Getting Started with AI Trading Bots: A Beginner's Guide

With the current pace of development of AI trading software, we are on track to completely change the automation industry to its core. Modern AI trading bots seem to be performing according to expectations or better. A significant improvement in efficiency and accuracy has been recorded by all providers of various investment automation products after the introduction of some AI elements.

A recent research by Grand View estimates that the industry of autonomous software solutions in fintech will surpass $52.4 billion by 2026. Automated trading systems (ATS) powered by expert artificial intelligence agents and machine learning are responsible for a significant chunk of the expected growth. Companies like 3Commas, Alpaca, and WunderTrading are deploying advanced products as you are reading this article. Notably, some companies design their new offerings to be user-friendly and work for beginners.

How to start with AI trading bots

The current landscape of the crypto trading automation industry is quite competitive with multiple established household names battling for the attention of a relatively small audience of individual and institutional investors in the crypto ecosystem. Choosing the right provider seems to be the first step for aspiring crypto retail traders.

What to look for in vendors

The quality of one’s experience with a product is determined by many factors. There is a significant difference between a typical consumer software program and something that will dramatically affect your financial well-being in the long term. Several established ATS supplying platforms are widely recognized as leaders in the industry. We will talk about them later and determine which has the best AI trading software for beginners.

For now, let’s focus on some criteria that you should pay extra attention to when choosing your automation vendor:

• User interface. When using the dashboard and analyzing the performances of your fully autonomous investment robots, you should never feel overwhelmed by the information. Confusing navigation, poor documentation, lacking tutorials, and a clunky interface make it hard for newcomers to get started.
• Reputation. Select companies that do not have any dark spots in their track records. Read user reviews and testimonials. It is important to not trust everything you read online, but you should have at least a general idea of what you are getting into when signing up for the service.
• Security. With over 97% of all US and Canadian internet users concerned with privacy and user data handling, picking trustworthy vendors with robust safety measures is critical. Work with companies that offer two-factor authentication, use time-tested encryption protocols and do not experience data breaches.
• Supported exchanges. Many retail traders switch their preferred CEX or brokerage service providers at least once throughout their careers. You should pick automation vendors that can work with many reputable CEX platforms. It also means that you will have access to a richer catalog of assets.
• Flexibility in design. Building an advanced ATS is a process best learned with continuous practice. Search for vendors allowing users to tinker with various parameters of their autonomous software and experiment with settings to build unique investment robots.
• Technical performance. The speed, with which bots receive and analyze data, make decisions, and execute trades, dramatically affects profitability. Work with companies that have robust digital infrastructures and connect to CEX platforms via API.
• Pricing. The bottom line for any strategy is determined by its performance. However, the price of using such novel tools can be a significant factor that affects returns. Beginners should look for platforms with flexible subscription plans, free features, and large product lineups.
• Backtesting and analytics. Building multiple iterations of a robot that interacts with digital assets and having an informative dashboard with exhaustive analytics allow newcomers to enter the market from a safe harbor and not worry too much about potential losses.
• Customer support. It is important to work with companies that have excellent support systems in place to guide beginners through the complexities of setting up AI trading bots and ATS in general. Companies that have good educational materials, video tutorials, multiple support channels, and an active corporate blog should be prioritized.

Automation providers that deserve your attention

Several companies in the automation industry have already established themselves as leaders in this incredibly lucrative sector. We picked platforms that will not overwhelm newcomers with complicated controls, endless settings, and unnecessary informational noise.

