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Cryptocurrency Trading Bots 101: Passively Grow Your Portfolio

Source: pedrosek (Shutterstock)
The Crypto Battle rages! 

This article is for crypto enthusiasts who already have a portfolio and are looking for the best cryptocurrency trading bot to passively grow their wealth. If you’re new to Crypto, start here.

Bitcoin now or later?

I strongly recommend reading this post to get to grips with crypto trading bots but if you’re keen to just get started with the best bots on the market – Check out Pro Crypto Bots here.

To simply SIT on your crypto portfolio, doing nothing, is foolish.

You want to grow your Cryptocurrency portfolio, check. You want to do this with minimum work – we’re with you there. Ideally, you want to distance yourself from the stress of dips, big and small, in the crypto market.

Trading bots accomplish all this.

Maximize return. Minimize work. This is what bots in the general, technological sense are all about! A crypto trading bot does the same.

free trading bot problems
To stress my point…

If you have a portfolio already (especially if you have a large one), it makes sense to use a crypto trading bot to grow your coins in the background.

There are quite a few free Bitcoin trading bots out there but almost all of these are crap! You need to invest into one of the few trading bots that actually works…

Luckily for you, we’ve been doing a ton of research (and trading) and have a solid trading bot review for you.

If you are interested in growing your cryptocurrency portfolio using an automated crypto trading bot – this post is a great starting point…

To infinity, and beyond.

Principles of the Bots: Compound Interest is the Key to Wealth

Compound interest is a beautiful thing! LIFE-CHANGING. 

If you haven’t played around with it yet, throw some numbers into CGC’s interest calculator and see how long it’ll take to buy that trip around Europe, that Tesla Cybertruck or an isolated island in the Philippines to build your mining farm!

Here’s the first key difference between traders and bots that do the trading for you. Humans are emotional creatures, and those emotions will ruin your ability to make key decisions, exactly when they’re most important – when you should sell and take home profits is when you’ll least want to, and when you’re panicked and want to dump everything – is usually when you should actually be buying. A well programmed algorithm (bot) is a rule-based system that is consistenly profitable over time, and doesn’t have any of those pesky ‘feelings.’

Every profitable trade adds to your trading account balance.

Meaning: your next return will be bigger.

Compound interest, baby!

But wait, won’t the pro (human) trader also throw his wins back into the betting pool?

Why, yes he will! The trouble is, most traders (about 90-95%) actually lose money over time. Meaning they are not consistently profitable. The bots’ slow-and-steady-wins-the-race-method outdoes all but the best of traders.

Compounding is Hard

But shoot, not everyone has the time to be a full-time cryptocurrency trader. I don’t just mean the 30+ hours a week (as a conservative estimate). There is a massive learning curve, during which you can’t expect to make returns. That means you’ve gotta be sitting on a mountain of wealth before you start your padawan  journey, not everyone has $10k to invest in crypto, and everyone will want to withdraw their funds at some point.

Trading-master Yoda gives investment advice
Will you follow the way of the Jedi?

Don’t worry, we will cover the best way to deal with the above! 

“Trading the markets seems easy at first. I can assure you it is anything but easy”  – Ray Dalio, Bridgewater Associates (the largest hedge fund in history).

Ray’s right. However, there are definite trends that can be followed that will return a consistent profit even though there will be inevitable losses along the way. Profitable trading is a game of probabilities, there are things you can do to increase your chance of winning- such as learning how to follow trends and chart patterns. 

Most new traders make counter-trend plays in hopes of generating outsized returns. Most new traders also lose money. By utilising a cryptocurrency bot to make your trades for you, you can play without emotion and stick to a strategy that would be far too time-consuming to do manually. 

Cryptocurrency Trading Bot – Finding One that Works

If you’ve been in crypto for a while, you’ve probably heard of trading bots. The two biggest names in the trade bot space are Hassbot and Coinhopper. I never used these personally, because they appear to focus on quick, tiny gains, or on the user building out their own strategy. Most importantly, they don’t publish the results for any of them. If these crypto bots do work, why won’t the team show proof? And why would you buy something before you know if it works? That’s a practice I tend to avoid…

This is the beginning of the journey of how I stumbled across the independent bots on TradingView. Individuals who are trying to create their own mechanical system can use the TradingView software to automatically backtest the strategy to find out if it works. This is huge.

