Discover bots

Welcome to the second article of our guide about trading bots! Trading bots are becoming more and more common, especially in cryptocurrencies markets. They are attributed many qualities. Some people think they are THE solution to get rich easily and quickly (spoiler, it’s not so easy and fast). Others think, on the contrary, that it is a scam and that there is no point. After 3 years of working on Botcrypto, we are convinced that trading bots have real advantages, but also limits. That’s why we will see in this article what you can expect from trading bots, and what you can’t.

The 4 real advantages of trading bots…

1. Trading bots are operational 24/7.

Unlike us, trading bots are operational 24/7. This is particularly interesting for cryptocurrencies like bitcoin, where markets are continuously open. This means you no longer need to monitor the prices of your cryptocurrencies in the evening, at night, at the weekend, at work, etc. You save time.

2. Trading bots offer new opportunities

Between their permanent presence on the markets and their ability to process a lot of data simultaneously, trading bots offer new opportunities that humans would not be able to seize. Taking advantage of the best prices at any given time, analysing large amounts of data instantaneously to determine entry and exit points, everything is possible for trading bots that bring the benefits of IT. You gain in efficiency.

3. Trading bots don’t give in to their emotions

Emotions are the trader’s worst enemies. And a trading bot, since it is a bot, does not give in to his emotions. He doesn’t panic (neither up nor down) and applies rationally what he was designed for. This avoids the risks of FOMO, Fear of Missing Out, i.e. the fear of missing an opportunity. You gain peace of mind.

4. Trading bots react quickly

For the same reasons, trading bots react quickly. Very quickly. Not to mention high-frequency trading, which is another subject, trading bots can analyse a lot of data and act accordingly much faster than a human. They will have no hesitation. In highly volatile markets, such as with cryptocurrencies, the ability to react quickly is a considerable advantage. You also gain in efficiency.

… and their limits !

First of all, remember that trading bots only do what they are told. There is no magic. You have to pay particular attention to the configuration, and provide safeguards. Risk management is essential. And as usual, you should not put all your eggs in one basket.

First of all, remember that trading bots only do what they are told. There is no magic.

We can also talk about other limits:

• Cost. Trading bots always involve costs. Regardless of the model (subscription, commission, profit, …), these costs must be taken into account in the results. The rates vary from a few euros to several hundred or even several thousand euros per month.
• Security. In order for a trading bot to use your funds, you must give it access to your account on a trading exchange by sharing your API keys. Of course, sharing your API keys is not trivial. There are good practices to follow as we have explained in this article on API keys. You must carefully select your service providers to keep your funds safe, and in particular respect our 3 rules to avoid being fooled by trading bots (article currently only in French).

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You now know the difference the true and false advantages of trading bots. In the next articles, we will learn how to use them correctly to get the most out of them. Do you see other advantages and limits to trading bots? Tell us about them in comments! ✍️

A little reminder about APIs

An API is an interface to access a service: we can make the analogy of the remote control and the television. The remote control is an interface that allows you to interact with the television without touching the wires.

In our case, the API allows access to a trading platform and thus to create cryptocurrency trading bots such as bitcoin or ethereum. The advantage is that you don’t have to give your password but just the API keys that you will learn how to create in this tutorial. If you want to know more about it, see our article How to create your API keys on Kraken? where we explain the APIs in more detail.

How to create your API keys on Binance?

You must first create a Binance account. If you haven’t already done so, you can use our referral link to sign up. Thank you !

The tutorial takes several safety steps but remains simple to implement. After creating your Binance account, go to the API management page. You can also access it by clicking on your account icon in the top right corner and then on API Management.

1. Give a name to your new API keys that will allow you to remember what they are used for, for example API_Botcrypto. Then click Create. If you have already added API keys to your Binance account, you can see them just below.

2. On the window that appears, you must click on Get code to have Binance send you a code by email (if you don’t click on this button, you won’t receive any email…). If you have enabled two-factor authentication, you will also need to enter the code for your application.

3. There you go! Your API keys are created. All you have to do now is enter the API key and the secret key on Botcrypto’s API page to start using our trading bots! Be sure to do this right away or save it in a safe place since the secret key will never be displayed again, and you will have to repeat the whole process.

Finally, you can manage the rights you grant to these API keys. Only the Enable Trading right present by default is needed on Botcrypto but we will review them for you:

• Read Only : gives the possibility to read market information.
• Enable Trading : gives the possibility to open buy or sell orders on your account.
• Enable Withdrawals : provides the ability to withdraw funds from your account. NEVER give this right if you are not 100% sure you need it and to have 100% confidence in the third party service that will use these API keys. We don’t need to have access to this right at Botcrypto, so we advise you to leave it disabled.

That’s all for today. If you have any questions, feel free to ask us in comment and see you soon on Botcrypto 🙂 !

What is an API?

An API, for Application Programming Interface, is an interface to access a service: an analogy can be made between a remote control and a television. The remote control is an interface that allows you to interact with the television without touching the wires.

In our case, the API allows you to access a trading platform and perform various actions. The API saves you from having to provide your password and allows you to limit what the API user can do. Thus it is possible to allow the API user to perform only certain actions on your account such as placing buy or sell orders but without withdrawing your funds. It’s a door that you open with certain permissions, the API keys being the key to access this door.

How to create your API keys on Kraken?

You must first create a Kraken account. If you haven’t already done so, you can use our referral link to sign up. Thank you !

Go to kraken.com and log in, then click on the menu at the top right, then Settings and then API. You arrive in front of your list of API keys.

Then, click on Generate New Key. In Key Description, put a suitable name to remind you that this is the one you are using to create your trading bots on Botcrypto.

It is then necessary to allow the consultation of funds, the consultation of open and closed orders and transactions, the opening and closing of buy and sell orders, as well as the modification of buy orders and their cancellation. Do not give the right to deposit and withdraw your funds!

It is also possible to put an expiration date on API keys (we advise you to put one in case you don’t use it anymore and forget it, it will end up expiring automatically).

To finish click on Generate Key to generate your API keys. The public key and the private key that will be displayed need to be copied on the wallet page.