Automated Trading Systems (ATS), commonly called trader bots (e.g. Binance trading bot), are becoming popular at a higher pace compared to the previous Bitcoin bull run (2017). You see trustworthy names in the crypto industry joining the automated crypto trading trend; KuCoin trading bots surpassed 7 million.
Table of contents
- Why Does Automated Crypto Trading Matter?
- Let’s See If All Crypto Trading Bots Can Make You Money.
- Criteria of Trustworthy Crypto Trading Bots
- Automated Crypto Trading via Real Copy Trading Is The Best Crypto Trading Bot Replacement Option
- What Is Crypto Copy Trading?
- How Finestel Provides Automated Crypto Trading? (With Example)
- How to Connect an Exchange Account to Finestel as an Investor or Trader
- Automated Crypto Trading Using Finestel’s Crypto Copy Trading Engine
Why Does Automated Crypto Trading Matter?
Numerous factors cause rapid price fluctuations in the crypto market, making accurate speculations near impossible. Traders analyze those volatilities using various technical indicators, On-chain and fundamental analyses, etc. Technical indicators (Ichimoku, RSI, MACD,…) available on financial visualization platforms like TradingView or exchanges like Binance are the common pickaxes crypto traders use to dig their fortune out of the crypto market.
First of all, trading is not just about technical analysis as it counts on the repetition of the asset price’s behavior in the past to guess the next possibilities. Nothing and no one can solidly tell where is the next candle headed;
history will not necessarily recur!
Secondly, using every indicator out there won’t increase the accuracy of your analyses and it could be destructive even. Just a glance:
To brief things up, the outcome of all technical or fundamental analyses are just speculations and a tiny nanometric creature (Coronavirus – Coivid-19) can easily ruin them all, as we saw in the past couple of years. Besides, even if your analysis results or trading signals are concrete, there’s still a high probability that your emotions refuse to follow your trading strategy.
That is why many expert crypto traders use automated trading systems, computer software, bots, or machines that don’t care about feelings.
If Human Brain Cannot Then What Can? Sleep Tight, Bots Are Always Awake
Participating in the capital markets targeting financial profit involves frequent data extraction, comparison, accuracy check, backtest, and upgrading the trading strategy. Aside from the data volume & variety,
the cryptocurrency market is 24/7 and never sleeps, but we do.
Applying your trading strategy by placing orders helps you stay in the game while you are off-chart. Still, you cannot catch sudden price changes that may cause a trend reversal and require an immediate plan change and decision making.
Additionally, using analyzer bots will leave us with a massive pile of data that our brain may not process as fast as its generator.
How Can Crypto Trading Bots Help?
The steep curve of social media growth pushed coders and software developers to make bots mainstream. These pieces of code can execute almost any online task, from tweeting to replying to an Instagram comment. In the finance sector, they carry more. Analyzing price movements, comparing various indicators, placing orders, and even more complex tasks like arbitrage trading are potentials of these algorithms.
So, ATSs are powerful, fast, and accurate, but they need inputs and planning and are unable to decide for themselves; yet though!
Those inputs are in the form of trading strategy, scripts, or a few lines of code. You can:
- Learn software development and crypto market to create your own bot
- Purchase trading strategies from various marketplaces
- Download open-source crypto trading bots for free and use them
The first option takes time, effort, and experience to master ATS development, but not emotional control. I think we’re on the same boat for the second and third, trust. You never know if the trading strategy provider is using or has ever used what their selling to you. And, if it’s a “free open-source profitable crypto trading bot,” you be the judge.
Let’s See If All Crypto Trading Bots Can Make You Money
Well, the answer is no, of course. There are tons of providers in the wild wilderness of the crypto-verse, most of them are scammers, and a few are legit. To choose the best crypto trading bot, you must consider some criteria. Skipping the complicated and tedious technical details, let’s count three types of trading bots and three primary criteria afterward.
Three Major Types of Trading Bots:
Signal Trading Bots:
Embed your trading strategies (AKA experts) which are a set of rules for the bot to place or cancel orders on your exchange account.
Simple to use, you can configure them yourself, buy or find free trading signals online.
Not reliable, not trustworthy.
Trading strategies may get spoiled after being used excessively (number of users) or spotted due to the massive amount of liquidity behind them. So even if the bot/strategy you have purchased or found for free is legit, it could be super spoiled.
Real Crypto Copy Trading Explained: Profit The Same As The Pro – Read Here
Arbitrage Trading Bots:
Arbitrage refers to trading an asset between exchanges. The value of an asset sometimes differs significantly across exchanges. For example, you can buy BTC on Binance and sell it on another crypto exchange, sometimes for half a percent higher price, and vice versa.
