5 Legit Crypto Bot Trading Strategies for 2022

Last Updated: July 11, 2022
In this article, we’re going to talk about how a cryptocurrency bot works, what you can use it for , and how to use some crypto bot trading strategies.
Crypto Trading Bots Strategies
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One great thing about bots for trading crypto is that they let you purchase and sell cryptocurrencies automatically, which means that you can create a passive income.

Trading bots can make it easy for the user to make a profit by implementing a number of different crypto bot trading strategies that work really well when it comes to the cryptocurrency market.

The way that bots like this work is by monitoring the market constantly. The bot is then going to make a trade for you following a set of specific rules that you create.

This means that you have the freedom to program the bot however you like so that it can follow specific market conditions.

In this article, we’re going to talk about how a cryptocurrency bot works, what you can use it for , and how to use some crypto bot trading strategies.

We’re also going to talk about the top crypto trading bots in the industry right now.

A Brief History of Trading Bots

The automated trading system was developed in 1949 when Richard Donchian developed a specific set of rules that he was able to follow when trading on the stock market.

It took another 30 years until well-known traders began to use a rule-based trading system like this, and these days, trading bots have become really popular when it comes to the trading industry, both cryptocurrency, and traditional currency.

Trading bots are helpful for two things.

The first is that investors can use a bot to make the trading process a lot simpler and more straightforward because bots can handle things like index construction, portfolio diversification, and portfolio rebalancing.

All of these things can take a lot of time if you plan on doing them manually.

The second way in which bots are used can be a lot more complex. In this case, the bot is going to try and beat the market, so that they can make a consistent profit.

This method requires a lot of research and can be difficult to set up. With cryptocurrency becoming more and more popular, the idea of trading has completely changed.

Unlike the traditional trading market, the cryptocurrency market is open around the clock, and it’s also extremely volatile, which means that bots are a lot more appealing to investors.

It takes the emotion out of trading, and it means that you’ve got a better chance of making a profit from your trades.

What Makes a Great Bot?

Of course, there are plenty of companies out there that want to sell you their service to use with your crypto bot trading strategies, but there are only so many of them that are actually worth your time.

So, with this in mind, what do we think makes a good bot?

We think that backtesting, strategy implementation, execution, and job scheduling all make a good bot.

You’ve got to be able to backtest your bot strategies before you implement them, just to make sure that they are really going to give you the best chance of making a profit from your investments or not.

Of course, the bot has also got to be able to effortlessly implement your strategy, without you having to do too much of the work, and it’s also got to be able to schedule investments for you on your behalf, even if you are sleeping.

Let’s talk about these features a little bit more in-depth.

Backtesting

As we mentioned, it’s really important to run tests against historical market data.

You need to make sure that your backtest is efficient and thorough and there are many different factors you need to think about when testing a bot.

You need to think about things like slippage, latency, and trading fees. You are able to obtain high-quality data for trading bots through exchange API’s.

This is going to help you gather a more precise data set, so that you can make safer trades.

Strategy Implementation

Setting a few ground rules in the beginning so that your training bot knows what to follow is really important.

In this stage, you need to be able to develop the bot so that it can understand when to trade, and what to trade.

Once you have developed a strategy, you need to test the bot to see how well it performs against historical data.

Execution

Once you have backtested your strategy, and you are getting good results from it, it is time to test it out in the real market.

The trading preferences that you have developed in the bot need to run as API requests so that the exchange can understand them.

There are some more advanced bots out there that are going to let the user test a strategy in the real-time market through a practice profile.

This is definitely recommended because it means that there is no risk involved when you want to try a new strategy.

Job Scheduling

Once you have tested and made the bot as efficient as you can, the next step is to automate the process. Making the most of a scheduler is the best way to do this.

When Should You Use Bots?

Bots can be really helpful for almost anything, because they can do things including portfolio management, rebalancing, and even smart order routing.

When it comes to deciding on the best bot, the same basic rules apply. Deciding on the right bot can be difficult because there is no one solution that meets everybody’s preferences and needs.

This means that you might need to try a few options out before landing on the bot that works well with your trading goals.

It is also important to realize that automation isn’t going to make everything about your investment passive, you still need to take care of the bot to make sure that it is operating smoothly.

Bots are helpful for completing tasks that are often time-consuming, so let’s take a look at some of the jobs that bots can help you with.

Repetitive Tasks

Of course, tasks that are repetitive can be tedious, and a lot of time, they can take up a huge amount of your schedule.

