Bot Trading 101 | The 15 Best Trading Bot Tips
Cryptohopper is the crypto trading platform where you are able to automate every single aspect of your trading, so you can devote your time to the important things in life.
Automate your trading to stop stressing out in the volatile crypto markets. Start monitoring your trades rather than trying to find the perfect trading opportunity. Sometimes, trading is like finding a needle in a haystack, hours in front of the charts trying to find that market that gives you an opportunity that probably won't come today.
Here’s a few tips and tricks to get the most out of auto trading crypto with Cryptohopper:
Select your coins wisely. Research your favorite coins thoroughly and subscribe to all the social channels to find new developments and partnership announcements which may drive their price up.
As for coins that other people care about, check their news and the section Charts to spot the best coins to buy and why. You can also just subscribe to the “ TradingView crypto screener” signaler, if you like this TradingView’s function, to automate this process with Cryptohopper.
If you are designing a strategy, research your indicators. Find out which indicators are best according to the specific market environments and your trading style. Research them and put them into practice. Whether you use volume, volatility, trend or momentum indicators, test them extensively before trading with your real funds. You can do it very easily by going to the section Strategy and using the tool Test.
As you can see there are various completely different approaches to analysing a coin. It’s your job to find out which one is most applicable to your coins when trading with the built-in indicators. And if that’s an issue, subscribe to a signaler!
For Arbitrage: Paper trade many coins to find the most profitable ones!
Friendly reminder: In order to do exchange arbitrage, you need to own the coins you want to do arbitrage with in your exchanges. Having recalled this, which coins should you buy to start doing effective arbitrage? Paper trade many different coins until you find the coins that offer the best arbitrage opportunities for your exchanges. Once you have an insight of which they are, buy them and let the arbitrage bot do the rest.
For Market Making: Before you market make a coin, check the spread.
Market Making consists of trading the spread of a market to quickly profit from the difference between the buy (bid) and sell price (ask). Then, the spread of every market is a crucial factor for the Market Maker bot, and you should make sure to choose the most profitable market. Of course, choosing markets with a big spread is a sign of illiquidity, which means that your orders could not get fully filled due to the lack of a counterpart that buy or sells your order.
You can easily see the current spread of any market in Baseconfig → Market & Pricing of your Market Maker bot.
If you are thinking about using signalers, do your research.
When subscribing to a signaler it may often feel like you really don’t need to do anything to be trading. It may simply be as easy as connecting your hopper to your exchange, clicking subscribe on a signaler and closing your laptop for the week. A little bit of time spent on researching your signaler however, can pay off very well. When choosing a signaler, don't forget to:
- Check the Performance report and realtime stats.
- Check the Overview of the signal.
- Check if he signals to your coins and your exchange.
Another thing you may want to do is Google the signalers. They often have their own website with info on how they work. Many are teams of highly capable analysts, using breakthrough tech to provide their signals.
For Arbitrage: Check the fees of your exchange (and get a cheap one).
As the infrastructure and liquidity of the exchanges improves, the potential profit decreases. However, cryptocurrency arbitrage has proved to be extremely profitable and bots can be very effective to take advantage of it. Then, choosing exchanges that will charge lower fees, will make the bot find more arbitrage opportunities to add more value to your crypto portfolio.
Get into the community.
Youtube - Cryptohopper has very useful and explanatory videos in which we explain step by step every single aspect of the platform in short videos. Also, you can find some awesome youtubers talking about them like MiggityMiner, NerdyDudeStuff, and many more. Their videos will often show screen recordings of how they’ve laid out their configurations and they post quite regularly.
Twitter - Follow us on Twitter as well, we post announcements, updates and market analyses that can be really helpful for you!
Discord - Join here to speak to experienced users who will be glad to provide trading tips. Cryptohopper employees cannot legally give any specific trading advice, but experienced users may be able to point you in the right direction!
Make the Paper trading mode your best friend. Paper trading is the previous step to real trading that every trader should take. Jumping straight away into trading with real funds without previous experience is something that commonly goes wrong. Enable the paper trading mode and put in practice different strategies while you reinforce your trading knowledge. You can even test different signallers in paper trading mode to check which of them is the most profitable!
