Are you new to Binance – the biggest cryptocurrency exchange in the world? Or are you an experienced trader but don’t have enough time to constantly check the current cryptocurrency prices? If yes, then you should possibly equip yourself with a Binance trading bot.
Trading in Binance is not an easy task because of the hundreds of cryptocurrencies available, the huge amount of liquidity pools, and the thousands of traders all competing on the same platform.
You need to always be on top of your game to gain higher revenue and avoid massive losses within a short period of time. Therefore, to make your investments secure and gain higher incomes from the crypto market, you must use the best Binance trading bots out there. Alternatively, if you want an income source that is risk-free and does not put your capital at risk, venturing into affiliate marketing and checking out this Binance referral program review could be to your benefit.
What is a Binance Trading Bot?
A Binance trading bot is an automated software that helps you buy and sell cryptocurrencies at an appropriate time on Binance. You can either create a trading bot on Binance or deploy a trading bot from somewhere else on Binance.
Nevertheless, the main function of an automated trading bot is to automatically trade either one or many cryptocurrencies on Binance on your behalf. It is specifically programmed to perform certain tasks with minimal human intervention.
How Does a Trading Bot Work?
Trading bots are computer programs that work on behalf of the investor. They invest in crypto exchanges such as Binance based on predefined settings. They offer a great way to earn money from crypto exchanges through emotionless trading and exceptional speed. A crypto trading bot works in the following sequence:
- Data Analysis
Trading bots scan the market and make predictions based on the available market data. They check various sources, interpret the information and then use technical analysis tools to pick the right crypto assets to invest in.
In short, it acts as a professional trader in choosing the best trade opportunities available. One of the interesting features of trading bots is the estimation of the potential risks of an asset.
- Risk allocation
The trading bot will invest and assess the potential risks based on a given set of parameters that are set by you. Depending on how much capital you allocate for your bots to trade, it will decide on how and to what extent it should trade.
- Buying and selling of cryptos
The trading bots will either buy or sell crypto based on your API (Application Program Interface) keys. The API is unique to your account on Binance, which the trading bot will use to buy and sell cryptos.
How to create a trading bot for Binance?
Follow the simple steps to create a Binance trading bot:
- Create your Binance API key
You need to log in to your Binance account and generate an API key. Log in to your account and go to the “user center’ and select “API Management” from the drop-down menu.
If you haven’t enabled the two-factor authentication (2FA) on your account, then do it now. Next, enter the name of your API key and click “Create API.” You will see a pop-up for security verification purposes.
Complete the process and click “submit“. Binance will then send you an email with a link confirming your application for an API key. Go to the link, and you will get your API key and Secret key. If you need more information about setting up the API key, feel free to read our Binance API guide.
- Connect your bot to Binance
Creating a crypto trading bot for Binance can be done using programs like python or websites such as Coinrule or Trality. Whatever you choose, sign in to your bot account and select “Exchanges,” and then copy-paste your Binance API key and Secret key on the appropriate boxes.
Make sure that you don’t give any withdrawal rights to the API trading bot.
- Set the rules
Now that your bot has access to your exchange, you need to make a few sets of rules to enable the bot to trade efficiently. You can customize the rules according to whatever suits your needs.
For example, you must define specific coin rules for every coin in your exchange account. You can choose the amount you want to trade using each coin, such as Bitcoin (BTC), Dogecoin (DOGE) and others.
If you want the bot to trade any of the available coins, then you can select that option too. You can even get Bitcoin trading bots to only trade in Bitcoin.
- Start trading
After you’re done setting all the rules, you’ll need to name your rule and choose the number of times you want it to run. Once you’re done, click “Launch,” and you are done!
How to Use a Trading Bot on Binance?
You need to have a Binance Futures account to start using a trading bot in your account. Follow these steps to get into using Binance futures bots.
- Login to your Binance account and click on “Derivatives” from the top menu bar.
- Choose “USD-M Futures” or “COIN-M Futures” from the top-down menu bar. This will take you to your Binance Futures page.
- Choose “Grid trading” on the right-hand side of the page, and you can create a Binance grid for your trading bot. Grid trading allows you to put a lower price and a higher price within which your automated trading bots will trade.
Pros & Cons of Using Trading Bots
- Emotionless trading
Since the crypto market is a volatile market, it is risky, and humans may find it difficult to keep up with the anxiety. With trading bots, the automated process avoids serious consequences, and lets traders stick to the plan.
- Efficient trading
Automated trading bots are more efficient in trading with the resources they have. They can multitask and analyze data accurately to make the right investments.
- Diversified trading
Trading bots allow the spreading of trading risks at one time. It permits the trader to trade multiple accounts on different crypto assets at one time.
- Regular monitoring
Trading bots need regular monitoring since they may experience connectivity issues, technology failures, or the system may crash.
- Limited cryptocurrencies
Using trading bots may expose you to trading only in a limited number of cryptocurrencies since they don’t have access to all.
There are many websites online that allow you to create an API bot for Binance for free. Generate your Binance API key and link it to your trading bot account.
Use an efficient bot that allows the maximum number of customizations and link it to your Binance futures account.
Binance Trading Bots Conclusion
Binance trading bots are well equipped to perform tasks such as scalping, thus giving you huge returns and minimal losses. Crypto arbitrage trading is very easy, and with the right trading bot, you can earn massive in the crypto market. Deciding if Binance is the right choice altogether for you or if you’re better off setting up your trading bot on another exchange can be hard, but feel free to give our Binance exchange review a read to better be able to make your decision.