Binance is the biggest crypto exchange by a large margin. With an estimated 17% market share and millions of users from across the globe, it is certainly the most popular CEX platform in the entire world. The company offers a wide range of services in multiple areas:
- Spot trading and margin accounts for retail traders with different aspirations.
- Multiple programs for investors interested in supporting emerging DeFi projects.
- Unique staking systems allow many crypto enthusiasts to invest conservatively.
- A wide range of niche markets for NFTs, gaming projects, and more.
Whether you want to focus on making annual profits from your capital investments or consider retail trading the most attractive aspect of the crypto market, you will find a suitable product in the catalog Binance.
On top of its many advantages, the exchange also has another great perk — a powerful API that enables integrations with a multitude of third-party providers. Among such external services that you can use our TradingView (an analytical platform and a feature-rich terminal), WunderTrading (automation vendor), and many other companies.
This API is the reason why so many retail traders choose to create cryptocurrency trading bots for Binance over many other platforms. Binance allows a wide range of third-party vendors to utilize its functions efficiently. You can automate all sorts of trading activities including spot trading and futures trading.
This versatility explains why millions of experienced crypto traders who do not limit themselves to manual trading flock to the biggest exchange in the world.
Various strategies employed by bot owners
Depending on your risk tolerance and investment style, you can choose an optimal strategy that can be automated. Thanks to the power of customization at WunderTrading, you can automate any technical analysis strategy and make it consistent with enough dedication and effort.
It is impossible to pick the best strategy for any given exchange or market in general. Every strategy has unique downsides and advantages. For example, scalpers can fine-tune their indicators to work on specific time frames and with a certain portfolio size. This strategy will not work for someone with a conservative approach focused on long-term market positions.
It is necessary to contemplate the personal preferences, resources, and risk tolerance of each investor to find the right strategy. It is possible to make any strategy fully automatic. However, you need to pick the right approach to trade before using automation. On the other hand, employing preset solutions like DCA and GRID bots can be a sound investment decision.
The right bot is the one that follows a strategy that suits your preferences and portfolio. We will discuss some of the best options for contemporary retail traders.
Binance market-making bot
Market making is another name for spread trading. You focus on creating buy and sell orders simultaneously to take advantage of market spreads. It is a relatively safe strategy that generates small profits consistently. It works perfectly for people who want to focus on building a low-risk trading system that can be easily automated and fine-tuned according to your portfolio.
The name of the system comes from the fact that traders engaging in it create liquidity by placing orders in both directions. It means that the market receives more buy and sell orders to stimulate the growth of trading volumes.
All centralized exchanges love market makers since they need liquidity. With enough orders placed in all directions, the exchange can facilitate instant order execution because buyers and sellers have preexisting offers to instantly sell or buy.
It is common for market makers to focus on maintaining a certain spread which can be quite hard during periods of volatility. When it comes to using this kind of trading bot on Binance, it is a good idea to turn it on when the market is relatively calm and predictable and turn it off when the environment is less favorable.
There are several downsides to running market-making trading bots for Binance:
- Insiders can be a big problem. If someone knows about upcoming developments in the industry that may affect prices, they will place orders preemptively skewing the existing balance in the market and throwing off traders with systems that are designed for specific market conditions.
- Sudden price spikes or dips. A large price action change can dramatically affect your market positions and cause you to lose money on both buy and sell orders. Since market makers must work continuously, it is close to impossible to avoid all situations when spikes or dips occur.
- Market-making bots are dependent on a variety of technological factors. The competition may run bots that are faster or have priority access to the platform. You never know what kind of agreements large fund managers and exchanges have regarding market order placement.
Arbitrage crypto trading bot for Binance
When it comes to running safe strategies that deliver guaranteed profits, the best solution is arbitrage. In theory, this approach is foolproof and works in 100% of cases. It is true that when conditions align according to the requirements of an arbitrage bot, it will produce profit without a fail. The only issue here is price convergence.
The latter is a phenomenon of prices reaching an equilibrium across markets due to frequent arbitrage trades. Basically, participants of the market quickly figure out the best average price for any given asset traded for profit in two markets. This phenomenon occurs extremely quickly in digital markets like Forex and Crypto.
While this apparent downside can seem hard to overcome, you don’t necessarily need to make huge gains with this method. If you already have a cryptocurrency Binance bot, chances are you have an upgraded plan at WunderTrading. You can set up an army of arbitrage bots tracking prices across multiple markets and exchanges. Whenever a good opportunity presents itself, bots will act. It will happen rarely, but it will be a guaranteed profit.
The reliability of the method makes it a perfect hedging instrument that can offset risks associated with other investment activities. If you are building a balanced portfolio filled with automation products, it is a good idea to have arbitrage bots running in the background to cover potential losses that may occur in other areas.
There are three main kinds of arbitrage that cryptocurrency traders can engage in:
- Arbitrage across exchanges. Different CEX platforms may have price discrepancies between the same pairs. BTC/USDT may be priced at $20,000 on Binance, but on KuCoin the price could be $20,010. By simultaneously buying on Binance and selling on KuCoin, you will pocket the difference. You need a sizeable portfolio and strong deposits on both exchanges, but it is the price of safety and consistency.
