How effective are Bitcoin trading bots?

One thing that clearly differentiates the cryptocurrency market from the stock markets is the fact that it has no open and close time. This makes trading the market highly stressful for traders, especially novice and casual investors in cryptocurrency.

The highly volatile nature of Bitcoin also added to the injury. Bitcoin investors would be familiar with either the joyful or sinking feeling of waking up in the morning to discover a pleasant or unpleasant surprise arising from seeing large gains or losses in their Bitcoin portfolio.

Therefore, Bitcoin  investors looking for a way to remain in control of their trading at all times, hence, the adoption of Bitcoin trading bots by Bitcoin investors (either for free from open-source platforms or licensed to users in exchange for flat fees).

N/B: Bitcoin trading bots is a software program that interacts directly with the crypto market or exchanges and places buy or sell orders on behalf of the trader based on the interpretation of relevant market data obtained via API’s.

These bots, especially with their ability to stay awake even while the trader is asleep, have become increasingly popular among traders nowadays.

How Does Bitcoin Trading Bots Works

Bitcoin trading bots work using a variety of signals and indicators, such as indices and moving averages trends. One profound advantage of trading bots is that they help traders make money in the crypto markets without wasting lots of their time.

Since Bitcoin trading is all about mathematics and complex calculations of probability, it is generally believed that computers would always be faster and perform much better than humans at trading.

More so, Bitcoin trading bots allow trading to be executed round the clock, faster, without emotions, and “more efficiently” than the Bitcoin trader would be able to do manually. However, does this mean that Bitcoin trading bots are more effective and should be favored over manual trading? I doubt if the answer would be a “Yes.”  

With over 50% of crypto traders trading Bitcoin passively and unable to devote a large amount of their time to analyze the market situation, the Bitcoin trading bots become very useful, enabling traders to establish more efficient Bitcoin trading without having to keep on top of the market all the time.

However, Bitcoin trading platforms only gives half of the “necessary” information. Fluctuations/moving trends in the crypto market are also based on other sources, such as tweets on Twitter or other online rumors, which may not be accessed by the Bitcoin trading bots for analysis.

Hence, Bitcoin trading bots cannot factor in insider knowledge, breaking news, fundamental analysis, and many other factors that make the Bitcoin market move.  In short, offering from Bitcoin trading bots is fairly simplistic i.e. the trading bots are only effective at performing arbitrage.

N/B: Arbitrage is the act of simultaneously buying and selling Bitcoin to capture slight differences in price on different exchanges.

So, the trading bot may only purchase some Bitcoin at a low price on an exchange and automatically sell it back at a higher price on another exchange. However, the profit margin for arbitraging seems to be less than 1% per day, which is not the best strategy to maximize profits. So, if you can make a 2% return on $1000 from manual trading, will you settle for the less than 1% return a day from a trading bot.


On a final note, if you’re committed to Bitcoin trading, you may consider an option that combines both human efforts with automated convenience – manual trading when you are available and bot trading when you are not.

When choosing an exchange, we recommend you got for one that has one or all of the following features: security, low exchange, mobile app for easy access.

With all these aforementioned features, one platform that comes to mind is bitmama exchange. A faster, easier, cheaper and secure way to trade over 30+ cryptocurrencies. Signup today!

Also Read

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Bitmama Team

Mar 31, 2021

4 mins read

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