How to create a safe crypto trading bot strategy 

Making a profit from your crypto bot is important, but it's even more critical to make sure it doesn't lose money. Use this guide to learn how to create a safe crypto trading bot strategy.
Updated: Aug 9, 2022

There are lots of strategies you can use with crypto bot trading. You can take a high risk approach or be more conservative. In this beginner-friendly guide, we explain how you can create a safe strategy that can cope with even the most volatile crypto market conditions.

What is a crypto trading bot?

Crypto bots are automated services that buy and sell coins around the clock. They usually use software which can be downloaded to your computer or operate in the cloud. The software makes trading decisions, places trades for you, and carries out other functions automatically. 

How to create a safe crypto robot trading strategy

There are a few different ways to go about setting up a strategy that minimises your risk. The most important thing is to ensure that crypto bots are legal where you live and then to make sure you sign up for a genuine, reliable platform.

It’s often safest to use a few different autotrading platforms to spread your money and your risk around. That way you can create different strategies and open up a few different avenues to make money that aren’t all reliant on the same factors. That way, the failure of one trade or strategy won’t harm you too much.

However, using multiple platforms can make managing your money more complicated. If you would prefer to stick to one crypto bot, then it’s best to set up a strategy with a low risk tolerance so that the bot only picks out the safest trades, doesn’t use leverage, and has strict stop-loss orders.

How to set up a safe crypto automated trading strategy: a step-by-step guide

You can set up a safe trading strategy very quickly and get the benefits from a crypto bot while minimising your risk as well. Here is a short guide that explains how to set up a safe strategy.

  1. Choose the type of bot to use. The safest way to use bots is picking ones that offer you lots of control over your risk and allow you to set up a system with a low level of risk tolerance. It’s a good idea to select a few options so that you can spread your risk around. You may want to consider trend trading bots and DCA bots, as these both take a longer term view of the markets. 
  2. Select your robots. Once you’ve decided on the types of bot you want to use, spend some time researching the platforms individually to make sure they can be trusted. Using online reviews is a useful tool when it comes to searching for profitable bots, and you can take advantage of demo accounts to try before you buy.
  3. Allocate your funds. The safest option is to spread your capital across a few different bots. This is generally better than putting all of your eggs in one basket, although it depends on whether you are confident managing a few different platforms at the same time. Multiple bots are better able to withstand price fluctuations by utilising different strategies. If one bot is performing poorly, others can make up for it.  
  4. Connect to an exchange or broker. When you have signed up and put some money into the bot, you need to connect it to a broker or exchange platform. You can normally set up a crypto bot through an API. You can use crypto bots on popular trading platforms like MT4 as well. 
  5. Set up your robot.  Most bots require some configuration prior to making them live. The setup process is an important part of creating a safe strategy and you need to pay close attention to the risk parameters you set. Once you’re happy with the set up, it’s time to make your bots live. 
  6. Regular maintenance. Bots are often sold as ‘set and forget’ tools, but to get the best use you will need to perform regular checks. It’s recommended that you regularly monitor how well your bots are performing and make any necessary adjustments as you see fit.

If you follow the steps above you’ll be able to create a safe crypto trading bot strategy. There are a few other factors you should consider when making your strategy. For instance, the cryptocurrency market is filled with lots of unscrupulous vendors selling scam robots, so make sure you spend the time looking for legit platforms before you start.

What should I do now?

Now that you know how to create a safe crypto trading bot you may want to start automated trading. There are lots of options you have but it’s vitally important you find trustworthy software. Here on Invezz we have lots of independent reviews where you can find detailed information on a wide range of crypto bots to help you get started.

Our editors fact-check all content to ensure compliance with our strict editorial policy. The information in this article is supported by the following reliable sources.

Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >

Prash Raval
Financial Writer
When not researching stocks or trading, Prash can be found either on the golf course, walking his dog or teaching his son how to kick a… read more.