Someone I followed accidentally posted a chart showing their algorithm executing trades and I jumped on it. It looked pretty good, so I asked if I could use it. After a couple weeks of back and forth, the guy communicated to his friend who had started it, whom I had to pay in Bitcoin and then go through the initial headache of setting it up unassisted. I’ll be straight with you – it was a pain.

This guy’s trading algorithm was brand new and I was his first customer, so we struggled along together. After a couple days of set up, I was rigorously pouring over trade history for 13 hours a day to see if I could trust it to trade on its own with my money.

It quickly became apparent that in the market conditions we were in at the time, it wasn’t profitable. Most trend-following strategies will get chopped up in a ranging market. We were ranging at the time and the price action kept triggering buy or sell alerts at the wrong end of the range. After 18 straight days of price chop, the bot would have bankrupted an account using any leverage. It still needed a lot of work…

But it was clear this guy was still on to something. It caught every major price move by BTC over the last six months, which is not easy to do. If you’re a trader you’ll know about fighting the emotions of hope and fear, and how they work against you. This bot didn’t get faked out by a short squeeze on Bitfinex or whales putting up hidden buy walls. It didn’t get duped by a huge dose of ‘hopium’ from Crypto Twitter. It consistently followed the major trends and made money most of the time. You just had to manage it and turn it off when price was consolidating.

It quickly became clear to me that if you found someone making bots who really knew what they were doing, they could reach the ‘holy grail’ trading goal of being consistently profitable.

Types of Cryptocurrency Trading Bots

A bot just means an automated trading system. They are plugged into your exchange account to make cryptocurrency trades on your behalf, 24/7.

Trend-following Systems

Crypto markets are most famous for three things: huge bull runs, devastating bear markets, and volatility. A trend system capitalizes on these big price moves by keeping a trade open until a counter-trend signal is given, letting you make money off the movement in between.

The concept is just as the name suggests – sticking with the price trend. Buying when price goes up and selling when price goes down. Sounds easy in theory, but it’s very difficult for a person to do successfully due to the emotions involved.

Trend bots are generally the most profitable bot strategies in crypto.

Where to buy a trend bot – Pro Crypto Bots, or make your own on Haasbot or Cryptohopper.

DCA Systems

DCA stands for dollar cost averaging, or to put it simply – spreading your buying over time. A benefit is that this evens out a lot of the volatility by averaging your entry price, but it means diminished returns too.

The problem is a DCA strategy will never grow your bitcoin unless you keep putting money in. You have to buy more to get more.

Where to buy a DCA bot – TradeSanta

Scalp Bots (or range-bound, GRID, or mean-reversion)

When price isn’t trending up or down, it often moves back and forth in a range. These ranges are also known as consolidation periods. They can suck the profits from trend-following bots.

Scalp bots do best in consolidation and are designed to sell if price gets too far above a set point, or buy if price is too far below. If you’re using a GRID bot, this usually entails manually-entered take profit points.

While there’s certainly a time and place for scalp bots, there’s more money to be made from the larger trend when it comes to crypto.

Where to buy scalp or Grid bots – TradeSanta, 3commas, or build your own on Haasbot or Cryptohopper.

Pros and Cons of Trading with Bots

Pros:

  • The crypto markets never close. Using a cryptocurrency trading bot lets you catch every trade that you’d otherwise miss.
  • Proven results. A good bot will come with a data report that shows historical performance, and will give you an idea of what to expect when you start using it.
  • Removes emotion. If you’ve ever traded an alt-season, you know that emotions will replace rational judgement and result in poor decision-making and bad trades.
  • You don’t actually have to learn how to trade. Getting to pro level can take years, and this approach lets you still profit from the ups and downs in crypto.

Cons

  • Building your own bot is a serious time investment. It will also involve a lot of trial and error, which means bad trades and money lost.
  • The wrong strategy will lose your money. All bots go through drawdowns (losing periods) depending on the strategy used and current market conditions. A thorough backtest report will let you know if there’s a light at the end of tunnel or if you just bought a bad bot.
  • You can fuck up the leverage. This is more user error than a bot problem, but a typical newbie mistake is to crank up the leverage to increase risk and profits. This is not good for long term growth and you want to keep risk at acceptable levels.

