Automated Bitcoin trading - should you let bots invest for you? | Inquirer

Automated Bitcoin trading – should you let bots invest for you?

/ 07:56 AM June 25, 2021

Have you ever wished an app could invest in cryptos for you? Automated bitcoin trading bots can manage your portfolio for you. Do it right, and these can help you make smarter trades in the crypto market!

First, let’s talk about what automated bitcoin trading is and what their bots do. Then, we’ll explain the potential benefits and risks of these apps. Later, you’ll figure out that there is more to automated bitcoin trading than meets the eye.

We get new technologies every day, and many of them improve themselves. Back then, you had to call your broker to place your buy and sell orders. Now that a robot may do it for you one day, you should know how to maximize their use.

What is Automated Bitcoin Trading?

What is automated bitcoin trading?

As you may have guessed, automated bitcoin trading involves something else trading BTC for you. Nowadays, it’s the software you may download for free or for a fee.

It starts with a user backtesting his investment strategy. It involves trying out the strategy in a simulation before it does real live trades. The user will need a tool that uses historical data.

Once the strategy is solid, the user gives access to data to their exchange account. To do this, they would need to give the bot their public and private API keys.


Once it’s in, it will execute the user’s trading strategy. Also, the user must adjust the two core settings. The first involves collecting “Balance” data from the crypto exchange account.

The second includes commands that relate to the ability to “Trade.” Note that automated bitcoin trading bots don’t usually require permission to “Withdraw” your funds.

You may want to avoid using this kind of bot. Otherwise, you may lose all your funds. Once you find the best-automated bitcoin trading bot, it can do so much for you.


The most basic ones can set your stop loss when you’re trading crypto futures. If you prefer scalping, the bot can place your buy and sell orders for you.

Some trading programs do more, though. For example, Shrimpy can mimic trading strategies from the best crypto traders. TraderBlocks let you drag-and-drop commands to build a strategy.

A few of the automated bitcoin trading bots are free and open-source. Yet, an experienced trader can do so much with them. Hummingbot is one of these powerful bits of software.

What are the types of cryptocurrency trading bots?

  • Trading bots – It simply follows a trading strategy for you. A fully automated crypto trading bot uses technical analysis to buy and sell on your behalf. If you don’t want the bot to purchase cryptos for you, you may get a semi-automatic instead.
  • Market-making bots – Market making involves buying the median price between the buy and sell orders. Investors can use bots to facilitate market-making. More importantly, they make sure trading remains active.
  • Arbitrage bots – Arbitrage means buying and selling an asset at the same time to profit from the price differences. This works because of the flaws in the crypto market. Since buy and sell orders whizz past in seconds, bots let you keep up the pace.
  • Paper trading bots – The bot uses real-life market data to give you a “dummy crypto.” It resembles a certain coin, allowing you to test your strategies without risk.

Pros of automated bitcoin trading

Pros of automated bitcoin trading

  • Bots don’t get FUD or FOMO – Investors are humans who react to stuff around them. They could be swayed by bad news reports and good news hype. A bot could make automated trades regardless of these events.
  • It gives you a trial run – Back then, you may have used real money to test your investment strategies. Automated bitcoin trading lets you try your new strategy safely.
  • Bots let you stick to a plan – Most traders start with a plan then lose it over time. Often, it’s because they get distracted by numerous factors. On the other hand, a trading bot will always stay the course.
  • It helps with portfolio management – Some investors have accounts on several crypto exchanges aside from Coinbase Pro. It’s hard to keep track of all these at once. Instead, you may want to let a trading bot handle a few of them for you.

Cons of automated bitcoin trading

Cons of automated bitcoin trading

  • Relies on power and bandwidth – A trading bot requires electricity and an internet connection 24/7. If it cuts off, you may lose a lot from your delayed orders.
  • The strategy may not work in reality – Believe it or not, too much backtesting isn’t good. Your test might be viable in the simulation but not in the real-life market.
  • You still have to check it regularly – Automated bitcoin trading bots will do your work for you. Still, you have to check it from time to time. The crypto market changes frequently and rapidly, so we may have to apply necessary adjustments.
  • The bot might take your money – Remember what we said about bots needing access to your account? If you pick a malicious bot, it may open your funds to a hacker. That’s why you should use a hard crypto wallet for extra security.

Should you try it?

Should you try it?

Did we convince you to use automated bitcoin trading? Ironically, you’ll need to know a lot about trading before using this software assistant.

You can’t give commands you don’t understand. This is why you’ll need to know some technical analysis before using a trading bot.

If you don’t know your Take Profit from your Stop Loss, your bot will squeeze your account dry! You’ll need to learn terms such as resistance levels, support levels, and others.

For truly advanced strategies, you’ll need coding skills too. Those who have both can create bots that perform like no other. This doesn’t mean the pre-built ones aren’t good, though.

A trading bot will only execute the plans it gets from you. As a result, it only reflects how great or poor you are as a trader. Hone your skills, and the tools will follow.

Final thoughts

If you haven’t invested in cryptos before, don’t look at bots yet. Instead, start investing in the crypto exchanges now. You may get a Binance or Coinbase account in minutes!

Learn all you can about cryptocurrency. Understand how they work so you can find the best ones. We’ll give you a hint. Go beyond bitcoin, and you’ll find hidden gems in the crypto market.

Read all you can learn about cryptos. Check real-time data from CoinMarketCap. Browse through the articles in CoinDesk and Inquirer USA for more insights.

Learn more about automated bitcoin trading

What do trading bots do?

These are computer programs that execute investment strategies on your behalf. You may attach them to your crypto exchange accounts, and they’ll do the rest.

Do trading bots work?

They do, but it largely depends on the trader. If you give it excellent strategies, the trading bot will perform well. Otherwise, the bot might drain your account.

Is using trading bots legal?

Believe it or not, they’re welcome in the crypto market. It’s not exactly cheating since it depends on your strategies. After all, it encourages more people to trade, keeping the market alive.

Disclaimer: This article is the author’s personal opinion, differing from the “official” statements or facts. All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by constitutes an investment recommendation, nor should any data or content published by be relied upon for any investment activities. strongly recommends that you perform your own independent research and/or speak
with a qualified investment professional before making any financial decisions.

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TAGS: Bitcoin, crypto, interesting topics, USFINANCE
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