Cryptocurrency trading is now a popular activity for making money given the speculative yield nature of cryptocurrencies. By buying low you can sell high and make massive profits within minutes; short cryptocurrencies using futures products that are now a populous derivative product; you can also practice hodling and still yield profits within a short duration of holding.
But these are only some of the strategies to earn by trading crypto. You might as well have heard about arbitrage, which leverages the differences in crypto prices within two or multiple exchanges to earn traders profits. Day traders can also earn money in the trading of cryptocurrencies through day trading, swing trading and a lot of other trading tactics on this of our other list.
But manual trading practice is not only popular and affordable, but carries way too many challenges such as the possibility for making errors, slowness in dealing with high volatility in crypto prices, and the fact that you get to deal with the emotions part of it -- the fact that you might have to deal with losses which are emotionally hard to take for instance. That said, you might as well check our other list about the benefits you can derive in automating your day to day trading activity. It may be worth it.
However, how you make working with the auto trading tools better is by following these and many other tips you will earn as an expert and experienced trader. Some of the bots to consider include Crypto Trader, Bitcoin Trader, HaasBot, 3Commas, Coinrule, and Apex Trader among many others.
1. Work with a legit, credible and reliable auto trading tools: It doesn't have to take years of trading with bots to know whether a given one is legit. It is usually the first step towards using an auto-trading tool.
Read user reviews on third-party review sites: You might want to use populous bots reviewed by thousands of users online even on third-party review sites such as auto-pilot. A lot of many users have tried and tested many of these auto traders and proved their genuineness or lack of it. Check positive and negative reviews and what the users are saying about the trading tools.
Check third party testing services on the app: Some technology websites are dedicating themselves to reviewing apps and tools from an independent point of view. Many companies and services send their devices, equipment, apps, and tools to these sites for reviews. These websites dedicate themselves to an in-depth testing and analysis of the apps and tools they review. That applies to auto trading tools where these sites do a real-life testing on app performance, trustworthiness, genuineness, and credibility; then post the results to readers to help them make decisions about whether or not to use the tools.
Check bots that work with legit trading brokers: Most trading bots do, on the other side, work with a trading broker who plays an important role in securing user funds. A trading broker platform is where the actual trading occurs. Once the bot has done its thing in predicting crypto prices, it formulated trading orders and sends them to a trading broker platform on which they are automatically carried out.
You may understand that most exchanges are automated through order types for instance buying selling orders, etc. Say for instance buying orders get to complete automatically once they are placed on the broker platform as long as the target price is reached. The order sits there till the target price is reached anytime or when it is canceled or expires due to preset conditions.
Work with cryptocurrency auto trading tools with good history: There are so many trading bots that have a record performance being used by people in the trading of cryptocurrencies. For instance, many have a record of several years helping people to trade cryptocurrencies.
Work with cryptocurrency auto trading tools that post verifiable information and transparent: Most cryptocurrency bots have referral networks, meaning people who want to earn by referring others to sign up and trade crypto. This is how most of these tools survive.
However, most people using referral networks to earn from referral sign-ups don't necessarily provide factual information when advertising the services. They may claim high profits or claim thousands of people earn massive profits like thousands of dollars per day by using auto trading tools, and most of the figures and information are inflated and unverifiable.
This means users should be careful to verifiable information on the Internet about the trading tools, by for instance checking official sites. Some officials may also claim unverifiable figures and information but you can confirm from third-party review sites whether or not that is true.
Further, a crypto trading tool should also be transparent and provide information about brokers it works with and the names of brokers and other information such as how to use the trading tool.
2. Trade U.S. markets: Crypto markets do not close like the way stock markets do. However, many trading experts will confirm that there is a correlation between the two, for instance, volumes for crypto trading drop when stock markets close and begin to pick up when these markets reopen or are about to open very early in the whee hours.
Thus it may be important to observe these gaps. Worth noting is the CME gaps too when volumes change significantly as a result of expectations of opening and closing of crypto derivative contracts. Further, U.S. markets influence crypto markets the most. Hence, it is important to not miss to have the bot active during these hours when the volume is up substantially compared to when the markets are closed.
3. What trading algorithms and signals? To newbies, these are jargon. Many people interested in trading crypto automatically wouldn't go beyond the step to switching the button to activate it to start trading. And almost every genuine trading bot will employ high-frequency trading tactics, artificial intelligence, machine learning, and Natural Language Processing code. However, the curious might want to go beyond the switching of the auto trading button to find out if the tool is effective in delivering its promise. Coders, for instance, may want to come up with their bought trading strategies to extend these tools or apply their signals if the trading bot allows.
