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Cryptocurrency Trading Bots: Do they work and how to effectively use them.

Trading cryptocurrencies can become a time intensive task that many investors obsess over all hours of the day.  Because the market is global and operates 24/7/365, significant moves can happen at any moment.  It could be when you were asleep for hours or just walked to the kitchen to refresh a cup of coffee.

Not only are there the big moves that no one wants to miss, but there are all these incremental movements that take place all the time.  No one wants to miss a profit opportunity or take a loss on a big move in the market.  There are also all these micro profit opportunities that can add up to significant gains over time. 

Both of these scenarios can be addressed by utilizing a cryptocurrency trading bot that can execute trades automatically based on parameters you establish in the software program.  This can be especially useful when the market seems to be stuck going sideways prior to the eventual bull or bear movement. 

How Trading Bots Work

The trading bot takes on the mundane task of constantly executing an endless number of small trades and automates the process.  You can still be making money while sleeping or taking the dog for a walk.

There are many trading bots out there that allow you to establish a trigger that will cause your script to execute.  A simple example would be to tell the trading bot to buy Bitcoin each time the daily price declines by 2.5%. Conversely you would also tell the bot to sell if the price of Bitcoin were to rise 2.5% from the initial baseline price.

On a day where the price of an asset remains fairly flat, the bot can still safely generate profits.  When you first start experimenting with a bot it is still helpful to check in once in a while and see how things are progressing overall and make some subtle adjustments if necessary.

Not only can investors create trading bots to buy individual assets , but they can also use them to manage your entire portfolio.  Capfolio has a rebalancing bot that will distribute your profits amongst all the cryptoassets in your portfolio and enable you to increase your all your holdings and maximize gains across the board. 

How to Set an Effective Strategy

As a general rule, using Bitcoin as your base currency is the best option since it almost always has the largest trading volume.  This helps smooth out any wild swings and creates many more incremental profit opportunities in a given day.  This strategy works well when volatility is relatively low.  Larger fluctuations in a more unstable market could result in a negative outcome.  You can always pause this particular trading bot until things settle down.

Users also need to account for trading fees when you are establishing the parameters for your trading script.  The key is to find a happy medium where your trading bot will be activated many times throughout the day.  This means the price gap need to be small enough to trigger the bot, but still large enough to cover trading fees and still generate a profit.

Backtesting is another essential step in setting-up an effective cryptocurrency trading bot.  Once you have set your parameters, run the backtest for a period of time that you feel is reflective of the market conditions you will execute this particular trading bot.  Try running the backtest with a variety of settings so you can start to understand how adjusting the variables affects your outcome and profits. 

Stay Engaged

Utilizing a cryptocurrency trading bot is not a set it and forget it mindset.  Proper backtesting and and paying more attention in the initial deployment of your strategy will allow you to fine tune a profitable strategy.  Many traders will also develop a series of bots that are reflective of variable market conditions.  Keep it simple with your first trading bot and as you gain experience and insight you can then deploy some additional strategies.


Everyone dreams of having the proper position of their assets for big profits like Biotcoin and other cryptocurrencies have delivered from time to time.  Yes, many people have become crypto millionaires or even billionaires by being at the right place at the right time.  Some of these big gains may still come our way in the future, but as the market matures traders wanting to consistently generate profits will need to execute more trades for smaller profits. A cryptocurrency trading bot can help you increase your holdings during extended sideways markets so that you can benefit either greater when prices go to the moon.

Are you ready to test your first cryptocurrency trading bot?

If reading about generating consistent, daily profits makes you want to give a trading bot a trail run, Capfolio is an easy place to start.  Set up a free trial account  HERE with just an email and be just a few steps away from testing your own trading bots. 

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