Here are our picks:

• 3Commas recently rolled out its Alpha series of unique software programs for investors that seem to be user-friendly and quite interesting to novices and professionals. The platform is known for its robust technology and innovative products. While the Alpha Volcano, Wave, and Tornado have been criticized for their lack of transparency and questionable performance, setting them up is easy enough to get on our list.
• Gunbot is a unique take on the implementation of expert autonomous software agents into a trading platform. Instead of trying to teach a robot to make decisions and analyze data, Gunbot bets on the popularity of large language models like ChatGPT, Claude, and Llama. The natural language processing system on the Gunbot platform can receive descriptions of preferred analytical approaches and desired outcomes from users and turn them into bots. Some beginners might find it easier to simply explain to a program what they want to do instead of tinkering with settings.
• ByBit’s Aurora is another attempt from an established household name to deliver an ATS powered by artificial intelligence. Aurora is capable of analyzing massive swaths of historical market data and adjusting 18 parameters to maximize profitability and reduce losses. Newcomers to the crypto market may enjoy the simplicity of the product, but it is limited to just several digital assets making it less useful to veterans and investors interested in working with different tokens.
• WunderTrading’s robot is a great example of a system actually controlled by an expert self-sufficient agent. It is one of the best AI trading bots for beginners simply because it is a “launch and forget” system that can operate without human supervision. We do not recommend just leaving it alone. Keep it on a long leash and monitor its performance occasionally. The advanced ATS uses the pairs (spread) trading approach to maximize the efficiency of the portfolio and deliver excellent results.

How to use AI trading bots

Incorporating any automated system can be a challenge for beginners. Many contemporary digital instruments require users to have some technical know-how on top of the necessary knowledge to create and deploy a functional investment robot. Despite the difficulties, this kind of advanced software for investors is, arguably, the most important thing to master for a retail trader in the crypto market.

With the current vector and pace of the development of the industry, we are headed into a heavily digitalized future where systems trained with human-generated data are a necessity, not a choice. Being among early adopters means that you can learn the expanding arsenal of tools offered by these sophisticated systems working without too much human intervention as it is being developed allowing you to stay ahead of the curve.

Let’s talk about some important tips for beginner AI trading strategies:

• Be mindful of personal goals and circumstances. It is important to not rely on tools like the ones we are discussing in this very article too much. You still must determine your overall objectives, risk style, and overall goals for investing money in crypto. Short-term and long-term strategies tend to differ in many aspects requiring users to pick different position sizes and delayed orders.
• Customize the parameters. We recommend you watch AI trading bot tutorials from companies that you plan to work with. For example, the WunderTrading platform has an informative video tutorial on how to set up AI bots. It is important to make sure that the the operational routines of robots align with your risk style and profitability targets.
• Never forget to backtest. Finding the optimal configuration for something that you don’t have any prior experience with can be difficult even for seasoned veterans. Beginners should be ready to spend a lot of time on iterating and searching for the right combination of parameters. Backtesting features on the WunderTrading website will help in this endeavor.
• Don’t leave your bots alone. Some people think that autonomous software programs can magically avoid losses during volatile periods in the market. While some of these newly conceived software agents have some adaptive capabilities, none of the currently existing products can act well during times when prices move chaotically.  Real-time market data can be extremely useful, but right now we don’t have sufficiently trained ATS to adapt to high volatility.
• Risk management is critical. All automation platforms claim that their systems already have the necessary risk management features in place to prevent unexpected losses. However, you should remember that choosing the right risk tolerance level and adjusting position sizing parameters are still your responsibilities. Do not forget about the importance of proper risk management.
• Stay disciplined. Investor psychology is hugely important in a speculative market like crypto. Using these advanced instruments is preparing for the long game. You should not expect exorbitant returns after a week of running it. Relatively small, consistent profits will slowly lead you to a better position. You just have to be patient, adjust bot parameters based on its performance, and stay calm.

Beginner's guide to AI trading bots

Utilizing the right strategy is crucial for the success of crypto investments. Contemporary programs designed to interact with all sorts of financial instruments autonomously afford many opportunities to enhance any approach to investing in the cryptocurrency market.