4. Try demo trading with the tools: It will be ok to test trading with different auto trading tools and bots using demo trading features. Sure enough not all bots will have these features, but it will allow you to test all the other features of the app, and even to learn crypto trading itself, all without investing anything at all. You can learn which risk profiles work, which amounts are safe to trade in a day, and even what best amount you should apply per trade, using demo features.
Take for instance Bitcoin Trader or Crypto Trader auto trading apps, both of which allow users to demo trade after registering an account whether or not they have deposited the required minimum amount to live trade. You can know and decide whether or not the tool will be helpful for your trading just by trying it through demo trading. You can decide to proceed to live trading or not after demoing the tool.
5. Fees, commissions and cost: Including Bitcoin Trader, a lot of trading tools are out to make money and most get their incomes from the commission charged on profits. Most do not have user license costs but you may be willing to check out because some genuine ones do. Ensure the tool does not have any hidden fees and that the cost and commissions are not too high. Most charge a commission of 1% on profits meaning you do not get charged when you make no profit or when you make losses.
Do not give up the search because a lot of many other genuine tools are charging no commissions or fees.
6. Low initial deposit and trading balance: The most helpful crypto auto-trading tool should help users to start regardless of the little they have. The need varies from person to person. Some people will afford much while others little, and most trading tools of this nature will let you trade as little as $10 to $250 for Bitcoin Trader.
7. Start small: Greediness is the top reason many people lose their trading balances within minutes of starting. You want to resist the temptation of using all your capital in the trading exercise. Why? Why, because although auto trading tools report high success rates of even above 90%, the risk of losing your capital is still life and even high. A 90% success rate means 9 out of 10 trades are profitable, but if you multiply the 1 trade x a 10,000 trades from the total of say a million trades a bot might make after several hours or days of auto trading, you find the bot will make some loss. The difference is that most of the trades will be profitable with genuine bots.
One tip is to ensure you start with the minimal allowable balance of $250 before you can add more. Besides demo trading, using the minimum allowable balance allows you to test performance of the bot and to monitor exactly how much the bot will make per day or after a given period, without committing more. A lot many people decide to start small and plow back profits.
8. Understand trading risks in crypto: That said in the above point, you are better versed with the risks of trading cryptocurrencies and digital assets. For instance, crypto prices change so unpredictably that it may be hard for bots to manage and do make losses.
Besides, given the high volatility of crypto prices, malfunction of a bot in a few minutes or seconds may lead to huge losses. It's important to work with a highly reliable bot but it is difficult to pin down all the conditions always. Also, manipulation of prices and codes themselves may be a factor in some bots, which you maybe need to check and work with trusted bots because it may lead to losses.
9. Which brokers are they working with? Like we said, brokers are used by trading bots to facilitate trading of cryptocurrencies. We already explained the purpose of utilizing a broker platform. However, an important thing to note is that a broker is tasked with handling the trader's money.
Scrolling through broker names, you can also read independent reviews about them and determine whether they are helpful or credible and legal. Most brokers are regulated under financial regulators such as the Finacial Commission Authority and Australia's ASCIC, with the financial regulations they operate under depending on the jurisdiction. These regulations, as would be expected, require them to install several practices, procedures and safeguards to ensure they can secure user funds. Trader tools like Cryptotrader, HaasBot, Bitcoin Trader work with legit and reliable broker platforms.
In addition to confirming the credibility and reliability and legality of brokers, some brokers allow for leverage trading where you can lend money to allow you to trade more than you would with your ordinary balance. These services are advised for more advanced traders because while trading on leverage can multiply your profits, it also comes with high risks as you can lose the amount in very little time. It is important to be cautious about this.
10. Your deposit and withdrawal options supported: Most auto crypto trading apps should be able to support legacy deposit methods such as credit cards and e-money systems such as WebMoney and Neteller or maybe Skrill.
However, for those who love crypto, there still are those auto trading tools that can support deposits and withdrawals in cryptocurrencies such as Bitcoin and Ethereum.
Selecting those that support your deposit and withdrawal methods not only allows for quick depositing and withdrawing, but you also avoid costly exchange services as you may be charged transaction costs as you transfer money from or to your popular method to or from the one they support.
11. Allows 24/7 deposit and withdrawal and no much delays in withdrawals: Many tools will allow you to deposit almost immediately to start trading almost immediately. However, very few will allow you to withdraw your earnings including the profits and the money you deposited initially, at any given time after you have deposited. These are more recommended. Scams also do not allow you to withdraw.