Modern trading bots for crypto are excellent at streamlining the trading process and pushing well-performing technical analysis strategies to their limit, but they do lack some important qualities that expert retail traders often have. Namely, intuition and adaptability. However, trading automation provides greater efficiency and consistency compared to manual traders, who are limited by emotional biases and require constant oversight.
It is possible that these issues will be worked out with the introduction of advanced machine learning artificial intelligence products in the future. Right now, human traders are still capable of outperforming automated trading system in favorable circumstances. Nevertheless, trading automation can significantly reduce or even eliminate the need for manual trading, increasing efficiency and saving time for traders.
Introduction to Automated Crypto Trading
Automated crypto trading, often referred to as algorithmic trading, is revolutionizing the way traders approach the cryptocurrency market. By leveraging computer programs known as crypto trading bots, traders can execute trades based on predefined trading strategies without the need for constant manual intervention. These bots are designed to analyze real-time market data, identify emerging trends, and execute trades at optimal moments—often much faster and more efficiently than human traders could manage.
One of the key advantages of automated trading is its ability to operate 24/7, taking advantage of opportunities in the highly dynamic crypto trading environment, even while you sleep. This not only helps eliminate emotional biases that can cloud judgment but also allows traders to optimize trading strategies for better consistency and performance. As cryptocurrency trading continues to grow in popularity, automated crypto trading has become an essential tool for both experienced traders and those new to the market, enabling them to execute trades with precision and confidence.
Understanding Crypto Trading Bots
Crypto trading bots are automated software programs specifically designed to execute trades on behalf of users, following a set of predefined rules and trading strategies. These bots utilize advanced algorithms and, increasingly, machine learning techniques to analyze vast amounts of market data, spot patterns, and predict future price movements.
What sets crypto trading bots apart is their flexibility—they can be tailored to implement a wide range of trading strategies, from dollar cost averaging (DCA) and grid trading to sophisticated market making tactics. For example, a grid trading bot can automatically place buy and sell orders at preset intervals, capitalizing on market volatility, while a DCA bot steadily accumulates assets over time to reduce the impact of price fluctuations.
Another major benefit is the ability to manage multiple trading pairs across various exchanges simultaneously, allowing users to diversify their portfolios and maximize opportunities. By automating trades, these bots help traders reduce emotional decision-making, optimize their trading strategies, and potentially increase profits, all while minimizing the time and effort required for active trading.
The Importance of Choosing the Right Cryptocurrency for Crypto Trading Bots
Algorithmic trading strategies have been around for a long while. They are often employed by exchanges and financial institutions for very specific purposes such as market making or portfolio balancing, and are widely used in financial markets. However, there are many other ways to utilize automation to make money:
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Statistical arbitrage. This approach has proven many times that creating a safe and balanced strategy is possible if you use the power of statistics and mathematics. Usually, such systems work with hundreds of different financial instruments and form a massive portfolio that must be managed by dozens of retail traders working together. Automated trading software reduces the number of employees needed to make the system operate as intended or even completely remove human traders from the equation.
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Market manipulation. Huge financial institutions and wealthy traders can affect the market dramatically by pushing prices and controlling the liquidity with massive trades. Crypto trading bots can place orders automatically following the instructions from their users. When there is enough capital at play, a single financier operating multiple bots can sway the market to their advantage while precisely forecasting how the market will react.
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Asset acquisition. Systems like distributed cost average and, more recently, GRID can be used to quickly buy digital assets at a lower average price. DCA is the most recommended asset purchasing method within the crypto community. While it can be done manually, automation makes it more efficient and allows users to build up wealth quicker.
In general, automated crypto trading is good at working with various systems and algorithms that are based on technical analysis strategies. For successful automated trading, it is crucial to have a solid trading strategy that ensures consistency and reliability. At the same time, they are hard to use for assets that have complexity. Cryptocurrencies are relatively simple assets that have a speculative nature. Stocks and bonds can be a little bit trickier since you have to account for economic factors, real investments, brand value, and other things.