Below are some methods of investing that can utilize modern artificial intelligence analytical and trading systems:

• Portfolio optimization. With over 5000 different tokens listed on hundreds of centralized and decentralized exchanges, optimizing a diversified portfolio can feel like a nightmare. Machine learning is capable of crunching unimaginable volumes of information to correctly score different investments and find a composition of assets to maximize risks and mitigate potential losses.
• Event-based trading. Advanced natural language processing algorithms are designed to comprehend textual data from news stories, viral social media posts, and corporate reports. While not perfect, these systems still can deliver good performance by summarizing the market sentiment, providing valuable insights, and giving you the necessary context to make informed financial decisions.
• Quantitative analysis. Approaches like statistical arbitrage and HFT rely on correctly analyzed market data. Machine learning cryptocurrency trading systems can easily power through tons of information to find good opportunities for a trade. The WunderTrading platform utilizes this feature of ML systems to make its AI-assisted statistical arbitrage system perform well under different market circumstances.
• Arbitrage trading. A well-trained system will be way better at recognizing patterns and comparing data from different sources in real-time than human traders or other ATS. This capability is extremely useful for arbitrage strategies that rely on quick identification of discrepancies in prices on certain asset pairs or exchanges. Several automation providers are already experimenting with such robots.

Novice retail traders will benefit from using sophisticated, novel software tools for any of these investment approaches. However, setting up and configuring an automated trading bot powered by a trained software agent can be difficult. Let’s talk about the easiest way of launching an AI crypto trading bot on the WunderTrading platform.

AI trading bot setup guide

This feature on the WunderTrading platform is a convenient investment tool that barely needs any initial tinkering with settings. You still must adjust risk management parameters (position sizing and delayed orders), but it works autonomously from the moment you launch it. Adjusting the ATS is required only if the performance seems underwhelming which may happen under unexpected market conditions or when working with digital assets like low liquidity tokens.

Here’s a step-by-step AI trading bot setup:

1. Go to the official WunderTrading website and sign up.
2. New users will be immediately prompted to connect to a centralized exchange account.
3. Follow the instructions on the WunderTrading platform and your CEX platform to connect an account.
4. Go to the Dashboard on the WunderTrading website and look for “AI BOT”.
5. Adjust the parameters of the bot as you see fit and choose your CEX account for trading.
6. Launch the bot and start monitoring its performance in “My Analytics”.

Note that you should keep an eye on any investment management program. The 2.0 version of WunderTrading’s self-sufficient arbitrage robot seems to be quite stable, but machine learning can produce strange, unexplainable results referred to as hallucinations. Make sure that the bot performs well and do not allow it to manage all assets in your portfolio.

The WunderTrading platform has everything you need to regularly backtest and evaluate deployed ATS for fine-tuning. Make sure to use all the tools and products available on the platform to diversify investments. There is a potential to make your portfolio more resilient to volatility and uncertainty. Autonomous programs can and should be used alongside other valuable instruments like copy trading, DCA buying, and staking.

Should beginners use these advanced systems?

Artificial intelligence looks like a game changer for newcomers and some veterans of the industry. We may never interact with financial markets like we used to. Humans like convenience and simplicity. We are lazy and often lack initiative. Software helpers and assistants are excellent for all of us! In theory, ATS assisted by fully autonomous software should solve this issue and help us make smarter investments.

At the same time, beginners without any prior exposure to the crypto market may struggle to find appropriate asset acquisition strategies or even pick assets to trade. We believe that smart machines capable of human thought are a great way for inexperienced traders to make their first steps while avoiding pitfalls so commonly encountered by people who start working with Bitcoin and Ethereum without any knowledge.

We also mentioned the fact that this technology in the fintech industry is experiencing an era of rapid development and adoption. People who “catch” the wave right now and ride it to the moment when these technologies are perfected will have the advantage of the first move. People with experience of using and fine-tuning advanced software agents will enjoy better returns.

Patient and smart beginners are in a great position to capitalize on the expansion and improvement of trading tools enhanced by the advancements in this industry. If you have funds to invest and want to explore many exciting opportunities in the market for digital assets, using a variety of super-advanced robots is an excellent decision.