What are Trading Bots?

Many people have asked me my opinion about trading bots. I have been researching and using crypto trading bots for many years and have tried many of them. From Cryptohopper to CryptoTrader to Gunbot to Hodlbot to Digiebot, and now all of the new AI bots such as Quopi.AI and the Trading Master, and others that are on the market, I have tried many of them and after using them, I have come to the conclusion that a trading bot can be a very useful tool to have in your crypto portfolio If you know what you are doing. Unfortunately, most people don’t know what they are doing when they decide to get a trading bot and that is where they get into trouble.

Trading bots are software tools that you use to connect to a cryptocurrency exchange and are used to make trades on your behalf. All trading bots work by using a variety of proprietary algorithms and indicators that supposedly work to make successful trades for you. The idea of using a trading bot is simple: A good trading bot will help users make money in the market. For those of you that do not want to waste a lot of time having to learn all the ins and outs of trading cryptos, automated trading bots might be an option. Cryptocurrency trading bots can eliminate things such as bad timing, human error, or making bad emotional decisions. Trading bots can also allow you to execute trades with greater speed and trading bots never sleep, they are working for you 24/7.

Do Trading Bots really work?

Trading bots can be a profitable tool to the investor provided that you have the expertise to configure the bot manually or if the bot has programmed trading rules that you can select and change as conditions in the market change. Using these automated pre-programmed trading algorithms allows the bot to take advantage of the constantly changing trading opportunities to make you profits.

Can a Trading Bot really make me money?

The answer is maybe. Whether you make money or not with a bot depends on several factors. It is possible to make money with a crypto trading bot, but it all depends on the trading bot, what kind of trading strategy you are wanting to use or that the bot uses, how much capital you have for the bot to trade and how much time you are willing to spend configuring and monitoring the bot.

Some bots such as Digiebot use several proprietary algorithms to make their trades based on automated preprogrammed rules that look at the crypto market's constantly changing conditions. Because the market is constantly changing, Digiebot uses many different algorithms or “bots” to decide what and when to make a trade.

Other bots such as Quopi.AI take a different approach and use algorithms to make trades based on a specific strategy of cryptocurrencies in an index. These indexes have certain allocations of cryptos that you choose. Once you choose that index of cryptos, Quopi’s algorithms work to get you towards your target allocation. I actually like the concept of Quopi.AI if you want a totally hands-off approach and I think it is perfect for those who do not want to mess with having to set up a bot even if it's automatic. Think of Quopi.AI as hiring a company like Fidelity to manage your portfolio. They do everything, you sit back and let them manage your funds.

A final thought and caveat about all trading bots. Unless you know the code behind the trading bot, be very careful. Bots can have code written in them that can do all sorts of things from siphoning off funds to false trades to front running. Unless you know how to read the bots's code, you are trusting that the bot is not using any kind of manipulation in its trading algorithms.

You also want to make sure that you have done your due diligence before sending any money to a trading company. Know the history of the Bot, the company, and the people behind it.

Personally, I prefer to only use bots that can be configured so that I allow them to trade using my exchange. I can then control what the bot can do using my API keys so that for example, they can only view, buy and sell but they cannot withdraw my funds.