It’s a simple process: buy here, sell somewhere else, and vice versa.
Risky and still require arbitrage trading experience. Plus, crypto exchanges with price differentiation usually don’t have enough liquidity, though they can even be loss-making.
Programmable Trading Bots:
As the name suggests, one can program them for market analyses, all kinds of trading, strategy testing, and so on, so forth. But, keep in mind that you require to have basic software development skills to get your automated crypto trading bot going other than trading knowledge and experience.
Criteria of Trustworthy Crypto Trading Bots
Other than making sure that the trading bot provider you pick for automated crypto trading is reliable, the two headings below are important to consider as well.
Best crypto trading bots are super customizable and can provide both manual and automated crypto trading. Moreover, they have juicy features such as “trailing stops.”
Trailing stops are orders that the crypto trading bot can move up & down as the traded asset’s price does. In other words, they can shift up or down your stop-losses (SL) and take-profits (TP), depending on your trading strategy and positions.
When choosing a bot for automated crypto trading, “keeping your assets inside your exchange account” is of the essence. Upright crypto trading bots use an API connection to your exchange account to make trades; some exchanges provide them too, like KuCoin trading bots. Also make sure that the exchange is credible already. By the way, we’ll tell you what an API is further below.
Advantages of Crypto Trading Bots
Indeed there are disadvantages in using crypto trading bots like security (compromised credentials), possible malfunctions, or the required development knowledge. Let’s be optimistic and talk about advantages only.
Bots need no sleep, which makes them ideal for watching the 24/7 365 cryptocurrency markets.
Once you have set them up, they just keep doing whatever you have asked them to.
The fact that bots cannot think or decide will prevent them from deviating from the trajectory you have defined for them.
Our brain cannot follow up with the cryptocurrency market volatility and act right in time; bots can.
Your humane emotions often trade against you, robots have no feelings… yet!
Automated Crypto Trading via Real Copy Trading Is The Best Crypto Trading Bot Replacement Option
So, bots are fast and accurate but lame without a trading strategy or user-defined instructions. What if we could take the rapidity and accuracy of a trading bot and mix them up with the trading skills of an expert trader and throw away the required trading knowledge and the complexity of software development? We would have a UTS (Utopian Trading System), probably. No utopian trading system exists, but Finestel does. Let me tell you what Finestel is and how it works.
Finestel is a fully automated crypto copy trading platform that copies from a trader exchange account via read-only API connection and pastes to multiple investor exchange accounts via trade-only API access.
What Is Crypto Copy Trading?
There are various types of copy trading models available, and many exchanges provide some or all of them as a feature. Copy trading is a form of social trading, a general term that consists of mirror trading, follow trading, and a few more.
In comparison, Finestel does not need to be an exchange, while there are many well-designed ones to rely on, like Binance. Instead, Finestel has a powerful copy trading engine that connects to your Binance or KuCoin (currently available) account via an API connection and does whatever your copied trader is doing on their exchange account with their money.
Binance Copy Trading Full Breakdown
Platforms and exchanges that provide crypto copy trading as a feature usually require users to deposit their funds into the platform and use their trading engine; users can only copy traders on that platform.
I almost forgot to say Finestel trade replication is proportional, meaning you don’t need to trade with the same portfolio value as the copied trader. However, your exchange account balance must meet the trader’s minimum investment.
Why Real Copy Trading Is Superior to Trading Bots or ATSs?
Bots are fast and accurate but dependent and not trustworthy. If you can build yourself a trading bot and a killer trading strategy, that’s awesome, just connect it to Finestel as a trader and gain investors and AUM (Assets Under Management). But if you’re buying a trading strategy for the open-source trading bot you just downloaded, better know you’re relying on algorithms that a developer thinks would work; there’s no trader on the other end.
Not trading on your own will cut emotions off from your trading but only if you’re copying expert traders that also have their “skin in the game” with you.
In the copy trading world, the term skin in the game means what you receive on your exchange account as replication is what a real trader is doing with their own money, not what a software decides.
How Finestel Provides Automated Crypto Trading? (With Example)
In this section, you will read:
- What is an API connection, how Finestel use them, and how to create them (investors and traders)
- How traders and investors connect their exchange accounts to Finestel
- What does proportional order replication mean
- How to start crypto copy trading on Finestel
What Is an API (Application Programming Interface) Connection?
An API is what two or more pieces of software, computers, apps, etc., interact with. For instance, when you tap on the Twitter icon on your smartphone, it talks to its servers via an API
For crypto copy trading, an exchange API access allows Finestel to read and copy from traders’ (read-only) exchange account and replicate into investors’ (trade-only). So, traders connect their exchange accounts via read-only API connections and investors connect via trade-only API access.
