money" and earn passive income from someone else's work.

  • Arbitrage: This method of passive crypto trading is all about exploiting different prices for the same assets across multiple markets around the world. Let's say, Bitcoin costs $4,000 on Binance but only $3,500 on Coinbase. In that case, a trader could buy it from Coinbase and immediately sell it at a profit on Binance, making a 15% return instantly (without doing anything). Trading bots can do that automatically while traders stand back and watch their balance grow.

  • Market making: This strategy involves providing liquidity to markets by putting a limit order in to buy/sell every time the market moves up/down, thereby ensuring there are always buyers/sellers for cryptocurrencies on exchanges. It's a great way to capture the spread between buy/sell prices.


FOLLOW THE GOLDEN RULE IN CRYPTO TRADING - DYOR

Passive income through cryptocurrency trading bots is a smart and efficient strategy for novice and expert traders. However, trading in digital assets also has risks, as the markets are extremely volatile. Therefore, before investing money in the crypto market, it's critical that traders do their research.