The Top 5 Crypto Trading Bots in 2020

Okay, that’s enough run-around. I’ll assume you’re finally ready for the bots? If not, bookmark the page and come back later. But if so, here are the best crypto bots that proved their metal in 2019 and are projected to make the biggest wins in 2020.

Pro Crypto Bots | The Best All-Around Trading Bot for Entry-Level Players

Pro Crypto Bots

Pro Crypto Bots takes a unique approach by having their own in-house bot developers make the bots, with detailed performance reports. This is a great beginner-friendly solution that spares you from building out your own custom system, with the added advantage that one done by a professional will likely outperform anything you’d make on your own.

This means you can access highly sophisticated trading strategies without spending the thousands of hours it would take to learn everything on your own. They are compatible with Bitmex, Biftinex and Binance and nearly all other crypto exchanges.

It caters to traders who want a strategy done by professionals without having to build their own bot.

Price – $350/month

CHECK OUT THE BOTS

Haasbot | Great Crypto Bot for Ultimate Customisation

Haas Online Homepage

If you have the time and desire to really dig in to all the different types of bots and trading strategies and build your own cryptocurrency trading bot; Haasbot has all the tools you could dream of. From obscure technical indicators to candle-stick patterns, they have a ton of tools to let you build an advanced custom trading strategy.

If you’re not already a pro, this is an expensive and time-intensive way to build a custom bot. You need to stick with it for this to be a worthwhile investment.

Price – $450 for 3 months on the basic plan, $750 for 3 months on the advanced plan

CHECK OUT THE BOTS

TradeSanta | A Simple & Cheap Solution with Limited Variety

TradeSanta Homepage

TradeSanta caters to the other extreme of the spectrum and only offers the simplest types of bots; DCA and GRID (see section on What Are Cryptocurrency Trading Bots for explanations).

This is great for some users, but there are really sophisticated and profitable bots out there that you’d miss out on by using this platform.

The other issue is that most fiat on-ramps (Coinbase, Square CashApp, etc) are implementing their own automatic scheduled-buy features. Which means you can do DCA buys on your own for free, without paying a monthly subscription to TradeSanta.

Price – $15/month for Basic or $100/month for Advanced

CHECK OUT THE BOTS

CryptoHopper | Well-Known Crypto Trading Bot

Cryptohopper homepage

Like Haasbot, CryptoHopper has an advanced platform with a lot of features. You can create and backtest your own trading strategies based on a good selection of technical indicators. They go one step further and have a bot marketplace where you can purchase a monthly subscription to bots made by other people.

Cons are their bots don’t give any information before purchase, which means you’re going in blind. Even those that do show performance metrics aren’t very impressive. Most importantly, none of the bots listed show a max historical drawdown for you to know how risky it is. It’s easy to cherry-pick some numbers and show a nice profit, but would you feel comfortable putting your hard-earned money behind a bot with a 75% drawdown? I wouldn’t.

Price – $19/month for Starter Pack, $100/month for Pro Trader package

CHECK OUT THE BOTS

3 Commas | Great for Traders with Personal Trading Bots

3 Commas Homepage

3commas has some nice features that are unique to their bot platform – you can make your own strategy on TradingView (#1 charting software for traders), plug it into your 3commas account and exchange account, and you have your own automated system! This is designed for traders who already have their own bots and strategies and need that missing piece to have full automation.

If you’re not already a bot pro, their bots on offer aren’t impressive – long-only or short-only (when does crypto only go in one direction?), or GRID bots like Trade Santa.

Price – $29/month for Starter, $99/month for Pro

CHECK OUT THE BOTS

How I found the BEST Cryptocurrency bot on the market…

After many more days of testing and lots of trial and error, I happened across a screenshot of a different bot. This time it was made by someone who clearly knew what they were doing. This was an insane step up from the first bot I had experimented with – every single setting and time frame had been tweaked, adjusted, and tested for maximum profitability and minimal drawdown. Trends were caught earlier. Maximum drawdown was measured and accounted for. The total returns were the best I’d seen and better than I had initially thought possible. 