There are many different types of API access on crypto exchanges with various applications. What Finestel needs is read-only for traders, which is the default in most crypto exchanges, and trade only for investors, which is the “Trade” on KuCoin and the “Enable Spot & Margin Trading” and “Enable Futures” on Binance.
Ensure you avoid granting withdrawal access to Finestel (or whichever website you don’t intend to give access to withdraw your money to), which is the “Transfer” option on KuCoin and the “Enable Withdrawal” on Binance. Whoever has this access potentially has your money.
How To Create an API For Copy Trading on Binance
Log in to your Binance account and select the “API Management” option from your profile icon’s drop-down menu.
Next, on the “Create API” page, pick a name for the API and hit the “Create API” button. After verifying your credentials, you will land on the API settings page.
The API Configuration for Finestel Investors
The image below is the Binance API settings page. Before getting into it, let me tell you that Finestel supports Binance spot copy trading and Binance USDT-Futures copy trading only. Thus, only the two in the red box are needed among all the options you see in the image. For Finestel investors, check-marking the first (Enable Spot & Margin Trading) is mandatory; they can leave the “Enable Futures” unchecked if they’re not interested in Binance futures copy trading.
Below the API restriction section, both traders and investors must checkmark the “Unrestricted” option.
- Both Binance and KuCoin show your API secret only once and when you save your API configuration alone. You can get back to the API section and edit it but your API secret won’t be visible. So, you can checkmark both spot and futures options and just copy spot traders.
- Binance disables API connections with unrestricted IPs 90 days after creation. So remember to get back to your Binance API Management section and reconfigure your API.
The API Configuration for Finestel Traders
Finestel trader accounts do not need to change anything in the API restriction section because its default is read-only. Just check the IP restriction and make it unrestricted.
This video shows you how to create an API for copy trading on KuCoin:
How to Connect an Exchange Account to Finestel as an Investor or Trader
Signing up on Finestel is super easy. Enter your email address and hit the “SEND CODE” button, then enter the code we send you to verify your email address. Choose a strong password and hit the “SIGN UP” button. Welcome to your Finestel dashboard!
You’re neither a trader nor an investor before connecting an exchange account to your Finestel account. By the way, you can connect multiple exchange accounts and have both trader and investor accounts connected to your Finestel account.
Connecting a New Exchange Account (Investor)
Back to the show, the 3-step guide you see in the image below is what you’ll see on your Finestel dashboard before connecting an exchange account.
Hit the connect button on the Step-1 card and on the next page select the exchange you want to connect, and hit the connect button again.
The next page is where you define your account’s functionality on Finestel. Select your account role (trader or investor), pick a username for your exchange account, and finally paste your API key and secret into their blanks and click connect.
Within 60 seconds, Finestel connects to your exchange account and then you can see the connected exchange account balance on your Finestel dashboard.
Let’s talk a little about connecting a trader exchange account and tell you how to copy a trader afterward.
Connecting a New Exchange Account (Trader)
Traders take the exact same path as investors with a small difference and an extra step. The difference is the account role which must be on “Trader” instead of investor (the image below).
The extra step is when Finestel connects to their exchange account. Finestel trader accounts are hidden by default, meaning newly connected trader exchange accounts won’t get listed on the “Explore Traders” page to be discovered by investors.
Finestel traders can keep their profiles hidden to gain investors from their private community only by sharing their personal links. However, they can make their account public and get listed on Finestel’s “Explore Traders” menu to be also discoverable by Finestel investors.
Check the images below. The first one shows how investors connect via trade-only API access, and the second shows how traders connect via read-only API access.
A Few Important Things to Mention
You can have investor and trader exchange accounts on Finestel simultaneously and your dashboard will change when you switch from trader to investor. Besides, when you switch from one exchange account to another, the account data such as balance, the trader you copy, profit history, etc., will also change.
In other words, each connected exchange account has an independent profile on your Finestel account. And you can monitor all of your exchange accounts using one Finestel dashboard.
Moreover, investors can copy only one trader per connected exchange account per market type. It means you can copy a spot trader with your Binance spot account and the same or a different trader using the futures account of the same Binance account. But, you cannot copy two traders with a Binance spot or futures account.
Only one, per exchange, per market, and it applies to yourself as well, meaning you must not trade on the exchange account that you’re copying a trader with. If you trade on an investor exchange account that’s copying a trader, you will cause order conflict and malfunction.
