How to set up and use a cryptocurrency robot
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You can use a cryptocurrency robot to make trades automatically based on your favourite trading strategy. You can often sign up and use a bot straight away, but some require a little configuration before you start. This beginner-friendly guide takes you through how to set up your own bot.
What is a cryptocurrency robot?
It’s a piece of software that automatically trades the crypto market on your behalf. Crypto robots are usually pre-programmed to carry out specific functions when certain conditions are met, such as to place an order to buy Bitcoin when the price hits $30,000.
Other types of bots use machine learning or artificial intelligence to ‘predict’ what the price of a coin will do. These AI bots can quickly ‘read’ previous price information before making a decision on when to buy or sell.
Lots of traders use bots in addition to manual trading strategies. It is possible to buy automated trading software from online vendors, get free robots, or design and develop your own. They can also be used via social trading networks.
How to set up a crypto trading robot
Each type of robot is set up differently and may require different skills in order to get it to work. For example, if you buy a bot online, you just have to connect it to your exchange or broker platform. If you design your own, then you may need to write some computer code before it works properly.
It’s more common to buy a robot online or to subscribe to an automated service. Here’s a quick guide that explains how to set up a bot you’ve acquired online.
- Download. You can either purchase a bot, or get one for free. Whichever option you go with, you’ll most likely need to download it onto your computer. This is simple and you can follow the instructions from the developer. Some bots operate in the cloud and don’t need to be downloaded, in which case you can skip to the next step.
- Connect to exchange. To connect a bot to an exchange you will require certain information. You’ll need both an API key and an API secret key. You can get these from your exchange account. You then need to go into the settings of your bot, enter your exchange name, and details of both keys.
- Connect to a broker. The process to connect a bot to a broker platform is similar to that of an exchange. Brokers use different platforms so the method can be different, however you’ll still mostly likely need the API keys. Another option is to use a trading platform such as MT4, which has bots pre-installed.
- Configure settings. It’s important to make sure that the settings of your robot are working properly and that they match how you want the crypto bot to operate. That means adjusting the risk tolerance, and how aggressive you want your limit orders to be. All this is normally pre-installed, but it’s a good idea to check them.
- Start live trading. Most bots will start live trading as soon as you give them permission to do so. It is important that you make sure it’s working and set up correctly before you start using it. You should also make sure you regularly check up on your bot and make sure it’s operating as expected.
If you opt to design your own bot, the above process can be followed to set it up. However, you need to use a programming language to code it, which requires fairly advanced technical knowledge. If this is something you are unfamiliar with, there are many services online that allow you to design and create your own bot on easy to use platforms.
How to use a crypto bot
Cryptocurrency trading robots work on autopilot so there’s not a great deal of work involved when using one. The process is simple; you connect it to your trading platform, set it up, and the software takes care of the rest. While this is straightforward, to get the greatest benefit from a bot there is some additional work to be done.
Once your bot is up and running you should regularly update your settings and keep a close eye on its performance. One of the most important settings to adjust is risk. Keeping risk low is an easy way to create a safe crypto trading bot strategy.
You should also keep track of the robot’s record. In plain terms, you need to know if it’s making money. If your bot is not performing well, you may want to consider lowering your risk until it starts showing signs of a recovery. While you can change lots of settings, a key aspect to getting your bot to work effectively is selecting the best exchange or platform.
What should I do now?
You may want to start using a bot now that you know how to set one up and use it. There are lots of different bots available and we recommend you take the time to research the market and pick one to fit your needs. Here on Invezz we have a dedicated cryptocurrency section where you can learn more about crypto and find lots of independent robot reviews.
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