Nevertheless, some tokens are more affected by the events in the global economy than others. They are often volatile yet follow some distinct patterns that are often recognized by expert analysts using advanced cryptocurrency market analysis tools offered by platforms like TradingView. These assets are slightly more suitable for automation than their counterparts that have more connections to the fiat economy. Choosing the right crypto trading bot is also essential to align with your trading goals and risk tolerance, ensuring effective and secure automated trading.
Cryptocurrency Market Analysis: What Makes a Coin Suitable for Bots?
Not every cryptocurrency is equally suited for automated trading. For a coin to be ideal for bot trading, it should exhibit high liquidity, significant trading volume, and a healthy degree of market volatility. High liquidity ensures that trades can be executed quickly and at predictable prices, reducing the risk of slippage. Substantial trading volume indicates active market participation, which is crucial for the smooth operation of automated trading strategies.
Market volatility is another key factor—coins that experience frequent price movements provide more opportunities for trading bots to capitalize on short-term trends and fluctuations. However, excessive volatility or low trading volume can expose traders to risks such as price manipulation or illiquid markets, which may hinder the effectiveness of automated crypto trading.
A thorough analysis of the cryptocurrency market, including monitoring market trends, liquidity, and trading volume, is essential for identifying which coins are best suited for automated trading. By focusing on these factors, traders can select assets that align with their automated trading goals and risk tolerance, ensuring a more successful and efficient trading experience.
The Top 5 Cryptocurrencies Ideal for Automated Trading on WunderTrading
From the perspective of a retail trader using automation, top performing cryptocurrencies are those that can be analyzed by a technical analysis strategy well enough to produce a sufficient number of true positives within a single trading session. Automated trading bots can also analyze market trends to identify optimal entry and exit points. Many day traders and people working on shorter time frames often choose automation to trade assets that are volatile to provide as many potential entry points as possible.
Depending on which risk style and delayed orders are used, the ratio of correct predictions to false positives may vary from 50% to 70%. Bots can implement various strategies to suit different trading preferences. Riskier strategies often require a high number of good forecasts while more conservative risk styles may bring money even with a few good predictions.
Since volatility and the tendency for speculation are key aspects of the best cryptocurrencies for automated trading, you cannot really work with stable coins and some other digital assets. It is also quite important for an asset to have high liquidity. Portfolio strategies play a crucial role in automated trading by enabling the creation, automation, and management of diversified investment portfolios. Bots can execute strategies simultaneously to diversify risk and maximize opportunities. With that in mind, let’s talk about the most suitable crypto to trade using bots.
Bitcoin — the king of the hill
$BTC is the biggest crypto in the market. The indicator Bitcoin Dominance, which shows the ratio of $BTC’s market cap to the cumulative cap of 50 most traded tokens, has been hovering above 50% for over six month. It usually bounces between 40% and 50%, but the recent chaos in the industry caused by some legal battles in the US and the collapse of multiple promising DeFi projects catapulted the Bitcoin Dominance to new heights.
Automated Bitcoin Trading can be extremely profitable if you identify temporary patterns within the market. However, it is also important to keep track of the news cycle and adjust your strategy according to the latest trends in the world of crypto. Using a trading bot can help monitor real-time data and adapt your trading approach to changing market conditions.
We strongly recommend against using borrowed funds (leverage) while trading $BTC or any other cryptocurrency. It is much better to work with what you have on the spot market. Thanks to large price movements, you can make money without exposing your portfolio to risks associated with margin trading.
Many retail traders who are in the crypto game for the long term often use Distributed Cost Average (DCA) bots to slowly accumulate a large amount of tokens and wait until they appreciate which is something that will inevitably happen according to many analysts. Automated strategies such as multi-entry orders and trailing stops can further enhance Bitcoin trading efficiency.
