Unlike the stock market, the cryptocurrency market works around the clock and seven days a week. Waking up in the morning, an investor can open Binance and find out what happened while he was sleeping: assets grew or fell.
Many traders use bots that can trade on the exchange while they are sleeping, working, or doing personal business. This is allowed by the rules of the exchange. There are many bots – some of them are free, paid, and available by subscription. However, not all of them are equally effective.
Of course, automated trading carries the same risk as manual trading. Never invest in cryptocurrency money that you cannot afford to lose.
How a Binance trading bot works
A Binance trading bot is a program that connects to a cryptocurrency exchange (usually via an API) and places trade orders on behalf of the account holder. It uses a predefined strategy that you can always customize to your liking by specifying volumes, price, time, and other factors.
Bots are quite popular in the stock market and migrated to the cryptocurrency market. A Binance trading bot is often expensive, and not all investors are willing to pay for it. Free trials are sometimes offered.
Some transactions are complicated to carry out manually, so the Binance trading bot can help the investor in such cases. For example, you can place many orders, including small ones, or catch the desired price in cases of high volatility. In this case, the bot can track not one or two cryptocurrency pairs, but in general, everything presented on the exchange.
Automated strategies
Bots are tuned for different strategies that are manually used by investors. In some areas, they are even more effective because they can quickly spot a suitable entry point and place an order.
- Arbitration. This strategy aims to make a profit from the difference in prices on exchanges or sites. So, a bot can detect a difference in the price of Binance, buy and sell an asset on time, and the difference will become your profit. It can also detect the difference between the future price and the underlying asset. At the moment, this strategy is less popular than before since there are very few opportunities for such risk-free trades.
- Market creation. Trading jobs for Binance using this strategy compare the buy and sell prices of the spot market and derivatives to find the difference between the two. The bot then creates limit orders and profits from price fluctuations. This strategy is very attractive and therefore highly competitive, which leads to losses in conditions of low liquidity.
- Indicators. Many bots are set up to track and analyze various trading indicators. One of the most popular is the Exponential Moving Average (EMA). The bot can react to various signals – for example, the EMA exit from the channel or the intersection with the price. Even free Binance trading bots can perform such actions.
What you need to know about bots
You do not require excessive amounts of capital to start. The main thing is to consider the commission of the exchange so as not to remain in the red on small transactions.
When choosing a Binance trading bot, consider its reputation. Among the little-known, there is a great chance to stumble upon scammers and hackers. Having chosen a popular and demanded bot, first of all, make sure that it can check strategies using historical tests and keep detailed statistics. 24/7 support is also a big plus.
Which is the best Binance trading bot?
Check out:
- Bitsgap,
- Cryptohopper,
- 3Commas,
- TradeSanta,
- RevenueBot,
- Steroid,
- Trality,
- CryptoTrader,
- Haasbot,
- Zignaly,
- Cryptorg,
- Stratum Bot,
- Botee Trade,
- Apitrade,
- Profit Trailer.
Remember that the Binance trading bot itself is not a loot button or a win-win. Such a program should set up, select and test strategies, and it will only follow your plan. Do not forget that many strategies work only temporarily at certain stages of the market.
Benefits of bots:
- The massive use of bots leads to a healthier market. A gradual reduction in exchange spreads makes the market more liquid, which attracts new participants to it.
- Bots can trade independently.
- Bots are capable of performing routine activities day after day for years.
- They make more accurate trades than people do manually.
Disadvantages of bots:
- You can’t just leave the bot in the hope that the money will drip into the account on its own. The program requires control and twisting.
- There are fraudsters among bot developers, and this is very dangerous because you can lose not only money for a bot but also trading capital.
- Bots can be targeted by hackers.
If you are interested in Binance trading bots, be sure to:
- Install two-factor authentication and other security methods on your account before using it.
- Store API keys in a safe place.
- Don’t give the bot permission to withdraw funds – it’s better to do it manually. And remember: the risks of drawdowns are still there.
