What Is a Crypto Trading Robot?

Crypto trading robots or crypto bots are software programs that automate the crypto trading process. For the most part, the trading process consists of analyzing market trends, selecting the right crypto, and the most favorable time for opening a position. Crypto bots use algorithms to automate this analysis and interpret the statistics. Based on the gathered data, they calculate the risk level and execute the purchase or sale of the selected crypto on your behalf.

It’s a clear-cut establishment — you set the rules (assets type, investment amount, time intervals, and other parameters) and hire a virtual expert to do the job for you. For instance, you can set the bot to sell the selected amount of BTC when its price goes up by 5%. So, I’d say that bots are suitable for all types of traders regardless of their crypto experience.

Benefits of Cryptocurrency Trading Bots

Cryptocurrencies are an astoundingly volatile business. Their prices drastically fluctuate in a matter of minutes without taking a break – the crypto market recognizes no business hours and holiday seasons.

This boundless frame can negatively impact user effectiveness in the long haul. It’s impossible to be present in the crypto market all the time. So, the main advantage of trading bots is that they can be coherent in the trading scene and never let you miss a great chance. In addition, bots are beneficial for the overall user performance because they:

Decrease Emotions

Once you set the parameters, the bot processes your order automatically without possibly modifying the settings. When the bot is activated, there is no room for human sentiments. On the other hand, if you trade on your own, sudden market shifts and external factors can easily change your decision. This happens even to the most professional traders.

Allow Backtests

Bots’ algorithms generate results based on your input and allow you to test the results without investing actual money. The demo stage can minimize hidden risks and potential mistakes. In addition, you’ll have a deeper insight into the estimated returns under the current market circumstances.

Ensure Consistency

When it comes to crypto, consistency is always a workable strategy. Since crypto bots are code-triggered, they execute the transaction only when the pre-set conditions are met. Nothing can better ensure consistency than automated trades.

Diversify Your Portfolio Easily

Without bots, I would never have built my portfolio the way it is. It’s impossible to open and close positions across various exchanges and experiment with new coins without simultaneous positions. Multitasking is what bots do for a living – most bot solutions nowadays enable you to initiate as many automated trades as you want.

Risks of Using Crypto Trading Bots

Certainly, bots aren’t ideal. As I mentioned at the beginning, they don’t guarantee success. Automated solutions fix many bugs in day-to-day trading, but they also come with occasional technical failures. For example, even if your bot’s algorithm is performing well on the market, a simple internet malfunction can lead to an operational failure.

Also, many newcomers think that you don’t need to monitor the bot’s performance at all, which is wrong. To avoid such mechanical failures, you need to check the bot status continuously.

Finally, I’ve seen how users over-optimize the bot system, which usually takes place immediately after the backset phase. As I mentioned before, the backtest shows you possible scenarios in real time. So, users sometimes may get encouraged by the backtest results but in the real-life arena, the outcome turns out to be different because circumstances have changed in the meantime.

How to Choose the Best Bitcoin Trading Bot in Australia

Trading bots usually operate with a global scope. They serve as management tools rather than money transmitters, so no worries. You’ll be able to download a bot app or access a bot platform from a browser without any restrictions. Still, if the bot comes as a built-in feature of a centralized exchange, you must double-check its local availability.

My point is that there is no bound for Australian traders to approach all top-performing bot solutions. However, this doesn’t make the selection process easier for us. Even though the idea of automated crypto trades sounds rather streamlined, bots’ work is very specific. That’s why I’d like to discuss all factors you need to consider when picking the best fit.

Success Rate

I’ll be honest with you — the success rate is the first criterion we all “zoom in” in the hunt for a trading bot. This happens regardless of whether we’re trying to automate our crypto or Forex portfolio. The thing is that many expert-level traders claim that the success rate is an undependable variable because it’s not constant.

The success rate needs time to be calculated, and it can be affected by many external factors such as trading volume and settings. I’m not saying that numbers like 87% success rate are just a marketing trick but the proportion of profitable trades is definitely the only reliable indicator for a well-performing bot.

Fees

When it comes to pricing, it’s unbelievable to what extent paid bot packages can differ. Professional bot systems are never free or low-fee, but you can find equally good free solutions within a cryptocurrency exchange. The catch is that in-platform bot systems don’t support cross-exchange synchronization but look at ByBit, for example. Its spot market is rich enough to satisfy the needs of ultimately professional traders.

However, some users prefer cross-exchange trading, and they’re aware that in most cases — the more integrable the system, the more expensive the deal. Other factors determining the bot price are the number of open bots, the complexity of analytic tools, and the number of adjustable functionalities.

Security

We need to tick a few boxes before calling a trading bot system secure. Do the exchange APIs allow access to your trade? What steps do you need to pass to get access to the API key? In some way, the API permits the bot to initiate a trade on your behalf. That’s why you need to double-check their configuration before connecting to the bot.

I know that bots look harmless at first sight as they don’t directly store assets (again, if the bot operates outside the trading platform). Still, bots collect valuable information about our transactions and balances and run virtually, so we must take into account the security standards that your bot system applies before submitting a sensitive piece of data.

