Looking to dip a toe into crypto trading bots, but unsure where to start? This article is here to help. We will explain what trading bots are, as well as the best practices and common mistakes when making them part of your trading strategy.

What’s a Crypto Trading Bot?

Let’s dive right in, starting with a definition of crypto bots. A trading bot is a computer-based algorithm that analyzes the market using technical indicators such as moving averages and trends’ strengths. Based on these indicators, it generates buy/sell signals on underlying assets. To put it in a nutshell: a crypto trading bot is an automated strategy that buys or sells crypto or derivatives on your behalf.

Why use a trading bot? Besides the fact that it saves you time (you don’t have to monitor your exchange continuously and place the orders yourself), trading with bots means that you stick to a predefined strategy. The bots have been designed with rigorous algorithmic rules, back tested on real historical data. A bot will not make rushed decisions based on emotions the way humans are prone to.

However, bots are not perfect investors either. The crypto market is very volatile, and this can lead to false signals. This happens when bots calculate…