Trading cryptocurrencies have been challenging before. It takes a lot of effort and resources as it requires you to spend a lot of time researching and watching the crypto you’re trading. Thankfully, everything changed when automated crypto became possible.
If you’ve heard of it and planning to use it for your benefit, here’s a short guide to help you through this process:
Automated crypto trading
The process of automated crypto trading is simple. First, you create an account with an AI crypto trading platform. You then select the bot, algorithm, or program to do the trading for you. Next, you’ll need to configure the parameters of the bot you’ve chosen to imitate how you would trade and decide what to do with your account. However, the challenge lies in what automated crypto trading platform where you’ll trade and the bot you’ll get.
Take note that each platform has its unique characteristics. Some might be great for traders who have no idea about presetting a trading bot by providing them with valuable and practical presets. Some might be excellent for having multiple trading bots and experimenting with parameter setups. And others might have excellent crypto rates, which is ideal for those ready to risk what they have in exchange for hefty rewards.
So, before you invest in a platform, be sure to do your due diligence. First, find online reviews on which platform is ideal for you. For example, if you’re a beginner, focus on platforms that provide a lot of flexible presets. On the other hand, if you want to learn about bots, there are platforms for that. These platforms’ strengths lie in providing users with digestible, visual information that helps them understand trading and setting up their automated bots.
Fund an exchange account
Take note that you need an exchange account before you can trade. Typically, automated trading platforms partner with exchange companies. This partnership results in you having an exchange account on this partnership before you can trade on the trading platform you choose.
For those unfamiliar, a crypto exchange company is typically an online marketplace. One difference is that this marketplace allows you to buy cryptocurrency using fiat money you can use to trade later (e.g., USD, EUR). Some exchange companies also allow converting or trading your cryptocurrency to another cryptocurrency. If you’ve traded before, these companies are brokerages.
Note that if you don’t have a crypto wallet yet (the place where you can store your cryptocurrencies, unlike blockchains that are decentralized), you can have a hosted wallet set up in the exchange company of your choice. Another thing to note is that there are three types of crypto wallets: hosted, non-custodial, and hardware. Some organizations may categorize these types differently (i.e., software, hardware, and paper). However, for simplicity’s sake, only focus on hosted wallets from an exchange company.
Thankfully, it’s easy to create an account with these exchange companies. All they require are your name and email address. Once you sign up with them, you’ll need to activate or confirm your account by following the instructions they will send you via email.
Registering on the platform
Registering is a breeze if you have a preferred exchange account by the automated trading platform you choose. Typically, all you need to do is sign up using your email address and create a password. Then, you’ll need to connect your cryptocurrency wallet. Once you’re done, you can proceed with choosing and configuring your bot or algorithm.
The most significant difference between manual and automated trading is the immense power of bots. Unlike humans, bots can scan hundreds of charts and identify all favorable signals daily, which can be impossible for ordinary people to do. And that’s why bots are incredibly advantageous in trading, particularly when trading cryptocurrency, where speed and accuracy are needed to profit.
Note that on some platforms, you may need to choose the bot before connecting your wallet. Anyway, remember that the bot you can use depends on the platform you’ve registered in. So, together with researching platforms, you should also dig up information on the bots or algorithms you can use on those platforms.
Once you select your bot, it’s time to set it up. Again, if you’re entirely new, it’s highly recommended that you use presets. While most presets would likely prevent you from losing money fast, these presets will only give you smaller returns. Instead, consider trading with presets for the time being until you understand how each of its parameters works.
Also, don’t forget that trading bots aren’t free. Some may require a subscription, while others operate on a profit-sharing business model. There are indeed free and open-source bots and algorithms out there. However, remember that not all platforms allow their use. Not to mention that they often require an advanced understanding of algorithms, programming, and trading, which can be a high hurdle for beginners.
Once you go through that, all that’s left is to leave the bot to trade on its own and come back to see if it worked. As a disclaimer, this is a very quick and straightforward guide. However, automated crypto trading has a lot of nuances and complexities you need to understand before you rake in tons of crypto in your wallet.
Reiff, Nathan. “Cryptocurrency Exchange.” Investopedia, July 13, 2022. https://www.investopedia.com/tech/190-cryptocurrency-exchanges-so-how-choose/.
Rosenberg, Eric. “Cryptocurrency Wallet.” The Balance, July 1, 2022. https://www.thebalance.com/what-is-a-cryptocurrency-wallet-5216017.
Tradingbotguru. “What Are Trading Bots and Do They Actually Work?” Medium, January 24, 2019. https://medium.com/@tradingbotguru/what-are-trading-bots-and-do-they-actually-work-9334b47314c3.
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