Ethereum — market volatility and profitability
$ETH is in a weird spot. Many experts believe that it is a coin with the biggest potential since the Ethereum network is the one hosting many DeFi projects and providing an important technological space for all developers interested in creating blockchain-powered solutions for various sectors of the modern economy.
On the other hand, many DeFi platforms ultimately failed or were put under severe scrutiny for problematic development or other issues. When it comes to Ethereum, automated trading is still the best approach to work with the asset. While its upward trend is reassuring with the asset's quick recovery after the “crypto winter” of 2022, $ETH is locally volatile and provides numerous opportunities to make money within a single trading session. Compared to other trading bots, WunderTrading bots offer superior efficiency and profit potential, making them a preferred choice for automated Ethereum trading.
Ethereum is also highly speculative and many external factors may cause local volatility. It allows traders who use technical analysis strategies based on identifying price retracements and opportunities for swing trades to make multiple traders per day and come out on top.
This digital asset is traded on all major exchanges and different exchanges, ensuring broad accessibility and integration for traders. With the introduction of staking, it became even more attractive to many investors pushing up liquidity and market activity. The most important thing for a retail trader is to choose the right analytical approach. Automating it is not an issue if you use contemporary automation providers such as WunderTrading.
Ripple — unshaken and volatile
$XRP is doing quite well, all things considered. Many experts predicted its soon-to-come collapse due to legal issues and the pressure from the SEC in the US. However, the asset proved to be unsinkable and recovered quite well from its summer dip. Many retail traders enjoy working with this asset as it offers many opportunities to make money even if you don’t have a large capital to work with.
Ripple is traded on a large number of centralized and decentralized trading platform making it one of top performing cryptocurrencies in the market. The only issue is that the token is easily manipulated by huge players creating risks of unpredictable spikes and dips that a technical analysis strategy may not be able to recognize as false positives. Grid bots can help automate buy and sell orders within specific price ranges, making them particularly effective for volatile assets like Ripple.
If you have a consistent technical analysis strategy that works well for Ripple, it is a good idea to automate the trading process. Using xrp trading bots that employ algorithmic approaches such as DCA, grid trading, swing trading, and trend-following strategies can help capitalize on Ripple's volatility. Using conservative automated trading systems may not be as efficient as with some other tokens like Bitcoin or Ethereum. However, one of the latest products from the WunderTrading platform GRID is a great preset solution that may be quite profitable when used on assets like $XRP, especially when executed through an automated trading bot based on tested strategies.
Solana — the youngest and the brightest
$SOL has a very impressive $24 billion market cap and commands a significant share of the crypto market. It was launched in 2020 and offers a whole web3 development space for people interested in building decentralized applications that can be easily integrated with all blockchain technologies. Some believe that Solana is much stronger competitor to Ethereum than Cardano, but only time will tell which will come out on top.
For retail traders, Solana is a good choice since it has high daily trading volume indicating healthy levels of liquidity on all exchanges and volatile enough to generate many market entry points within a single trading day regardless of which technical analysis strategy you employ. $SOL is traded on many centralized exchanges, and its support across multiple cryptocurrency exchanges enables seamless trading and portfolio management on any platform that you prefer.
The future of the token looks bright thanks to its continuous development and some exciting updates that are scheduled for the next several years promising improvements in transaction speed, throughput, and interoperability. The problem is that these are still upcoming changes that are not reflected in the current price.
Many users of automation will recognize the inherent connection between Solana and many other tokens that are issued from the Solana’s technological platform. It can be exploited by clever retail traders using complex trading strategies such as statistical arbitrage. Professional traders also leverage Solana's volatility and advanced automation tools for optimal results.
Cardano — Ethereum’s arch nemesis
$ADA is one of the most volatile top tokens. Its market cap changes regularly based on a variety of factors. The Cardano project has been in development since 2015. It promises a more flexible development environment to creators of decentralized apps. During its launch, it was the biggest Proof-of-Stake network in the market with its developer, who is one of co-founders of Ethereum, seeing the trend way before Buterin started talking about the advantages of PoS.
