Automated Crypto Trading Decoded


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Researcher with iCompareFX

The cryptocurrency market, unlike stock markets, remains open all the time. Traders and investors who have tested these waters can well vouch for the feelings of sudden elation or despair when they witness an overnight change in fortunes, this way or that. However, can anyone actually keep a round-the-clock eye on the crypto market?

How Do Crypto Trading Bots Work?

You may think of a trading bot as robot broker of sorts, one that executes trades through online cryptocurrency exchanges. Trading bots send trades to an application programming interface (API), and the API then transfers all the trade-related information to a cryptocurrency exchange. The bot actually does not interact with the exchange, the API does.

Benefits of going this way include being able to increase trade volume, as well as identifying opportunities faster and at the right time.

It was only a matter of time before trading bots became popular with traders, giving them the ability to stay in control of their trades at all times. While there are scores of trading bots from which you get to choose, you need to look at various factors if you wish to benefit through the time, money, and effort you put into the process.

Access to Trading Signals

Good automated crypto trading bots should give you access to multiple trading signals. People who are new to the world of automated trading stand to benefit through the trading suggestions of buying and selling particular cryptocurrencies at specified times or prices. While trading signals were mainly generated manually in the past, trading algorithms and bots are now capable of creating and sending trade signals automatically.

Integrated Trading Platform

A trading platform typically comes as part of the package, essentially serving as a terminal that you use to implement different strategies. For instance, you might consider using a trailing stop loss order to keep an eye on the price until there is a reversal in the market. You may also consider using other strategies such as stop-loss and take-profit concurrently. Incidentally, the service provider you shortlist should offer integration with one or more prominent exchange trading platforms such as BINANCE, BITTREX, and BitMEX.

Security Matters

Reliability and security play crucial roles because this realm is not devoid of its share of unscrupulous elements. If the service provider you select requires withdrawal rights, you might want to move to your next alternative. This is because finding companies that execute orders on your behalf, while trading directly on the exchange side, is not difficult. This way, all your cryptocurrency remains stored on the exchange.


If you choose a program that you need to save on your hard drive, you might need to think about getting access to a server. Besides, updates tend to be an ongoing process. With a cloud-based solution, everything you need is online, and you may access the same platform from no matter where you are.


There is no shortage of crypto trading bots out there, ranging from free software to subscription-based models. What you should look for in the one that may work best for you include ease-of-use, profitability, as well as quality.

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Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from iCompareFX and is being posted with permission from iCompareFX. The views expressed in this material are solely those of the author and/or iCompareFX and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

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Disclosure: Order Types / TWS

The order types available through Interactive Brokers LLC’s Trader Workstation are designed to help you limit your loss and/or lock in a profit. Market conditions and other factors may affect execution. In general, orders guarantee a fill or guarantee a price, but not both. In extreme market conditions, an order may either be executed at a different price than anticipated or may not be filled in the marketplace.

Disclosure: Digital Assets


Trading in digital assets, including cryptocurrencies, is especially risky and is only for individuals with a high risk tolerance and the financial ability to sustain losses. For more information about the risks surrounding the trading of Digital Assets please see the “Disclosure of Risks of Trading Digital Assets“.