Furthermore, every step for setup was laid out clearly so all I had to do was follow the instructions and cut and paste. There was even a video walking you through the settings. If only it had been this easy the first time…

It was immediately clear that this guy had spent a significant amount of time to hone this beyond anything I had seen before, and I’ve been in this space for a (relatively) long time. He even had a Discord chat with every setup up question laid out and answered, and a really small community of people helping each other figure this stuff out. And almost no one was using it yet.

After running the data myself and testing it with small amounts, I switched over from the first bot and have never looked back. This is now what I use on my main account and I am comfortable backing it with my hard-earned money. It has been such a good experience that I also recommend this to my friends, family, and anyone else that believes in Bitcoin long-term and wants to increase their exposure to it beyond just holding.

And here’s the thing – I showed the data to the first bot guy, and he was so blown away that he signed up too on the spot, realizing that these results were better than anything he was able to get. 

Don’t Take My Word for It

Seriously, don’t take my word for it – the screenshot below is from TradingView’s data backtesting service. Data speaks the truest language in the world! 

So far, user feedback has been unanimous – this trading bot is a total game changer. You can see a whole bunch of user reviews below… 

 If you’re serious about crypto trading and want to actively work on building up your stake (without the stress and headache of day trading) you should be looking at crypto trading bots as the next logical step.

Back to the independent data – because this is what’s really important. You can’t test the data yourself until you’ve paid for access to the bot but you CAN see the results of the data here. 

According to the independent data: this iteration of Goldman Bot is profitable 77% of the time, with a total average return of 45% per trade (return per trade factors in compounding over the course of the data sample).

From December 2017 to January 2019, the trading bot would have executed 13 trades resulting in a total return of 596% and a maximum drawdown of only 4%!! That’s with no leverage. You could use up to 2x leverage, nothing more, so you could double that total return number to 1,192%… (it would actually be higher than that because of- you guessed it, compounding)

Why You Should Try It

Going back to our compound interest discussion, an annual return of 1200% (using 2x leverage) would turn $5k into $235k in two years. This bot has actually had even better performance, but just wait- two more years?

$11 million.

Yes, that’s ridiculous money and I’m not going to guarantee this will make you a millionaire in just four years from $5k. The bots need volatility to generate returns and the crypto markets are moving slowly right now. But once you’ve started, time is on your side. Have patience and let your capital grow. Markets do change and volatility generally decreases as markets mature; which means that these kinds of gains in BTC will most likely be harder to achieve in the years to come. But, those are the gains this bot has achieved consistently so far, even in a bear market.

Not many traders will ever match those returns and those that do will spend years getting good first. This trading bot only takes half an hour to set up and then it runs itself.

You will take losses. Think of this like being a shareholder in a casino where the odds are in your favour – not every trade will be a winning one and it will take a lot of trades to grow your account enough to reach your goals.

This is not a get-rich-quick scheme. It will take time, years even.

These sophisticated bots have taken 4 years of experience to develop, and have so far delivered consistently profitable results that will grow your capital. Results that are independently verified. And that also happens to be the best I’ve ever seen.

Furthermore, the bot architect is always working on improving it and adjusting it to the ever-changing market conditions. He’s incentivized as much as you are because it trades his money too.

Let’s put it this way: if you had bought bitcoin at the height of the market at the end of December, you would be down 80% today. Had you bought the bot and used it on that capital at the same time, you’d be up in BTC 596% with no leverage. At 2x leverage, you could have almost 1,200% of your initial amount of BTC instead of just the 80% loss in USD value.

These numbers are so good as to invite some skepticism. I was doubtful too. Try it for yourself and see. 

CHECK OUT THE BOTS HERE

What’s the Downside?

Every seasoned trader knows to measure the worst-case scenario before entering a new position. It’s a great practice and one that translates well to the real world too. So what does the worst-case scenario look like here?

You’ll notice from the data report above that the bot only made 13 trades in 2018. It caught all the big moves and followed the trend beautifully. But, this could mean that you sign up for the service and then potentially wait 2 whole months before being able to enter a new position. Ouch!