A trading bot lets you automate specific tasks, so that you can make specific trades really easily. We think that one of the best ways to use a bot is to use it for automatic periodic rebalancing.

Timing

Of course, one of the most important aspects of trading is getting the timing right. A lot of the time, this is pretty difficult to achieve with exact precision.

However, if you use a bot, you’ll be able to make more precise trades, which means that you aren’t going to miss out on opportunities to make a profit.

Using a bot makes it easy for you to implement the right trades at the right time without any hassle, so that you can spend more time focusing on something else.

Day Trading is Time Consuming

Being able to build your portfolio up so that it is diverse can take a lot of your time. In fact, managing your portfolio is something that some people do as their full-time job.

However, if you implement a trading bot, you can cut down on how much time this takes, because you can automate those repetitive trades and tasks.

What’s really good is that you have complete control over what is automated, and what is manual, which means that day trading can go from being a full-time job, to a semi-passive side gig.

The world of cryptocurrency is running all the time, which means that the price of your assets can change overnight, when you’re sleeping.

Naturally, this is going to make it difficult to keep track of your portfolio, because you can’t be there all the time.

Using a trading bot is going to let you automate your trading strategies when you are asleep, which means that you don’t have to miss out on good opportunities to make some real money.

What are the Best Crypto Bot Trading Strategies?

Here are some of the best crypto bot trading strategies that we think that you can use with your bot.

Mean Reversion

This is a pretty simple strategy for your bot, and it works using assumption.

With this method the investor is going to assume that if the price of an asset changes in relation to how much it costs on average, then it is eventually going to move back towards that average.

This assumption works well in both cryptocurrency and traditional markets. It is based around the psychology of the market.

Momentum Trading

Momentum trading is when you monitor the ebb and flow of the market based on the momentum.

The investor aims to be there when the market is moving in a positive direction, and then of course, when this momentum reverses, they aim to sell their assets.

Bots can be helpful here, because the timing of your investments is really important if you want to make this strategy profitable.

Arbitrage

Arbitrage is something that is usually associated with sports trading; however, you can also apply this type of trading with the cryptocurrency market.

The price of cryptocurrency can vary based on the exchange that you’re using. This is where arbitrage comes in.

It involves making revenue by purchasing on one exchange, and then selling your asset on another exchange. Bots are helpful for this, because markets can be wildly unpredictable.

When you use arbitrage, the user must buy and sell simultaneously, therefore using a bot can make this pretty straightforward, and it lowers the risks that the price could shift unfavorably while you make a trade.

Naïve Bayes

This cryptocurrency strategy uses machine learning to read the movement of the market.

It provides information to a bot, and it can make calculations so that you can purchase and sell at times that are profitable.

Natural Language Processing

The world of cryptocurrency often reacts to news, and other things, including social media attention.

When you use natural language processing, you can train your bot to react to certain words that it picks up from news sources.

This way, you can keep your finger on the pulse of what the market is doing and be there when the trading is good.

Different Types of Bots

Crypto Trading Bots

There are four different types of bots that you can use for your cryptocurrency trades. Let’s take a look at what these are.

Arbitrage Bots

There are a number of great services out there that we’re going to talk about below that can help you with an arbitrage bot.

We discussed the process of using arbitrage above, so just make sure that you find one that’s going to suit your personal needs.

Market Making Bots

These kinds of bots can purchase and sell orders automatically, so that you can make a quick profit. They are also referred to as scalping bots.

Portfolio Automation Bots

A portfolio automation bot can help you create and maintain a portfolio that is diverse.

Technical Trading Bots

A technical trading bot is arguably the most popular and widely used bot.

This bot can use indicators and signals to predict the movement of an asset, which lets you automatically enter the market before the price increases.

Automated Crypto Trading

This kind of cryptocurrency bot has been developed by an investor that has a lot of experience. It lets the user trade like a professional, in a way that is hassle free.

This means that you are probably going to need a little bit of experience to capitalize on a bot like this, but once you learn the lay of the land, you are going to be able to get it to work really well for you.

How Do I Pick the Right Trading Bot?

Choosing the right bot is going to depend on what kind of trading is interesting to you, because there are a lot of options.

Here are some things that we think you should consider before you choose a bot.

How Trustworthy is it?

It’s really important to do your research when it comes to using a cryptocurrency bot, including looking into the company that is providing the software, because this can be an indication of how trustworthy the bot is going to be.

You need to ask questions like how experienced at trading is the team that is offering the bot?

Have they ever maintained a strong trading portfolio?

And how much information is on their website about the bot?

Is the Bot Suited to my Strategy?

