What is a Bitcoin Bot?
A bitcoin bot is a type of software that will automatically submit, cancel, or analyze a cryptocurreny market. A bitcoin bot will have many different uses, ranging from 24/7 trading to situational trades. Some of these bitcoin bots will trade on technical analysis indicators, which are mathematical algorithms that determine when to buy or sell a cryptocurrency. There are literally hundreds of technical analysis indicators, which are primarily used for stock market trading. While these indicators are useful to stock market trading, they are also very useful for trading profitably with bitcoin. The bitcoin bot we recommend the most is Haasbot Bitcoin Bot, because it is the most customizable of all of the bitcoin bots.
What type of Bitcoin Bot?
Well, there are two different types of bitcoin bots. The first type is an open source bitcoin bot. There are many different types of bitcoin bots and here is a useful resource for open source bitcoin bots. Open source bots like Node Gekko are very useful for beginners, because it allows them to run a bitcoin bot on exchange websites like Bitstamp or BTC-E. This bot also is useful for trading on very basic indicators, like Moving Average Convergence Divergence, Double Exponential Moving Average, and Price Percentage Oscillator. I’d recommend checking out Gekko and run the 4 hour MACD, but each setting must be tweaked for the currency pair. Overall, open source bitcoin bots are useful for beginners and to get an idea for how they work and the usefulness of them.
Now that we have gone over some of the open source bitcoin bot types, we can now move into commercial bitcoin bots. By far the best bitcoin bot overall is Haasbot. Haasbot allows you to basically take control over almost any setting! These settings can be something like changing the MACD settings, using StochRSI, protecting yourself from price drops, etc. It is extremely useful for 24/7 bitcoin trading or even situational day trading. It has over 20 indicators and you can run as many bitcoin bots as you want, if you have the advanced license. Although Haasbot is awesome, it does come at a cost of 0.90 BTC for the advanced license, but I think it is absolutely worth it if you know what you are doing. In order to really get going, it is important to know some technical analysis trading strategies.
Have you used a Bitcoin Bot before?
Using bitcoin bots can be sometimes challenging, depending on the type of bitcoin bot you are trying to use. Understanding how traditional markets work is a pre-requisite for any bitcoin trading, but it is especially important for automating trades, since a bitcoin bot will generally trade off of a technical analysis indicator. It is also important to know what type of market you are, whether it be a bull, bear, or sideways market. There are a lot of great resources for beginners to learn about technical analysis, which are Investopedia and Chart School. If you read about technical analysis indicators and market situations or conditions, you will be on your way to start being a pro at trading bitcoin. Once you get the hang of it, you may be ready for automating some of these trading strategies with a bitcoin bot.
Understanding how a Bitcoin Bot works
Understanding how a bitcoin bot works is a very important step in beginning your hobby with automating your bitcoin trades. That is, of course, that you understand technical analysis as well. Generally a bitcoin bot will consist of trading indicators and different mechanisms that protect your trades. A great example of this is Haasbot, which trades on Indicators, Safeties, and Insurances. Haasbot works by generating a buy or sell signal from a technical analysis indicator and then it checks that against any insurances. Insurances work like special conditions so that a trade will at least cover the trade fees associated with it. Then there are safeties, which are useful for protecting a trade investment so that if the market crashes, it will sell and get you out of the market. This is the basic anatomy of a bitcoin bot.
Should you use a bitcoin bot?
Well, that is entirely up to you, because it is a hobby for us at Bitcoin-Club. We have an understanding of technical analysis as well as an understanding of bitcoin bots, so it is something we enjoy. Using this type of software is not for everyone and bitcoin bots should just be used as tools for automating your own trading strategies.