Guide To Algorithmic Trading For Cryptocurrency

  • Algorithmic trading entails employing computer code to automatically enter and exit trades based on predefined criteria
  • It assists traders in better managing their risks and minimizing any potential losses that may occur when trading
  • The main advantage includes time efficiency, its fast-paced and Auto-Adjustable characteristic
  • Its cons are that sometimes it is unreliable and Not Good for HODLing

Crypto Algorithmic Trading Explained – How Does It Work?

Crypto Algo Trading: A trading algorithm or technique is a system of principles that determine when trades should occur.

crypto trading bots

Algorithmic trading involves using computer code to automatically enter and exit trades once certain criteria are met. It can eliminate the effect of emotions on your trading, increase your activity, reduce the time you spend on analysis, enable you to backtest strategies, and improve your execution speed.

A crypto trading algorithm is a set of principles and rules in the form of mathematical formulas and equations that decide when to sell or purchase a certain cryptocurrency. Cryptocurrency algorithmic trading refers to the employment of algorithms in the trading of cryptocurrencies. Importantly, these algorithms are bundled as programs known as crypto trading bots. The phrases mathematical models and equations may lead you to believe that algorithmic trading is usually a difficult procedure, but this is not the case.

Technology has led to the introduction of such programs/bots, as well as their growing acceptability and use. Obviously, they have, to some level, reduced emotions and impulsive trading, especially if used as advised. This, along with the other advantages, are strong reasons why crypto trading algorithms should really be an element of any cryptocurrency trading strategy.

There are several important applications of algorithmic trading on the crypto market. First of all, it helps traders to better manage their risks and minimize all the potential losses that might take place while trading. On top of that, another important aspect of algorithmic trading is that it tells you which is the right time to buy the specific cryptocurrency and which is the right time to sell it. Consequently, it is not surprising that this computer program, in most cases, is very beneficial in terms of generating huge amounts of profits eventually.

Besides, algo trading crypto gives crypto investors the opportunity to trade on multiple exchanges, depending on the cryptocurrency trading bot you are using.

Realizing the fact that 95% of day investors lose some money is crucial to understanding why crypto trading programs and bots are essential. If you want to start trading cryptocurrencies with algorithmic trading you are recommended to choose a good trading strategy first. Choosing the best trading technique takes much study as well as time. Bitcoin traders frequently employ a long-term strategy, whilst other cryptocurrencies are traded using shorter-term approaches. So once you have chosen your appropriate cryptocurrency to trade with, you will be able to choose the best and most efficient strategy that will work for you in the future.

Crypto Algo Trading – Pros And Cons

There are several important things to consider in terms of Algorithmic Cryptocurrency Trading. The major thing is it has its own pros and cons that every person needs to take into account before starting trading. The main advantage includes time efficiency, its fast-paced and Auto-Adjustable characteristic. On the other hand, its cons are that sometimes it is unreliable and Not Good for HODLing. We will describe those factors briefly down below.

Time Efficient

algo trading cryptoOne of the greatest advantages of using crypto algorithmic trading is that it is way more time-efficient than manual trading. Market analysis takes time. In addition, you should constantly watch price fluctuations to decide the best moment to trade. Part-time investors may not be able to do all of this manually, this is why they usually use algorithmic software systems in their trades.

Besides, most of the traders do not have enough time to do the necessary research of the current market performance which is why it might become the reason they will not manage to gain a big amount of money from their trading.

On the other hand, the best cryptocurrency trading algorithm software gives investors the chance to save time on doing analysis as it does all the important stuff for them. This will help them to become more productive traders and generate a significant amount of profit eventually.


Another significant advantage of crypto trading bot algorithms is that it allows traders to enter orders more quickly. Essentially, the algorithmic trader is programmed to open positions whenever a specific price level is achieved. This protects you from missing out on drops. Crypto traders that trade in the crypto market might benefit greatly from faster order entry. There are several instances where the market performance fluctuates fast at a specific moment. So When a price drops to something you want it buys it immediately without you having to log into your account and buy it yourself.

As a result, there is a good probability that crypto traders who do not employ this type of trading will be unable to respond quickly to this ideal scenario. The computer algorithm, on the other hand, has the best ability to express current market circumstances and create a quicker order entry when it is the most appropriate period of time. As a result, it is not unexpected that those who use automated crypto trading are able to make a substantial profit when trading in this industry.


