Well, a bitcoin bot is a tool, that can be used to automate bitcoin trades. These tools come in many different types, but I will demonstrate how effective a bitcoin bot can be for trading. For this blog post, I will be using a very unique bitcoin bot that does everything that you want it to. This bitcoin bot is called Haasbot, which is one of the most advanced bitcoin bots commercially available. But before we go over how I have been using this bitcoin bot recently, we must evaluate the market conditions.
Current Bitcoin Market Conditions
Today is October 3rd, 2014, so the current price of bitcoin has been in the $370’s. When looking at the 4 hour MACD, on bitcoin wisdom, we see that there appears to be a double bottom, which signifies that a trend reversal is coming soon. While this may be the case, it is Friday, which generally means that people will dump coins on the weekends, as people cannot deposit fiat on the weekends. Due to this, I anticipate that the price of bitcoin may try to retest ~$360. So with this in mind, we must set up a bitcoin bot to handle the scenario of a trend reversal and the possibility of a drop to the $360s.
Our Bitcoin Bot Setup for this weekend
So now that we know we need to use some technical analysis indicators for handling a drop to the $360s as well as positive trend reversal, I will go ahead and look through Haasbot’s bitcoin trading indicators. It is clear that a RSI based indicator may not work for my needs, so I have decided that I need an indicator MA based. While using the MACD Histogram may very well be useful, it is also to be noted that almost everyone and their grandmother uses MACD Histogram, so I want my trades to be a little before their trades, as slippage may occur. Because of this I want to use PPO, or Price Percentage Oscillator. PPO works essentially the same as MACD Histogram, but with the difference that it uses percentages, rather than absolute numbers. So given these conditions, I will go ahead and set up my trades to follow the PPO at 30 minutes, which historically does well against historic data.
So now that I have set up haasbot to use the 30 minute PPO, I will go ahead and try to protect my losses against a sudden drop below $360, if somehow the resistance at $360 breaks and then we are heading to a new low. I will use Haasbots price drop safety, which will automatically sell any of my bitcoins, regardless of the 30 minute PPO does. I set the dynamic price drop safety to sell if the price of bitcoin goes below $350, which would definitely be a new low, which is new territory. I feel confident that this set up will trade over the weekend, so we will see how it does. It just goes to show you how useful a bitcoin bot can be, especially when I am away from a computer over the weekend and I want to enjoy my life, while a bitcoin bot handles the dirty business. I will submit a new update on monday, based on how my bitcoin bot trades.