- Geographical (Spatial) arbitrage. In markets separated by miles, prices can noticeably differ. For example, BTC/USDT can be traded at $20,000 on Binance US while trading at $20,010 on OKX focused primarily on the SEA region. The principle is the same: the Binance US trading bot buys BTC and sells it on KuCoin simultaneously.
- Triangular arbitrage. This method is the most commonly used by crypto retail traders preferring to work on a specific CEX platform. If you want to run multiple Binance automated trading bots, it can be a good idea to set up a system where you track three pairs sharing a common asset. A good example is a trio of BTC/ETH, ETH/USDT, and BTC/USDT. If there is a discrepancy in prices against the USDT component, you can make simultaneous trades to take advantage of the difference.
Arbitrage is an extremely safe system if you use it carefully. Some risks should be mentioned but they barely affect the frequency of trades. Volatility, sudden price spikes, and other issues prevent bots from acting but do not affect the bottom line too much. If you focus on reducing risks, you will lower the expected returns.
DCA buying on Binance
DCA is an abbreviation standing for “Dollar Cost Average”. This method was introduced to the world in 1949 by Benjamin Graham. It is a system that suggests that investors should buy assets in fixed amounts and fixed periods. For example, an investor should buy 100 stocks per month. In theory, it allows investors to benefit from price retracements and reduce the average price of purchased assets.
The contemporary understanding of the method is different. Modern systems usually follow strict instructions from users who prefer technical analysis strategies that identify a downtrend. The bot makes a series of purchases to reduce the average price and exists in the market when the “take profit” threshold is reached.
Alternatively, an investor can turn off the “take profit” placement functionality to continuously accumulate resources. This approach is one of the staples in the Bitcoin community where investors try to “hold” and wait for Bitcoin to appreciate. DCA is a great approach for people who want to build a massive portfolio step by step.
Many experts believe that this is the best Binance day trading bot since it can do many things for users. However, focusing on DCA as your main money-making strategy is not as efficient as using the updated version. WunderTrading offers its clients a powerful tool — GRID bots.
GRID — the best Binance trading bot
If you want to use a promising automated trading system that will produce good results over a long span of time, it is a good idea to start testing the GRID system. The name comes from the shape that forms on the price chart when the bot starts working and opening market positions according to its instructions.
The script uses the DCA approach to identify the best moments to enter the market. However, it also places “take profit” and “stop loss” orders as well. The strategic placement of orders creates a net or grid on the price chart.
One of the advantages of the system is that it allows retail traders to control risks and use thresholds according to their risk tolerance and portfolio management styles.
When you use GRID as a preset for a Binance automated trading bot, you enjoy multiple benefits:
- The bot works around the clock. You need to find a good technical analysis system that produces signals reliably. The bot will monitor the market around the clock and search for perfect opportunities to enter the market according to its instructions. Since downtrends occur regularly, the 24/7 schedule will allow you to optimize profitability.
- The GRID system is highly customizable. Retail traders who have experience and can fine-tune risk levels will find it quite appealing that users can change “take profits” and “stop losses” to their liking. You can control how bots behave.
- You can run as many GRID bots as you like. If you are interested in creating a Binance trading bot for profit, GRID can be a great approach if you allow each bot to manage only a fraction of your portfolio. Divide your designated capital between multiple bots and allow them to work with different financial instruments.
The GRID system is one of the flagship products at WunderTrading for a reason. It is a finely tuned instrument that can be further customized according to your risk tolerance and preferences. It can work on the spot and futures market.
Trading derivatives on Binance
This CEX platform is known for pushing the envelope and offering unique products to its audience. It is a common occurrence in the crypto market when Binance makes a new move and other exchanges start copying it. The market for derivatives is not a novel invention, but it gained popularity in the cryptocurrency industry after Binance introduced perpetual futures.
These contracts do not expire after a certain period. They are immediately renewed and can be held for a long time. Many crypto retail traders work with these financial instruments. However, newcomers should be careful because trading futures is possible only if you use a margin account. Using leverage (a credit line from the exchange) to trade can be quite dangerous for inexperienced investors who do not understand the ramifications of using borrowed funds to trade.
If you understand everything about using leverage and want to risks anyway, it is a good idea to focus on picking the right strategy. Note that trading derivatives can be automated as well.
Which bot is the best for Binance Futures?
When picking the most optimal Binance auto trading bot for futures, you need to remember that working with derivatives is different from working with digital assets directly. On the spot market, you exchange any amount of assets as long as there are trade offers and sufficient liquidity. On the futures market, you trade fixed amounts of assets with trades contractually necessitating finalization and settlement at the end of the expiration period.
It means that all futures contracts must be honored. It is why exchanges will provide you with a credit line to ensure that all obligations can be met. If you do not have sufficient funds to cover your end of the deal, the exchange will liquidate the contract forcibly and you will lose your money.
