Binance is still the leading crypto trading platform in the world with the largest market share. It has branches in multiple regions of the planet including North America and Asia. This size and scale are reasons why Binance trading bots are so popular among retail traders.
How crypto trading bots work
A trading bot is a script running in the cloud on the automation vendor’s server. Some exchanges offer their automation services, but they are usually quite limited in functionality and cannot be used outside of their respective platforms. Versatility and diversity are two key factors driving most experienced and even beginner retail traders to specialized automation vendors like 3Commas or Wundertrading.
A typical bot has several components that are essential for the performance of said bot:
An analytical platform that sends signals. Usually, it is TradingView, one of the most popular analytical and charting tools in the world.
An automation provider that processes signals and makes decisions based on user-generated conditions and terms.
An exchange where outputted trading orders are executed on behalf of an owner of a bot.
These three components exist in one form or another in all bots. Wundertrading interprets any type of signals from the TradingView platform allowing its users to create complicated trading patterns and generate money even when they cannot trade physically. In the end, we all have to sleep.
How to set up trading bot on Binance
Retail traders who want to engage with automated trading strategies should first create an account with Binance. Let’s take Wundertrading as an example to explain how you can start trading using bots:
Go to the Binance website or mobile app and create a new account.
Open a new trading balance with Binance for spot or margin trading.
Go to the Wundertrading platform and create a new account there.
Connect your existing Binance account to the automation vendor.
Go to the dashboard and start creating bots as instructed on the official Wundertrading website.
While Binance is the most popular exchange, it is certainly not the only one. You can select from a long list of available CEX platforms that are fully compatible with Wundertrading or any other automation vendor. A typical selection includes Binance, KuCoin, Kraken, and many others.
How to use trading bot on Binance
There are several interesting preset options offered by Wundertrading for their clients with Binance accounts. One of the most popular tools in the arsenal of the automation platform is GRID, but you may be interested in other bots too.
People who prefer safer trading patterns should pay attention to GRID bots. These are advanced DCA scripts that place take-profit and stop-loss orders automatically and generate money during both descending and ascending trends.
DCA buying is a good way to utilize automation to quickly amass a big portfolio. DCA stands for distributed cost average and means that you can divide your purchase into multiple orders and buy on a downtrend to ensure that you are buying, on average, below the actual market price.
Custom strategies. A swing technique using RSI could be a good money maker during periods of high volatility. You can set up a simple script that will buy when RSI hits 30 and sell when it reaches 70. A very straightforward and effective method.
Since Binance has a large P2P spot market, you can also try using arbitrage bots to benefit from price discrepancies between markets and different exchanges.
A Binance crypto bot will work as long as you have a good strategy. While automation reduces idle time and allows you to utilize your strategy even when you sleep or cannot attend the market, it still depends wholly on your strategy and decision-making.
Never think of it as a wonder machine that will start printing money without any work on your part. You should be focusing on choosing the right strategy. Going to investing forums and crypto communities is a good way to find top user-rated trading systems. Implement them, but monitor how they perform and adjust as you see fit.
Binance is great for automation because it has enough liquidity and market activity to make every single deal simultaneous which is excellent for machine-controlled trading.
Should you try using bots to trade crypto?
It depends on your preferences and trading style. People who want to dedicate their time to macromanaging their portfolios should use automation to focus on diversifying and searching for better investment options while not scaling down market activities. Those who prefer trading manually could benefit from automating some aspects of their systems.
For example, you could trade activities during the day and allow bots to continue DCA buying during the night. There are various efficient ways to incorporate automation into your investment strategy. Especially, if you are working on such a massive platform as Binance.