Are Crypto Trading Bots Profitable?

Crypto trading bots profitable

Crypto trading bots are automated robots or software with build-in strategies that trade the markets without human intervention. The market charts are just graphs or candles showing the relationship of price over time. Since the markets operate 24/ 7, the data can overwhelm humans doing traditional trading.

Human emotions, including greed and fear, contribute to the failure of most trading strategies. Crypto bots are not affected by emotions or overwhelmed by market data. So they are the perfect trading tools in the financial markets.

What Makes Crypto Trading Bots Profitable

Here are some characteristics that make Crypto bots profitable trading tools.

  • Powerful in Market Data analysis

Human traders have a specific amount of time they productively process market data before fatigue kicks in. On the other hand, crypto bots can handle any amount of data 24/7 without fatigue and can quickly draw tradable conclusions from the data.

  • Efficient

Every trade requires a strategy that tells you when to enter a trade and when to exit it. Crypto bots are very efficient in following the strategies. Human traders will sometimes hold onto losing trades, hoping they will reverse into profits or hold onto winning, thinking the trends will last forever. 

On the other hand, Bots will enter trades at the right time. They will also exit trades when it’s time to exit, whether the trade is a loss or a win.

  • Emotionless

Fear and greed are the main human emotions that drive the financial markets. Sometimes they push human traders to make bad decisions that cost them. Crypto bots are emotionless; thus, they always execute the right way.

What Lacks In Most Crypto Bots?

Crypto trading bots are perfect for analyzing the technical aspect of the market. But they can’t analyze the fundamental and sentimental aspects of the markets. So they are sometimes lagging.

Elon Musk might say something about Bitcoin causing more people to buy and invest in Bitcoin. This sentimental activity causes volatility and price changes on Bitcoin prices, but Crypto bots won’t consider it.

The Chinese Government banning cryptocurrency was fundamental news that might cause volatilities in the Crypto markets, but the Crypto bots will not consider this. 

Are Crypto Trading Bots Profitable?

Crypto bots can’t give you massive profits from the markets. But they can consistently generate small gains over time. Therefore, they are profitable over time. The win: risk ratio of good Crypto bots is above one. If the Bot has proper risk management, it will come out net positive with time.

However, most Crypto bots are lagging because they don’t take fundamental and sentimental analysis into the markets. So, they might lose some trades when we have news and announcements that affect the market volatility. But in normal markets with no high impact news, the bots have winning trades.

What to Look For in a Profitable Crypto Bot

Now all the Bots in the markets are profitable. Here is what to look for in a profitable Bot.

  • Bots Strategy and Algorithm

The strategy and algorithm the Bot uses. A Crypto bot is as profitable as its trading strategy. Try to look for a Bot with a high winning: loss ratio. You can back test the Bot to see if it’s profitable.

  • Professional experience level of the Developers

The Bot is as good as the person who developed it. Look for Crypto bots from firms that understand crypto markets and have a profitable track record. If the firm has a bad track record, its bots wouldn’t be profitable.