For Arbitrage: Paper trade different exchanges and select the most profitable ones.
In exchange arbitrage, the exchanges that you choose play a key role in the profitability of the strategy. The arbitrage opportunities are produced by price differences between exchanges, therefore, selecting exchanges that usually show price divergences in their pairs, will increase the profitability of your arbitrage strategy. In order to find these exchanges, paper trading several exchanges will give you a very good idea of which ones your should choose to quickly pocket different prices for the same cryptocurrency.
Fire up some config pools.
Trading crypto is like playing asteroids. Coins are bouncing all over the place, some heading up and some heading down, all at different speeds. Once you start getting to know the coins in your portfolio, you can set up specific indicators and actions for those coins. You may be more interested in scalping some coins, while treating others as more of a long term investment. Config pools will let you do this!
“Keep signal for X candles.”
This is a function that we created in the Cryptohopper offices. Many indicators give signals only during crossovers but, if we have several indicators in our strategy, will they have to make the crossover at the same time to buy or sell? Supposedly yes.
For example, imagine that we a strategy with the MACD and DMI, and both have to signal a buy at the same time in order to open a position. These two indicators give signals though crossovers of two lines. It is pretty difficult that bot crossovers take place at the same time and therefore, not many positions would be open. This will cause that many trades will not be executed. Then, Keep signal for X candles plays a role. With this function you can make, for example, MACD to keep a buy signal for a specific number of candles, which will prevent your strategy from missing good trades.
Shorting to not be afraid of bears.
Plain and simple. Coins will decline and you can avoid the heaviest of bags if you short on time. Consider shorting, if the market is likely to dip lower than you expected. You can open short positions once your strategy signals a sell, which is potential decline of the price. In this way, the hopper will sell them to buy them back once the price has stopped dropping and is likely to increase again. Then, not taking any hard hits from the bears!
Backtest, backtest and backtest! We say it three times because we can’t stress how important this is for TA traders. Before you use any configuration, backtest it. You’ll see an approximation of where you would have bought and sold if you had applied it. Although you can’t predict the future, you absolutely can learn from the past. Here’s a backtest that looks just about ready to load into your config!
For Arbitrage and Market Making: Enable move failed backlog to match your loose orders.
At first, certain parts of the Arbitrage and Market Maker’s bot configurations can be a bit difficult to understand. We recommend you to check our current documentation or shoot a support ticket. But now, you might wonder what is the backlog. Let’s dive into this term.
The backlog is the place where all your cancelled arbitrage orders go. Cancelled orders refers to exchange arbitrage orders that have only been filled in one exchange. Therefore the order in the other exchange hasn’t been filled or has expired, then the arbitrage trade hasn’t been fully completed. If you enable “Move failed to backlog”, the hopper will move these orders that haven’t been filled and are expired to the backlog. Now, you can tell the hopper what to do with these uncomplete arbitrage orders, the options are: Do nothing; Retry (place the order again to try to fill it); Revert (will revert a buy into a sell and viceversa).
You might wonder why the arbitrage trade might not get fully completed. One word: Volatility. When the order is placed at the current price, the price might quickly change its rate, leaving the order unfilled. Due to this Cryptohopper added the backlog, a place where you can manage these orders.
Have you considered using more than one indicator? Each indicator will tell you an optimum buy or sell moment, and only give your hopper calls to action from what they measure. To ensure you’re filtering out fake signals, it might be smart for your hopper to consult more than one indicator at a time for more confirmation. Take the screenshot below as an example. Having used both indicators helped you successfully make two highly profitable trades. If you had only used the SMA, your hopper would have bought and sold many times during the upward trend. However, adding the Stochastic, the position was bought at the beginning of the trend and sold when both indicators signalled a sell.
But be careful, Sometime adding too many indicators could make your hopper discard many trades that could have great potential!
Take into account these 15 tips and click here to start automating your trading!