Cardano has similar advantages and disadvantages as Solana. These two networks are competing for the spot of the Ethereum’s killer. However, both are massively behind $ETH in terms of market activity, trading volumes, and price.
One of the reasons so many retail traders are interested in $ADA is that it has a tremendous potential to change the landscape of the crypto industry if it reaches the heights promised by its roadmap. Right now, many investors using automation are trading $ADA using all sorts of analytical approaches and risk styles. Portfolio rebalancing can also help maintain target allocations and manage risk when trading Cardano, supporting a more disciplined and diversified investment strategy.
Honorable mentions
While these tokens are the best cryptocurrencies for automated trading, there are other interesting coins that may interest an investor using bots. We strongly recommend checking out Dogecoin, Shiba Inu, Tron, Polygon, PolkaDot, and Litecoin. Bitcoin clones like $LTC can be a good target for DCA and GRID strategies.
Using a crypto trading bot can help automate trading for these alternative assets, making it easier to manage multiple positions efficiently. Cryptocurrency trading bots are especially useful for automating complex strategies across a wide range of coins, reducing emotional trading and operating 24/7.
Some platforms also offer social trading features, allowing users to follow and copy the strategies of successful traders. Additionally, many trading platforms provide an affiliate program, giving users the opportunity to earn rewards by promoting their services.
Crypto Trading Platform Comparison: Why Choose WunderTrading?
With a variety of crypto trading platforms available, selecting the right one can make a significant difference in your trading success. WunderTrading distinguishes itself as one of the best crypto trading platforms by offering a comprehensive suite of advanced trading tools, a user-friendly interface, and robust security measures designed to protect your assets.
WunderTrading provides a range of features tailored to both experienced traders and newcomers, including automated trading bots, real-time trading signals, and powerful portfolio management tools. The platform supports secure API connections, allowing users to safely link their exchange accounts and automate trades across multiple exchanges and trading pairs. Its transparent fee structure and commitment to robust security measures ensure a reliable and trustworthy trading environment.
By choosing WunderTrading, traders can access advanced trading tools to optimize their trading strategies, benefit from automated trading bots that execute trades efficiently, and manage their portfolios with confidence. Whether you’re looking to automate complex trading strategies or simply streamline your trading process, WunderTrading offers the flexibility and security needed to succeed in the ever-evolving world of cryptocurrency trading.
How to make sure that your trading strategies work?
While it seems that automation is a very straightforward concept for any contemporary retail trader, you need to be careful when building your automated trading system. Avoid some pitfalls and make sure that you are doing everything right.
Here are some important tips for a retail trader interested in trading crypto using bots:
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Choose the best automated crypto trading platform. Work with companies that offer a variety of products and flexible payment plans. For example, you may run a variety of different custom bots and preset systems on the WunderTrading platform while choosing any paid plan that suits your needs. Also, consider the trading fees charged by the platform, as these can significantly impact your overall profitability.
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Do not break our risk style rules. It is important to stick to what has worked for your before. You don’t need to increase or decrease the level of risk when trading crypto using bots. Remember that an automated trading system is like you on steroids. It will do what you have been doing but faster, better, and more reliably. Use historical market data to backtest your strategies before live trading to ensure their effectiveness in various market conditions.
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Always limit the amount of funds available to your bots when trading. We strongly recommend limiting a single bot to less than 20% of your portfolio. It is an important safety measure that will protect your capital from risks associated with using automation for cryptocurrencies. Efficient executing trades is also crucial to minimize risk and take advantage of market opportunities.
Using a robust trading terminal can help you manage multiple bots and strategies efficiently, providing advanced tools for order execution, risk management, and monitoring.
The main takeaway
When achieving consistency and good results are the main goal of your investment strategy, using automation is a sound decision. However, you should not only create and appropriately manage an automated trading system but also choose the right assets to work with. Any token from the top 10, in terms of market cap, except stable coins will do nicely.
