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Are Crypto Trading Bots Worth It? (Pros and Cons)

Are Crypto Trading Bots Worth It? (Pros and Cons)

When trading crypto, time is of the essence. Conditions change quickly in the crypto markets. Creating, implementing, and improving your crypto trading strategies can be difficult. You may end up losing out on many profitable opportunities simply because you can’t do things fast enough. 

 

Imagine receiving custom trade alerts on massive trading volume spikes due to news. If this news breaks while you're sleeping or away from your phone or computer, you might miss your chance in the 24/7 crypto trading world.

This is where crypto trading bots can give you a substantial competitive advantage. By leveraging their speed, accuracy, and advanced features you can make sure your hard work pays off.

 

In this article, we’ll guide you through the pros and cons of crypto auto-trading and help you see if bots are the right tools to help you level up your crypto trading game.

What Is a Crypto Trading Bot?

A crypto trading bot is a piece of software that trades cryptocurrencies on your behalf. Bots connect to your crypto exchange and trade following your instructions. 

There are many types of bots, each suited to a specific trading strategy or style (e.g., DCA and grid trading bots). There are also complex algorithmic crypto trading bots that can perform highly sophisticated data processing to execute even your most complex strategies.

Why Do People Use Crypto Trading Bots?

Bots are widely used in the traditional markets. In fact, estimates suggest that ~70% of trading volume in U.S. capital markets is algorithmic

 

If used correctly, bots can significantly improve your trading speed and performance. Why? Because they spare you from much of the manual work associated with trading and allow you to focus on what really matters — perfecting your crypto trading strategy.

Is Bot Trading Profitable?

It’s no coincidence that top trading firms rely heavily on automated trading. Bots can give traders a large competitive edge over those who trade manually. In markets like the stock market or the crypto market, speed and flexibility are everything. If you as a trader can make more accurate trades faster than everyone else, you will be the one to reap the highest rewards. 

This is why automated crypto trading can be highly profitable if done correctly. 

 

Put simply, if you’ve discovered a profitable trading strategy, automation has the chance to drastically increase your winnings simply by virtue of the speed of trading bots.

 

Note: Keep in mind that the opposite is also true: If your strategy doesn’t work, bot trading may make things worse. You can make sure you have the best shot at success by validating your trading strategies before you start trading, using a backtester

What Are the Pros of Crypto Trading Bots?

Whether you’re a seasoned trader or just starting out, automating parts of your trading process can benefit you immensely. 

 

From freeing up your time to work on refining your trading strategies to making sure you don’t succumb to emotions when making trades, here are some of the most notable pros of using crypto trading bots:

24/7 Trading

Crypto doesn’t sleep, but you do. Your bots, however, don’t. They can keep on trading and executing your vision with discipline and precision, long after you’ve called it a day. 

Speed

Crypto trading bots can place a trade and cash out in the time it takes you to blink. HFT (High Frequency Trading) is one of the best parts of using bots. Crypto bots let you make thousands of trades a day. So long as you’ve made sure to stack the odds in your favor with a well-devised strategy, you can make good, consistent profits. 

Consistency

A bot will never change its mind. It will never get emotional, or deviate from your planned strategy. Bots are reliable soldiers, ready to work for you tirelessly, day and night, never missing a trade.

Efficiency

Using crypto bots, you can trade across multiple platforms and dozens of tokens simultaneously. Now imagine having to do that all on your own. It would be nearly impossible and the chances of making a mistake would be substantial. 

Backtesting

Your trading strategy is your most important asset when it comes to crypto trading. Some bots, like the ones offered by Dash 2 Trade, come with a powerful tool called a backtester. It can help you test your strategies safely, using real, historical market data. 

Discipline

You’re only human. People can get emotional, distracted, and confused. This can affect how they trade and lead them to make avoidable mistakes. Crypto bots, on the other hand, don’t make mistakes. They do exactly what you tell them to, even when you’re not watching. 

What Are the Cons of Crypto Trading Bots?

Seeing the allure of trading algorithmically, with a crypto bot, is simple. However, bots can sometimes become difficult to handle. 

 

Don’t worry though, as these difficulties are easily resolved with the proper tools and the right approach.

Setup

Bot trading can sometimes become highly involved but it’s generally only as complicated as you make it. You can start small and grow your skills over time. Simple automation like DCA (Dollar Cost Averaging) can be a fantastic stepping stone to more powerful trading bots. 

Strategy Limitations

A bot will follow your instructions to the letter. This means that if your trading strategy is bad, your bot will not perform well. It may be difficult to find the right approach at first but there are tools like backtesters as well as vast collections of educational resources to tap into. Our advice? Start simple and slowly add more complexity to your automated trading. 

Market Volatility

The bot you choose and the strategies you feed it will determine its ability to gracefully handle big changes in market volatility. Simple configurations will naturally have limited power to navigate unpredictable market conditions, while more sophisticated algorithms may even find ways to profit from them.

Over-reliance

There is such a thing as too much automation. Overusing bots can leave you exposed to certain risks (e.g., overfitting your strategies, detachment from market dynamics) as well as keep you from realizing profits that can only be made with manual trading. Over-reliance on bots can lead to complacency, causing traders to miss critical market shifts and potential opportunities that require active engagement and human intuition.

Bugs

Software is predictable and disciplined until a bug appears, making it act in unpredictable ways. Always verify the stability and security of any crypto bot you consider using before you give it access to your funds.

FYI: Dash 2 Trade takes software stability very seriously, performing rigorous testing and monitoring every product for potential issues. We include built-in fail-safes to protect our users. 

Security Concerns

Using bots is relatively safe if made by a trustworthy company or developer and if you’ve taken the necessary precautions when setting them up. Still, there are risks of hacks and scams. Be careful and do your research before allowing any crypto trading bot to access your funds.

Costs

Sometimes, automated trading, especially HFT can incur lots of extra costs, like trading fees. Not only that but access to the bots themselves can often put a sizable dent in your trading budget. 

Verdict: Is a Trading Bot Worth It for Crypto?

In short, it depends on what you are trying to accomplish. Anyone can benefit from a simple DCA bot for example. More complex bots are worth using if you have the skills, knowledge, and patience to make them work for you. There is a slight learning curve to get over when you’re first getting started but it’s nothing you can’t conquer in a few hours of experimentation and practice. 

That being said, if you are a complete beginner, you will be better off learning the basics of crypto trading before trying your hand at automation.

Why You Should Choose Dash 2 Trade’s Crypto Bots

Dash 2 Trade offers fast, easy-to-use, and ultra-customizable crypto auto-trading solutions. 

 

Our bots are built and tested by quantitative traders with decades of traditional financial market experience. They require no coding skills to set up whatsoever and are a pleasure to use. 

 

Of course, as we mentioned you also need a top-notch backtester to verify that your strategy works. We’ve built one of the fastest backtesting engines on the market. It’s completely no-code and comes packaged with all auto-trading access tiers. 

 

Check out our subscriptions and pricing page to learn more and join our Discord community to stay up to date on all things Dash 2 Trade! 

Built for the future.