Avoiding the so-called “margin call” is one of the most important priorities for any retail trader. It means that market positions in the futures market must be chosen carefully, after multiple considerations.
How to pick the right Binance automated trading bot for futures? All retail traders must remember that every ATS is based on a technical analysis strategy. A consistent system of indicators will produce good signals that can be used in futures trading.
On the front of technology, WunderTrading offers everything you need to succeed: 99.9999% uptime, quick processing speeds, reliable execution of scripts, and more. However, you still need to use a trading strategy to generate profits! Choosing the right technical analysis approach determines the profitability of any given bot.
Which strategies work best with volatile markets?
All cryptocurrencies are speculative assets that are prone to volatility and sudden price movements. It means that a good system will identify promising swings and trends. Experts agree that some traditional technical analysis methods are still some of the best since they utilize the price action data and trading volumes directly instead of manipulating numbers.
Here are some staple methods used by traders everywhere:
- RSI swing strategy. The relative Strength Index is a great volume indicator that shows when an asset is oversold or overbought. The indicator is represented by a line fluctuating between 0 and 100. If it comes closer to the upper limit, it means that the market is overbought and aims for a downtrend or a short price retracement. If it falls closer to zero, it means the market is oversold and there is a potential for a reversal and bullish movement.
- MACD reversals. Moving Average Convergence-Divergence is a powerful tool that uses primarily price action to determine when the market is ready for a reversal or a price retracement. Predicting the length of any trend is not possible, but you can guess when a short-term or a long-term trend starts shaping up. Rules for using MACD are simple: when the MACD line goes over the signal line, it means that a bullish trend is forming and vice versa.
These two approaches are used by millions of retail traders from all across the globe. However, any indicator alone has limitations. For example, MACD often produces false positives which can be a good thing if you strategically place “stop loss” orders. However, too many false positives will quickly run your account dry. RSI is prone to latency issues. It can be too late or too early to predict a reversal.
A good idea is to use multiple strategies to confirm a signal. If you are using the TradingView platform, you can create a custom script that will generate alerts when multiple indicators align and product-specific signals. This method is also not 100% reliable, but it will dramatically reduce the number of false positives.
Different strategies are chosen for each time frame. The MACD indicator works well on the 1D (one day) frame since default settings are optimized for 26/12/9 days. On the other hand, RSI is often used by scalpers and day traders to identify price retracements that can be exploited for a small gain.
Optimizing profits and risks
WunderTrading offers its clients a wide range of tools to reduce spending while controlling risks and profits. You can get the best Binance trading bot for free. All registered users can run up to five bots simultaneously without paying a dime which is a great way to test some investment ideas and play around with the product before committing to a full-scale expansion into the world of automation.
You can choose when to upgrade and how much to pay depending on your preferences, portfolio size, and available budget. The flexibility in pricing coupled with the ability to customize and individualize each bot makes it possible for all users to create optimized systems with controllable risks and profits. If you get a Binance trade bot for free, you can focus on honing your technical analysis strategy instead of calculating potential expenses related to automating your trading routines.
There are two ways in which you can reduce risks:
- The first method is by reducing the portion of the portfolio that can be managed by bots. Depending on your diversification thresholds, you may give a cryptocurrency Binance bot the right to trade with any percentage of your portfolio.
- The second method is to set conservative “stop loss” orders to ensure that any market position opened by a bot can be closed before it starts affecting the portfolio at large. Choosing the right settings can be challenging and usually requires some testing and tinkering before you can find the optimal configuration.
Flexibility is hugely important if you work on Binance
Any Binance bot strategy requires retail traders to spread their attention across multiple financial instruments to diversify investments and use the full spectrum of opportunities presented by the exchange. Since the platform allows its clients to interact with hundreds of different tokens, an altcoin trading bot for Binance should be launched alongside automated trading systems working with Bitcoin, Ethereum, Dogecoin, and other established tokens.
The idea here is to find an equilibrium between risky and safe investments. You can use the same-day Binance bot trader for BTC/USDT and ADA/USDT. However, you will see that results will vary greatly. Both assets can make huge movements, but ADA has greater potential due to its inherent volatility. Many new coins also have a greater potential for explosive growth but also may not produce any results in the short term due to low liquidity.
To make money consistently, you need to use the best Binance crypto trading bots that you can create using technical analysis techniques. It is possible that a single strategy won’t work in the long run, but a variety of bots will offset each other’s risks and have a higher chance of achieving success.
The main takeaway
The best Binance bot strategy is the one that works well with your portfolio size, risk tolerance, and investment style. You need to use a variety of automated systems to create a reliable method of making money with bots running on the biggest CEX platform in the world.
WunderTrading offers its clients a wide range of highly specialized automation tools that can be used to create advanced automated trading systems. The service is fully integrated with Binance. You can use it to trade on the spot market and with your margin account. It is a great choice for newcomers and veterans.
What you need to do after registering at WunderTrading and testing your first bot is to pick the right technical analysis strategy that will generate good signals for bots.