While talking about the advantages of algorithmic trading for cryptocurrency, another thing that should definitely be considered is its auto-adjustable characteristics. The algorithm detects changes in the market, considers the sentiment of the market, and comes out with a conclusion on what to buy and what to sell.

There are a lot of cases when the market becomes extremely volatile, meaning that the currency prices start to fluctuate very quickly so no one really knows what might happen in the future and what type of direction the market performance will take. Therefore, it is extremely important to implement a cryptocurrency algorithmic trading platform in order to manage to deal with these sensitive times and not to lose a big amount of money while trading. Besides, auto-adjustability means that the computer program will evaluate the best possible time and situation to buy and sell the specific cryptocurrency at the given period of time.

Sometimes Unreliable

algorithmic cryptocurrency tradingHowever, it should also be mentioned that using algorithmic trading has its own disadvantages as well that everyone needs to consider if they want to start trading with them. The First and foremost thing the potential traders should take into consideration is the fact that sometimes the latter is unreliable. Crypto Algo trading is still being developed to be super-efficient, but right now it is prone to some malfunctions and bugs. It is not surprising since the computer program has to process a huge amount of information and sometimes errors take place. This might be an obstacle for most of the traders, especially in sensitive times, when every second is extremely important and decisive.

Nobody knows when the Malfunctions and bugs can be awaited, it can happen at any time and any minute which makes the overall cryptocurrency algorithmic trading unreliable. However, if you choose a good platform to trade with, those types of risks will be minimized.

Not Good For HODLing

crypto algo tradingAnother disadvantage that should also be noted is that algorithmic trading for cryptocurrency can not be good for HODLing. This algorithm is designed to trade in the short term, meaning that you can not use it to buy something and then hold onto it for a long time. This is an important con that every trader should take into consideration especially when they are motivated to start long-term trading rather than a short one.

In most cases, people use the HODLing strategy in order to generate a substantial amount of profit which they are unable to do in a short period of time. On the other hand, crypto Algo trading can not give the investors the opportunity to buy the specific cryptocurrency and hold it until it reaches the desired level in terms of the price. This factor reduces the chance of gaining big payouts in the crypto market.

What Did We Learn From This Crypto Algo Trading Guide?

A crypto trading algorithm is a set of rules and principles expressed as mathematical equations that determine when to sell or buy a specific cryptocurrency.

Algorithmic trading tells you which is the right time to buy the specific cryptocurrency and which is the right time to sell it.

One of the most significant benefits of having crypto algorithmic trading is that it saves a lot of time compared to manual trading.

Crypto Algorithmic trading is still being considered to be ultra-efficient, on the other hand, it is currently prone to malfunctions and errors.

Common Questions On Crypto Algo Trading

Is Crypto Algo Trading Profitable?

Crypto Algo trading can definitely be very profitable. It advises you when is the best moment to purchase and when is the best time to sell a certain coin. As a result, it is not unexpected that in most situations, this computer software is quite useful in terms of creating massive sums of money in the short run.

Can You Automate Crypto Trading?

Crypto trading can indeed be automated. Algorithmic trading entails using computer code to automatically enter and exit transactions in accordance with the given criteria. A crypto trading algorithm is a set of principles and rules expressed as mathematical formulae and equations that determine when to sell or buy a certain cryptocurrency. The use of algorithms in cryptocurrency trading is referred to as cryptocurrency algorithmic trading.

What Is The Best Trading Bot For Cryptocurrency?

There are several best trading algorithms for cryptocurrency in this industry. However, one of the best is considered to be Bitsgap. Bitsgap is a software that allows users to effortlessly trade and manage bitcoin on all exchanges from a single platform. It provides a very high level of service in terms of quality so that traders will not be afraid of any further errors while trading.

Can Algo Trading Make You Rich?

Algorithmic trading, as trading with cryptocurrencies in general, can definitely be very profitable and can make you rich. However, it is impossible to say the exact number of possibilities it holds. What can surely be said is that this algorithm is designed to trade in the short term, meaning that you can not use it to buy something and then hold onto it for a long time. This aspect decreases the likelihood of large rewards in the cryptocurrency market compared to manual trading.