One last thing, spot traders should not perform deposits into and withdrawals from their exchange account during an active copy trading session. Futures traders should ensure not to have open positions or orders before and during deposit/withdrawal. Because if you’re an investor, your spot portfolio will resync with the copied trader’s, and on your futures account, you could change your liquidation price if you change your exchange account balance but it won’t happen to your investors’. And, traders must pause their Finestel account, make the transfer, and then resume.
You can connect multiple Binance or KuCoin accounts to your Finestel with different functions (trader or investor) and manage them all using one dashboard. Also, if you’re a KuCoin user, you can create sub-accounts and connect them to Finestel via API connections as alternative exchange accounts. KuCoin sub-accounts are freely available for all users, but for Binance sub-accounts, you need to be a VIP user.
Automated Crypto Trading Using Finestel’s Copy Trading Engine
Select the investor exchange account you want to copy a trader with from your Finestel dashboard and head over to the “Explore Traders” menu.
You can filter traders by the market sector using the icons on top of the page or just scroll down to see the traders’ shelves divided by market sector.
The mini cards show you a brief summary about each trader, such as their profit history chart, return, and pricing, including their performance fee and minimum investment. The performance fee is the share of the copied trader’s profits; it’s in the form of a percentage, and traders define it. Every 30 days from the start of your copy trading, Finestel will realize your profits and calculate the trader’s performance fee and ask your to pay it via your Finestel wallet.
The minimum investment for the spot is the least balance you must have in your exchange account’s portfolio to copy a trader. Doesn’t matter what coins, tokens, or portfolio you have in your exchange account/s spot section, but its value must be equal to or more than the trader’s minimum investment.
For USDT-Futures copy trading we only consider your USDT balance, whether you’re a trader or an investor.
Click on the “View More” button to land on the trader’s profile to extract detailed information and see if they suit your copy trading conditions.
What to Check Before Copying a Finestel Trader
- The trader’s risk level is the volatility you see in their profit history chart; you see very few fluctuations in the profit history of a low-risk trader like Elessar.
- Check the trader’s pricing (the performance fee & minimum investment).
- Trader’s stats tell you the active days of their exchange account, drawdown (the biggest drop of profit), how many trades per week they have on average, and the balance range that tells you how much skin they have in the game with you.
How to choose a trader to copy on Finestel:
Start Automated Crypto Trading in 60 Seconds (Spot Market Copy Trading)
Alright, when you find the trader, hit the “Copy” button on their profile, and a mini window pops up showing your Finestel balance, asking you to pay the monthly service fee (29 USDT).
Unlike the post-paid performance fee, the Finestel service fee is pre-paid and per copy. So you must have at least 29 USDT in your Finestel wallet to start copying a trader. Otherwise, you need to deposit.
Right after hitting the “START COPYING” button you’ll pay the service fee, the copy session starts, and within 60 seconds, Finestel syncs your exchange account portfolio with the copied trader’s; proportionally, though. That means you will have the same asset collection as the copied trader but with a different amount.
After the synchronization, your spot account stays synced with the copied trader’s portfolio through Finestel’s proportional order replication as long as you copy them. Every time the copied trader makes a trade on their exchange account, yours will receive the same trade but proportionate to your exchange account balance.
USDT-Futures Copy Trading on Finestel
Currently, Finestel supports Binance futures copy trading only, and KuCoin’s futures copy trading is not available at the time.
Futures copy trading does not have synchronization like the spot. You will not receive the trader’s existing open positions and orders and new positions/orders of the pairs trader already had orders/positions on. Because those positions could be close to their SL (stop-loss) or TP (target price), replicating them could harm investors’ money. Thus, you will only receive fresh new futures orders.
Frequently Asked Questions
Can I automate crypto trading?
Trading bots are one option, and copy trading is another. Comparing the two, using a trader bot usually requires basic development knowledge and strategy but copy trading does not.
Is automated trading profitable?
The profitability depends on your trading strategy, not the ATS (Algorithmic Trading System), AKA trader bot you use. A well-tested trading strategy will be profitable no matter how you automate it.
How much does a crypto trading bot cost?
Paid trader bots vary in price depending on the ability and the provider. Also, there are open-source bots that are free. However, whether using paid or open-source, you’ll pay trading fees.
Are crypto trading bots safe?
Yes, if you choose wisely, though. Otherwise, you may lose capital due to faulty trade execution or fraud.
Is automated trading legal?
Gekko is the most popular open-source crypto trading bot. Besides that, KuCoin also has a free trading bot section that is reliable and quite well-known.
What makes a good trading bot?
A good trading strategy! Trader bots can automate your trades but not on their own. Bots cannot decide, and they rely on their users’ setup. So, the profitability of a bot pretty much depends on the strategy you define for it.