Minimum Deposit

It’s still a popular opinion that bots are reserved only for professional crypto traders who play with huge amounts. As you can see, many of the bots I listed are typical beginner-friendly solutions with simple parameters and comprehensive tools — suitable for casual and small-scale investments. In general, you won’t stumble upon a minimum investment account. On the other hand, some bots impose a minimum deposit and you should also pay proper attention to any possible restriction of this type.

Deposit and Withdrawal Methods

Similar to the previous section, AUD deposits and withdrawals (if any) depend on the type of bot you’re using. Those that enable all-in-one service usually support multiple payment methods such as wire transfers, credit cards, debit cards, crypto, etc. On the other hand, with some bots, you need to fund the exchange accounts to which they’re connected.

Transparency

Transparency is the key ingredient for an effective crypto bot. Make sure that the bot you’ve chosen makes all transactions appear clear and well distributed as much as it’s possible. Also, examine whether the bot has an open-source dev process and responsive customer support.

Ease of Use

I’ve noticed that users tend to identify the ease of use with the visual complexity of a particular bot, which is wrong. Even the most Bollinger-fluent traders need an intuitive interface, clear instructions for API integration, and meaningfully-arranged analytic tools.

Popular Crypto Trading Bot Strategies

There is an entire science behind bot strategies. As I mentioned several times throughout this guide, you don’t always need profound trading knowledge to activate a crypto bot. However, it can be useful to recognize the most frequently used bot strategies.

Market Making

Let’s start with the key use of crypto trading bots. We define the difference between the buying and selling price under the term spread, an inconsistent variable that depends on both the exchange liquidity and the current supply-vs-demand waves. As such, you can’t always monitor these spread movements manually. With the market-making strategy, you can buy and sell high volumes of coins and earn a sort of passive income from the spread.

Arbitrage

I came across the Arbitrage strategy in my early Forex-trading stages, long before crypto was a thing. Given the lack of price unification in the cryptocurrency market, I wasn’t surprised to find Arbitrage a popular practice for automated trades.

The thing is that crypto prices aren’t determined by a central institution with a unified rate. Very often, you can see that the same coin has one buying price on one and another buying price on another crypto exchange. While this price disconnection leaves room for making a profit, it’s almost impossible to follow the movement of a particular crypto asset across different exchanges on your own.

And, this is where Arbitrage comes along. For instance, if Binance sells Ethereum (ETH) at $2130 and Coinbase Pro at $2135, the bot will buy ETH on Binance and sell it on Coinbase at the same time. It’s simple math — $5 profit per coin.

Mean Reversion (Trading Range)

The Mean Reversion strategy is based on a price-pattern phenomenon, which somehow always turns out correct. Experts claim that the asset price reaches an average value periodically after multiple ups and downs. With Mean Reversion, you only need to determine the range of what you consider an average value. The bot will make an automated purchase or sale every time your asset’s price enters that range.

Trend Trading

Trend Trading is another well-established strategy that efficiently captures gains through monitoring the coin momentum in a particular direction. For example, the bot “notices” a relatively-stable upward trend of your selected coin and initiates a long position (purchase), and vice versa. It sells the coin when its price continues moving down.

Frequently Asked Questions (FAQs)

What is the best Bitcoin robot in Australia?

While all crypto trading bots that made it on our top-10 list provide a trustworthy environment for automated trading, I’d single out the ByBit free bot as the best solution so far. This built-in tool offers multiple trading strategies and top-notch analysis tools under the same roof with a coin-rich spot market.

How do you auto trade Bitcoin?

For starters, you need to pick the most suitable crypto trading bot platform or app against your price range and trading needs. After connecting with the program, you need to select a strategy and insert all other parameters. The bot will automatically respond to your settings and buy/sell BTC in the given point or time frame.

Do crypto bots actually work?

They do. Bots don’t guarantee success because nobody can guarantee that the BTC price won’t fall or rise tomorrow. However, crypto bots can monitor the market 24/7 and execute trades in intervals that can’t be otherwise handled. As such, the use of crypto bots results in more efficient performance on the scene and hence, better results.

How do cryptocurrency trading bots work?

All existing crypto trading bots have a single purpose — to execute a crypto trade automatically under the settings you’ve entered. However, each crypto bot system comes with its own feature set, including available trading strategies, integrated exchanges, performance power, adjustability of tools, etc. That’s why there is no single how-to-use pattern in this diversity of software solutions.

What is the most successful crypto trading bot?

For the most part, the measurement unit for the bot performance is what we call a success rate. As I already said, the success rate not always gives us the real picture as it depends on external factors and the bot’s integral capacities. But, if we talk numbers, the Bybit bot has reported a 99.99% success rate with no downtimes.

What is the safest crypto exchange in Australia?

With the latest AML/KYC policies, all crypto exchanges that operate across Australia need to be AUSTRAC-registered companies. This means that Australian-native and overseas exchanges aren’t closely associated with scams anymore. In addition, exchanges implement plenty of security features by default for maximum user and account safety (2FA, cold storage, etc.). If I had to choose one, it’d definitely be Swyftx.

Are crypto trading bots profitable?

They can be. Crypto bots can be an excellent choice for making passive profit but at the end of the day, they respond to your commands. In a word, trading bots will be as profitable as your trading strategy.

How much can a crypto trading bot make?

It depends on market circumstances, chosen strategy, and algorithm type. For example, a single bot will be able to make a 3.5% return, but after changing the market direction, your day profit can fall to a negative number.