It is really important that you find the best bot for your crypto bot trading strategy. This is why you need to research thoroughly what the advantages of every bot is.

It is also essential that you make sure that you are able to work well with the bot.

There are some trading systems that require you to have advanced technical knowledge, whereas others are user friendly, and can accommodate anybody, whether you are just beginning or you are a veteran.

How Good is the Customer Service?

You need to check the website of the bot to make sure that they have reliable customer service.

You also need to check if there is an online community where other users of the bot can discuss their experiences, because if you have any trouble with using the bot, you are going to need to be able to get in touch with them quickly, and even get help from more experienced people.

Ease of Use

Of course, bots are going to be able to save you a lot of time in the long run, but initially, it can be challenging to set them up, and get them running exactly how you want them to.

The reality is that a lot of trading bots are incredibly advanced, which means that any beginners need to focus on finding a bot that has an interface that is user-friendly, before they move on to anything more complex.

The Top Crypto Bots in 2022

Now that we have talked about trading bots in general, let’s go over what we believe to be the top crypto bots for trading in the industry currently.

  1. Pionex – 🏆 Winner!
  2. Coinrule
  3. Bitsgap
  4. Quadency
  5. TradeSanta

1. Pionex

Pionex

Pionex is by far one of the best cryptocurrency bots in the industry, because they are completely free for you to use.

Of course, if you are just beginning in the world of crypto bot trading strategies, you aren’t going to have a huge amount of money or assets to invest as capital.

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This means that you’re going to have hardly anything in your budget for your cryptocurrency bot either. If this is the case, then definitely go for these guys.

Not only are they free, but they have no minimum deposit, and all of their free bots are built into their system. Literally all you have to do to capitalize on their features is enter your email address.

They also have different bots for different needs, so if you are wanting to use arbitrage as your trading strategy, they can help you here, but if you’re wanting to use grid trading, they’ve got bots for this as well.

2. Coinrule

Coinrule

Coinrule is another super helpful cryptocurrency trading bot that is going to help you make your trades really easily, and they say that they love to empower the people that they work with to compete with professional traders out there, and the best part is that you don’t need to have any prior experience of coding, and you can even get started with them for free.

They say that they work with ten of the most popular exchanges, and they also employ encryption and security on their website that is military-grade, so you never have to worry about the safety of your assets.

You can implement their trading bot strategies, and you can even create automated trading rules around the clock.

3. Bitsgap

Bitsgap

Bitsgap is another great cryptocurrency trading bot option if you want an all-in-one trading platform that you can capitalize on for not just Bitcoin, but other cryptos that you might be wanting to invest in.

They say they can help their clients with some of the best bots in their industry, and they also have smart algorithm work orders, as well as demo and portfolio trading.

What they are saying is that they have everything that you need to easily manage your assets under their one interface.

You can get started with these guys for free, and they can also help you discover the best opportunities so that you can maximize your profit.

4. Quadency

Quadency

Quadency is a good choice if you want to not only be able to do well with your cryptocurrency trading bots, but you want to be able to simplify your digital asset experience in general.

You will notice that they have a chatbox on their home page, so you can get in touch with their customer support team straight away, and they even say that it is free to set up an account with them.

They have access to more than 15 strategies and bots, as well as 35 wallets and exchanges.

They believe that they have boosted portfolio analytics, so that you can really get to know trading and strategies before you implement anything.

5. TradeSanta

TradeSanta

TradeSanta is definitely one of those crypto bots that want to be able to help you from a grassroots level, which means that they work with a lot of people that haven’t really been able to get off the ground in terms of their cryptocurrency investments, and they still want to be able to implement professional trading strategies.

These guys can help you trade cryptocurrency like a professional because they say they have powerful software that you can capitalize on.

They take you through a little bit of a tutorial on how they work, and they can help you connect with some of the major exchanges out there.

Final Thoughts

A good crypto trading bot strategy can be an extremely useful tool that can help you generate a real profit from your investments.

These bots can save you a lot of hassle and time and give you more time to focus on what you might want to invest in next.

We suggest that anyone that is planning on investing some of their assets in crypto bot trading bot strategies considers using a well-researched one and see how they can incorporate them into their trading setup in general.

The only disadvantage is that there is not currently a one-size-fits-all kind of deal, so you’ll need to take a bit of time to figure out which trading bot is going to be best for your needs.

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Written by Thomas McGovern

Thomas has over a decade of experience with blockchain and cryptography. He writes regularly for EarthWeb and holds a M.S. in Mathematics.
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