A cryptocurrency robot is a tool that is also known as an expert advisor. It is a piece of software that seeks to automate what traders do in a manual ecosystem. For example, a cryptocurrency bot can be built using technical indicators like moving averages and MACD. It can also be created using fundamental data like on-chain movements and economic data.
How does a cryptocurrency robot work?
A cryptocurrency robot can help you to automate your trading. Some bots help traders by scanning the market and then sending signals to the trader through email or a desktop notification. The trader can then do more research about these signals and then execute the trades. As a result, these bots help to simplify the trading process and then reduce the overall risks that come with using robots.
The other types of robots are automated ones. These are bots that scan the market for opportunities and then execute orders. They will initiate the order based on what the developer has programmed them. This means that they can focus only on the specified coins. They can also protect the orders using a stop-loss and a take-profit.
Also, you can test them by yourself, it is very easy, for example get started with Immediate Profit and try the platform to see if it works for you.
How to build a cryptocurrency robot
Developing a crypto robot is not an easy thing. For one, if you are coding the bot from scratch, you need to have some experience in software development. Also, depending on the trading software you are using, it is important to know the specific language. For example, MetaTrader 4 and 5 trading robots are designed using a language known as MQL 4 or 5.
These days, there are several free and premium websites that let you build a robot using the simple process of drag and drop. These platforms make it easy for people without coding experience to build quality bots.
Another thing is that you need to have a good experience in trading since you will basically digitize your manual approaches. Some of the top strategies you could use are scalping, trend following, grid strategy, and reversals.
How to buy a cryptocurrency robot
Since building a bot is difficult, most people opt to buy a cryptocurrency bot. There are two main approaches to this. For example, you can use one of the most popular marketplaces to buy your robots. MT4 and MT5 developers have intuitive marketplaces with thousands of bots that you can buy. In most cases, this approach is usually better because it is safe and you can see genuine review.
The next option is where you find a robot developer and then buy the bot directly from them. This is the approach that Immediate Profit uses. While this model works, it is very common for you to fall prey of online scammers.
The cost of a trading robot varies. Some, like Immediate Edge are offered for free while others cost as much as thousands of dollars per month. Immediate Edge is free but its developers make money by referring you to their specific broker.
Testing the robot
Because of the volatility of the cryptocurrencies market, it is important for you to test the robot well. This applies for one that you built yourself or one that you have acquired.
Many charting platforms like MT5, NinjaTrader, and TradingView have a feature known as strategy tester that simplifies this process. You just need to enter the robot and select the dataset you want to analyze.
Ideally, while testing the strategy is a simple thing, you should spend a lot of time doing it. In most cases you should spend at least a month testing the performance of the bot. This is why you need to buy a bot that gives you a free trial.
If the bot works fine, then you should start with a small amount of money and then top it up as your account grows.
Summary
There are several benefits of using a cryptocurrency robot. For example, the bot that does the analysis and sends you an alert can save you a lot of time. Also, it will help you identify more trading opportunities. Besides, as a human being, you can only analyze a few assets in a given day.
Second, a robot works harder than a human being. Since the crypto market is open every day, the bot can work from Sunday to Sunday. It can execute as many trades as possible since bots don’t sleep. Further, the bot can set a take-profit and a stop-loss in a better way, unlike a human trader.
On the other, hand the risks of a robot is that it can misjudge the data and in most cases, it does not include fundamental views.