Not to worry. There are smaller time frame bots available that trade much more frequently and will allow you to continue to grow your account while you wait, or you could allocate some funds into different exchange accounts and run two bots at the same time.

Smaller time frame bots generally have higher drawdowns and lower accuracy per trade, so that’s something to keep in mind and why I personally prefer the 4hr.  But you can do what’s best for you based how much risk you’re comfortable with.

Bitcoin Will Change the World – How Much Will You Have Five Years from Now?

Strap in friends, shit’s about to get wild…

For anyone that believes long term in Bitcoin, this strategy is a no-brainer. Rather than just hodling, you gradually grow your BTC by having a sophisticated algorithm execute trades while you keep full control over your account. Even if you’re a professional, having an algorithm to complement your trading style will increase your gains and help you make better, less emotional, decisions. It also runs all the time, so you never have to worry about missing a trade.

The most successful hedge fund in history, Bridgewater Associates, uses an algorithm alongside their traders in every market they trade in and have said that using a data-centric approach like this one has been crucial to their success.

I still trade full-time and having the bot trade some of my funds simultaneously has made me a better trader because it checks your bias.

Check out the best cryptocurrency bots now…

ProCryptoBots.com is where you can find out more about the bot and purchase your membership. Membership starts at $350 a month and there is a two week free trial so you can test it out before paying.

In my opinion though, this is the ideal tool and solution for anybody in crypto with a portfolio of 5k or more.

Scam Bots

There have been a LOT of scams in crypto and bots are no exception. There are two main ways where people have been scammed by using a bot:

Asking for API withdrawal permissions turned ON.

Scambots
Would you trust your investment to the Daleks?

This is a red flag and a no-go. Bots can (and should) execute trades on your exchange account without withdrawal permissions turned on. If your platform is asking for this then it’s most likely a scam.

How to protect yourself – creating an API key with withdrawals turned off means that only you can take funds out of your account.

The smallcap exit scam.

This will take a bit to explain, and A.F.A.I.K. has only happened once. Some bad guys were running a bot platform and decided they’d rather steal their customer’s funds and bail than run a legitimate business. But the API permissions meant they couldn’t directly take money out of customer accounts. Being clever and devious bastards, they engineered a plan to do this another way.

They bought up all they could of one tiny coin on Binance that had no trading volume. So far, they’re using their money – okay so far.

Then they programmed their bot to have customer’s accounts all market buy this same tiny coin until all the accounts were emptied, right into their own ridiculously high sell orders. All this buying on that small market meant that customers were paying obscene prices (like 100x normal) to the scammers. This strange behavior immediately caught everyone’s attention, including the CEO of Binance – billionaire CZ himself. They shut it down immediately, froze the scammers accounts, and even reversed the trades to put the funds back in customers’ accounts.

While it’s hard to say anything in crypto can be 100% secure, following the proper API protocols and the quick responses from exchanges in the past to stop scammers mean that your funds should be safe.

Additional crypto resources and notes

Here are some further notes worth reading over if you choose to utilize this info and start managing your portfolio with the crypto trading bot.

  • Use a good VPN whenever accessing your crypto exchange. It keeps your information safer than broadcasting it unfiltered. It will also prevent any ‘restricted location’ messages.
  • Get your API keys from your exchange and don’t keep them online. Two thumb drives is a great option (one as a backup).

Taxes (for US citizens)

Without getting too into the specifics here, taxes on crypto in the US are an absolute mess thanks to the IRS. Crypto-to-crypto trades are treated as property transfers, which means that every single trade is a taxable event and must be reported. This might have something to do with why out of the estimated 5 million crypto holders in the US, only about 1,000 people filed taxes in 2018. There are steps you can take to not get killed by this policy.

What you can do – trade futures on Bitmex. It’s identical to trading bitcoin except that you are trading a financial derivative that is pegged to an exchange price for BTC instead of the real thing. This minor discrepancy matters. Since our elected officials are far more beholden to Wall Street than Main Street, this is reflected in the tax policy. 

Future trades are not treated as property transfers like crypto is, so all gains just go into your annual capital gains tax as if you were a rich banker on Wall Street. This tax rate is better than your regular income tax by about half. It’s a more than a little gross that a typical job is taxed at double what banks and institutions pay for paper profits that go to fuel their bonuses… But if you can’t beat them, join them.

