Some of the finest and most efficient strategies are designed for the most popular charting tool out there — TradingView. It is a powerful technological platform allowing millions of retail traders from all across the globe to use highly sophisticated analytical systems and make profits consistently. A TradingView automated trading bot can be as risky or as safe as you want it to be while delivering impressive results in the long run.
WunderTrading is integrated with TradingView and can use its alerts to trigger bots that can be further adjusted and customized according to your risk management style and investment preferences. However, it is important to use appropriate technical indicators and their combinations to achieve consistency. Algorithmic trading can be outstandingly profitable if you understand its limitations.
The Benefits of Integrating Crypto Bots with Technical Indicators
What is a technical indicator? It is an instrument that uses several sources of data like price action, liquidity changes, volumes, and more to identify patterns in the behavior of the market. Generally speaking, there are four main types of indicators:
- Trend indicators. These identify current price directions and help you assess the strength of any given strength by showing you whether the price vector fortifies or weakens. Most commonly used indicators from this category are Moving Average (MA), Parabolic Stop and Reverse (SAR), and Ichimoku Cloud. The latter is quite complicated but provides context to many price action changes in the market.
- Volume indicators. The number of orders executed at any given moment is a huge factor that helps retail traders confirm or disprove their theories about the current direction of the market. For example, a quick spike on the chart with a relatively small number of trades suggests that it is a deviation that will be inevitably corrected later on. On Balance Volume (OBV), Accumulation/Distribution Indicator (ADI), and Money Flow Index (MFI) are quite popular.
- Volatility indicators. These help you determine the strength of implied and actual volatility by analyzing price action amplitudes and trading volumes. Many experts believe that inexperienced retail traders should avoid trading during periods of high volatility while some day traders thrive in chaotic environments when price action is unpredictable. Bollinger Bands (BB), Donchian Channel, and Average True Range (ATR) are excellent tools to analyze and predict volatility.
- Momentum. Among TradingView indicators, some of the most commonly used tools are those that analyze the force and speed of price action to determine when an asset is oversold or overbought within a certain time frame. Relative Strength Index (RSI), Moving Average Convergence/Divergence (MACD), and Stochastic Oscillator are great at providing context to any sudden change in price. These are often used to predict potential reversals and retracements.
Some of these tools have been around for many decades while others entered the market relatively recently. Unique novel tools also exist. For example, Fear and Greed Index for crypto or Hash Ribbons for Bitcoin are highly specialized instruments designed to work in the cryptocurrency market by providing the much needed context to price action dynamics in the relatively young industry.
These indicators make improved trading strategies which can reach incredible levels of sophistication with the ability to combine them to produce alerts that are confirmed multiple times. It is exactly what TradingView excels at. The platform has a thriving community of enthusiasts, experts, and experienced traders who build new systems which are then tested by other users. Some of these systems consist of dozens of indicators allowing for a relatively accurate market analysis.
People who place trades using only their intuition and experience exist, but the vast majority of successful professionals who survive in the market usually prefer using various analytical instruments to make optimized trading decisions and achieve consistency.
Since any strategy can be enhanced with these tools, it is a given that any automated trading system will benefit from crypto bot integration with technical indicators deployed on the TradingView platform. While using bots without any direction can be quite dangerous even if you employ as many risk reduction measures as possible, when a retail trader with a plan uses automation, it elevates their strategy to the next level.
Exploring Different Types of Crypto Bots Available for Integration
A bot is a relatively simple concept: a script executed on the automation platform is triggered by an alert (manual or automated) and places an order on the exchange of your choice. While the script itself is not complicated without adding various adjustments and limitations, it can be triggered by a sophisticated technical analysis strategy to deliver excellent results.
In some cases, it is possible that bots are completely defined by the strategy that powers them. Since technical indicators usually form the basis of any automated strategy deployed on the TradingView platform, bots are often named after the type of indicator used to trigger them.
Here are some types of bots that you may find interesting when contemplating how to integrate a promising technical analysis indicator in your trading routines:
- Arbitrage bots. Arbitrage is a straightforward approach to trading assets that have different prices depending on the region or platform. Cryptocurrencies are traded in all parts of the world and on hundreds of exchanges. Multiple indicators tracking prices on several trading platforms simultaneously can be used to make this method more profitable and consistent.
- Market-making bots. While these are often employed by financial institutions and exchanges to drive up activity on certain assets, many retail traders engage in market-making for their own purposes. A strategy powered by trend or momentum indicators can help you identify when the time is perfect to launch such bots.
- Trend-following bots are quite straightforward. They trade along a well-established trend to ensure that small profits are achieved consistently. DCA and GRID bots can be turned into trend-following systems by simply using a technical analysis strategy that triggers them only when a very strong price vector forms in the market.
- AI-driven bots. These novel automated trading systems are assisted by an expert AI to automatically adjust risk levels and other parameters of any given market position. However, they also need triggers and direction which are ultimately produced by indicators. The best thing about these bots is that you can use any strategy and still benefit from automatic adjustments suggested by AI.
Understanding the Role of Technical Indicators in Crypto Trading
One of the most prominent features of the cryptocurrency market is its volatility which is, in part, caused by the speculative nature of all traded assets. Fundamental analysis is rarely applicable in this industry. Technical analysis is the only way to make predictions about the current market situation making it quite important to learn indicators and how to use them.
Regardless of which cryptocurrency trading platform you are using, there is no running away from using various indicators. You cannot guess a way to success. You need to have some ways to predict the behavior or the market even if the success rate leaves much to be desired.
