How to Choose the Right Automated Trading Bot

The cryptocurrency market is quite unique in many ways. One of the key differences of this financial market from many others is the prevalence of trading automation. Over 65% of all retail traders were using various forms of trading automation in 2018. Since then, the number has been increasing according to various independent surveys.

Since an efficient contemporary automated trading bot is capable of performing consistently well and does better than an average retail trader, it is not a surprise that both individual and institutional investors are interested in using bots as extensively as possible.

The demand drives up the offer. The current landscape of the trading automation industry is one of saturation and overabundance of choice. Picking the right type of bot is quite challenging.

What is the best bot for cryptocurrency trading?

There are three main types of bots that you can use to trade crypto tokens:

• Bots offered by your CEX platform. Centralized crypto exchanges often have some forms of automation to help users trade faster and more reliably. The issue is that these products are often limited in scope and flexibility, preventing retail traders from building complex automated trading systems or focus on automating every single aspect of their investment activities.
• Bots created on specialized platforms. Automation vendors offer a wide range of features and unique products aimed at both novices and professionals. All of them can connect to many CEX platforms via API and significantly reduce the time spent on placing orders. Since these platforms are designed to automate all sorts of signals and trading strategies, people who are interested in bot trading should use these.
• Desktop or server applications run locally. You can also use programs developed by crypto enthusiasts and various software companies to run bots from your machine. It is the most cumbersome and unreliable way of creating an automated trading system since you will face plenty of technical issues such as unstable connectivity, glitches, and API connection failures.

While all three types of bots can perform well, the current trajectory of the automation industry suggests that only third-party providers dedicating all their resources and efforts to building a perfect product will remain viable in the long term. Don’t worry, you won’t have any issues with selection. With hundreds of providers offering their automation products, you will always find something that suits your preferences and needs.

Choosing a good automation vendor

There are many factors that determine the quality of automation products and your satisfaction with the service. It is hugely important to work with an automation provider that delivers an excellent user experience while allowing you to build highly efficient trading bots.

Here are some important things to look for in a good automation provider:

• Flexibility of the product lineup. Some companies focus too much of a very specific type of bots. You can find platforms that have good social trading services, but do not offer much in terms of bot customization. Others may showcase outstanding presets but lack in the analytics department. You should work with a provider that does everything well.
• Pricing. Competitive prices are quite important for individual investors who may feel the difference of a couple dollars per month. Cutting expenses is a necessary skill to master. Working with providers that do not overcharge for their products is a sure way to long-term success.
• Integrations with other platforms. Choose providers who can work with other platforms without any compatibility issues. For example, one of the best ways of generating trading signals is by having a technical analysis system deployed on TradingView. These signals can be used by bots to initiate their algorithms. Working with a platform that cannot connect to TradingView is a big disadvantage.
• Reliable technology. An automated crypto trading bot that does not work 100% of the time or has recurring technical issues is a faulty tool that will not only work inefficiently but also cause losses. Choose companies that have good customer reviews and partner with service providers like Microsoft Azure or Amazon Web Services.

TOP3 automation vendors to choose in 2024

While many companies offer a good selection of tools, there are some vendors that stand out from the crowd by having unique products or offering an extraordinary level of service to their clients. Below are three companies that you should consider picking as your main provider of trading automation.

3Commas — a good social trading platform

The main focus of this automation vendor is copy trading. You will be able to find a wide range of different ways to evaluate copied traders and search for managers to follow. Other offerings from the company are also quite good and allow you to create well-performing trading bots. However, when it comes to building a unique automated trading bot for cryptocurrency, this company may underdeliver as it somewhat limits users in terms of what they can adjust.

Cryptohopper — reliable and consistent

This automation vendor is often mentioned as one of the best in the industry. The platform offers a rich selection of automation products including some preset solutions that you may find quite interesting. Cryptohopper is a platform that does not shy away from innovating and experimenting with different products to satisfy their customers. Some may find the lack of diversity in the copy trading department disappointing.

WunderTrading — an all-around good choice

This company has some unique offerings like AI-assisted trading bots that run complex statistical arbitrage systems. Other preset solutions include DCA and GRID bots as well as some other interesting solutions. The copy trading section is versatile and diverse. The marketplace features hundreds of retail traders working on Binance, Kraken, Coinbase, and many other exchanges. The pricing at WunderTrading is also quite welcoming. Many newcomers will feel right at home after the initial period of learning how to use risk management techniques and analytical tools available at WunderTrading.