PCB does have Bitmex functionality, so just make sure you use this option if you decide to have the bot trade your account.

Some exchanges have barred US users from access to protect themselves from US regulatory agencies, so you would have to work around that as well. For a solution to this problem, see the additional resources section above.

Note from the Author

For this post, I shared my own experience and also leaned heavily on my man Chiang Mai Chuck.

Chuck is a full-time professional cryptocurrency trader who has managed the impressive feat of living off his earnings from just a 10k initial investment into crypto. I’ve known Chuck for nearly two years – we often work out together, play Call of Duty together and talk about the state of the Cryptosphere…

Chuck has been experimenting with some of the best cryptocurrency trading bots for a while now and I’ve recently jumped in to grow my Crypto portfolio passively.

Disclaimer

One more thing; this isn’t for everyone. You need some working capital first, and ideally a way to pay for the monthly usage fee that doesn’t come from your account so that it can compound (the longer the better!), and without you having to stress about the occasional drawdown. I’d suggest a minimum of $5k. If you’re not there yet, start saving and cut some expenses!  

I also suggest not touching your capital for at least two years, preferably five to ten. Think of it like a retirement account. Or better yet, a ‘someday quit your job and never look back’ account.

You aren’t charged by a percentage or account size so this advice is strictly for your own best interest.  

[maxbutton id=”106″ url=”https://www.procryptobots.com” text=”CHECK OUT THE BOTS HERE” ]

Will’s Disclaimer: I am not a professional (or even a veteran) trader. I am an intermediate trader with a passion for cryptocurrency. I am disclosing my own ventures in crypto because cryptocurrency trading does make up a chunk of my online income and I want to be 100% transparent with you when it comes to making money online. Investing in cryptocurrencies carries a risk – you may lose some or all of your investment. Always do your own research and draw your own conclusions. Again – this article is aimed purely at advising; draw your own conclusions on whether cryptocurrency trading and cryptocurrency trading bots are right for you.

Photo credit: A big thank you to The Man with No Name, for allowing us to use his awesome crypto artwork images.

Written by Will Hatton

15 Comments

Leave a Reply
  1. Good Stuff! Thanks for sharing! Do you mentor regarding the bot although it appears this article is all the mentoring one would need.

      • We started crypto bots, the problem is lack of funds, and just minimal investors. We are thinking how to generate funds for payment. Can you recommend some strategies on how to grow our funds?

        • Hi Ritchie, in my opinion the best chance to grow your funds is to buy bitcoin. Especially now that it has entered a new bull market (not professional advice). Even if the professional bots are too expensive to be worth it for you now, buying and hodling is still an effective strategy!

  2. im ready to start with the cryptobots but i live in california and bitmex mentions prohibiting from holding
    positions or entering contracts if you live in the US , then i see something about trading futures on bitmex
    and i have no clue about futures , all i want to do is get into the cryptobots , is this possible ?
    If it is possible please tell me what to do. Lavell

    • Hi Lavell, trading futures just means that you can make money if price goes up OR down. That’s crucial to being profitable in a bear market. The bots and the automation platform will handle everything else. Please check out the ‘Additional Resources Section’ for an answer to your location question.

  3. Hi Will,

    great article, thanks for the breakdown. Super useful for someone just getting into the cryptosphere.

    I’m keen to give a trading bot a try and the Pro Crypto Bot you refer to sounds good. I am still not sure how this all works. It seems like you need a trading account with Bitmex which is trading with futures. I have never even touched a trading platform other than Coinbase. Would you still recommend this to anyone who doesn’t have any trading experience yet?

    Would love your thoughts on this!

  4. If my crypto assets are trading on binance do I have to move my portfolio to Bitmex to be able to use the bots?

    • For now the bots only work on Bitmex because its the best option – most liquidity, can go long or short, and leverage available. Binance is working on a margin trading option that will allow bots to long/short on that exchange too, but so far its still in testing phase.

  5. I was really against bitcoin at first until I decided to give it a try, Mark made me see the light in investing in bitcoin. I’m really glad I did because it changed my life.

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