Here are some of the most consistent and popular technical indicators widely used in the crypto market by experienced retail traders:
- Moving Averages (MA) are very helpful when you need to get a better understanding of the current direction of the market. The indicator uses a range of prices and creates a smooth curved line that follows the price. While some strategies employ only one MA to indicate when a trend strengthens, the common approach is to use three such lines with different ranges (usually, a short, medium, and long). When these lines diverge, the trend is getting stronger. When they converge, a potential reversal may happen quite soon. It is the idea behind MACD (Moving Average Convergence/Divergence).
- Relative Strength Index (RSI) is one of the most popular momentum indicators. People love it for clarity and simplicity. The indicator shows when an asset is oversold or overbought. It is an oscillator with a single line that moves within a 0 — 100 range. The commonly used strategy is to wait when the line starts approaching the upper or lower limit and place an order in the opposite direction to benefit from a price retracement or trend reversal. You can adjust sensitivity by moving the threshold for alerts. For example, highly sensitive alert will be triggered to signal “BUY” when the indicator moves close to 40 —35. A less sensitive alert will be triggered at 30 — 25.
- Bollinger Bands (BB) is a great example of a reliable volatility indicator. It shows a range within which prices normally move. Any outliers or huge bulges should be considered anomalies or price deviations which should be corrected by the market. It can also predict when volatility is too high to trade. Depending on the automated trading system that you are using, Bollinger Bands can be game-changing or ignored completely.
Step-by-Step Guide to Integrating Crypto Bots with Technical Indicators on TradingView
Analytical tools can be easily integrated in any automated trading system. All modern automation platforms use them whether you can tinker with bots or use a fully autonomous ready-to-launch system offered by a third-party provider. However, you need to learn more about technical analysis and using bots before running your first ATS.
Selecting a compatible crypto bot platform and connecting it to your TradingView account
There is no denying that the most popular and feature-rich analytical platform out there is TradingView. It has one of the best terminals coupled with an enormous catalog of technical indicators. Unfortunately, not all automation vendors are integrated with the charting website and may not allow you to use complex strategy effortlessly.
Choose an automation vendor that works well with TradingView. For example, WunderTrading can receive alerts directly from the chart with a code inserted in the Pine Editor on TradingView.
Familiarizing yourself with the available technical indicators on TradingView
The platform has hundreds of different indicators. Some of them are staples that you can find everywhere. Others are unique instruments often conceived by prominent community members and theorists. Before using any of them, you should test a strategy and talk to other users who tried using novel strategies.
Learn them, test them, and iterate until you find something that delivers consistent results across thousands of trades. You can do this by simply using the strategy testing feature on the TradingView platform.
Crafting your custom strategy by combining specific indicators and setting appropriate parameters
The iterative approach to testing your strategy is quite important because many retail traders prefer using strategies that have indicators generating signals and indicators that confirm them. Adding more filters (indicators that confirm or negate alerts) reduces the number of alerts but also brings down risk level of any given trade.
All technical indicators can be further adjusted to be more or less sensitive depending on your preferences. Adjusting parameters until you find a combination that works is a tedious process but it must be done if you want to be successful.
Testing and optimizing your strategy through backtesting and paper-trading
Paper-trading is a centuries-old approach to verifying your ideas about the market. As the name suggests, you use pen and paper to write down theoretical positions and observe the market. The modern world offers a wide range of various technological advancements to people who want to practice their craft. Today, the same concept can be used with demo accounts on various trading platforms. For example, Binance calls its paper-trading feature “Mock Trading”.
The idea of testing an idea before using it in the real market is a prominent one within any financial market. Automation makes it possible to use any strategy and check its validity against the market history. The feature is called “Backtesting” on WunderTrading and many other automation websites.
Another approach to testing a strategy is deploying your integrated crypto bot on live markets and monitoring its performance while limiting position sizes. It is a good way of testing the waters before committing to a new strategy that you are unsure of.
Critical Factors to Consider when Integrating Crypto Bots with Technical Indicators
As in case with any other form of investment, using automation and technical analysis strategies should be approached from the risk management angle. There are many important factors to account for when it comes to using any technical indicator or a new bot system.
Here are some of them:
- Data accuracy & reliability. The source of information that your technical analysis use is quite important. It is the main reason why real-time data feeds received directly from the actual source where market activity takes place are so important. The TradingView platform allows you to choose any source that corresponds with your trading system. For example, if you trade on OKX, you can choose it as the main provider of data for the price chart.
- API compatibility. Some automation vendors are incompatible with TradingView. They can also have a limited selection of centralized exchanges. The speed and efficiency of automated trading systems reached their peak in the modern times thanks to Application Programming Interface functionality used across all relevant financial platforms. Choose automation vendors compatible with as many APIs as possible.
- Technological limitations. Experienced retail traders know that customization options provide the much needed flexibility to investors who want to work in the crypto market. The reason so many crypto enthusiasts are eager to use the TradingView platform is because it is the most technologically advanced charting and analytical tool. You should be using the best tools that won’t put any technological restraints on your trading system.
Unleashing the Full Potential of Crypto Trading with Integrated Bots and Technical Indicators on TradingView
Taking everything said before into consideration, we can deduce that crypto bot integration benefits contemporary retail traders who use sophisticated technical analysis strategies, test them vigorously, and employ the best automation vendors out there. Since the highest level of sophistication, in terms of the diversity of technical indicators and features, is achieved only by working on the TradingView platform, only those automation providers that can seamlessly connect to it lead the market.
The goal of any automated trading system is maximizing profitability in the long run which can be done by employing consistent strategies. However, improved trading results may manifest themselves only over a long period which is the reason why you need to test your ideas and systems thoroughly. Good crypto trading signals make bots perform at their best.
Even with the best bots, most consistent strategies, and large portfolio, staying ahead in the market is a demanding job for any retail trader. You should never stop iterating, testing, and launching new bots to ensure that you never lag behind the competition.