Diligently checking the crypto markets on a daily—or perhaps hourly—basis: it’s an adrenaline rush, but is it the most efficient way to trade? If efficiency is your goal, algorithmic cryptocurrency trading bots can help.
What are crypto trading bots?
Cryptocurrency trading bots are computer programs that create and submit buy and sell orders to exchanges based on the rules of a pre-defined trading strategy. For example, a very simple trading bot might be programmed to sell Bitcoin when its price reached a certain threshold.
In short, crypto trading bots enable trading based on data and trends—not on emotional impulse. Ultimately, this usually grows their profits, minimizes their risks, and limits their losses across exchanges. Furthermore, bots can produce passive income 24 hours a day. Whether you’re sleeping, biking, giving a presentation, whatever: you could also be earning from automated trades.
Automated trading is supported by a growing number of platforms, but we’ve done the research and presented our favorites below.
Common crypto bot trading strategies
Arbitrage bots
Source: Cryptohopper
A crypto arbitrage bot is a computer program that compares coin prices across exchanges in order to make automated trades that take advantage of price discrepancies.
For example, a BTC arbitrage bot might identify that Bitcoin is trading for $200 more per token on Kraken than it is on bitFlyer. It would then buy BTC on bitFlyer and quickly sell it on Kraken in order to make a small profit.
Grid bots
Image source: Hackernoon
A grid bot is simple and good for beginners. You simply set multiple “grids” of upper and lower cost limits for a certain cryptocurrency. The bot then makes a series of interchangeable trades and incrementally accumulates profit. Let’s say you had the following parameters for COMP:
Lower limit: $100
Upper limit: $200
Grid quantity: 10
If the price of COMP is at $150 when you program the bot, you will have 4 open orders for sell and 5 open orders for buy. If the price increases to $16, the bot will automatically place two paired orders: sell at $160 and buy at $150. The $10 profit is added to your balance.
Sandwich bots
Sandwich bots detect when a trader is placing a bid on a token. They then place a higher bid on the same token, betting that the trader will still want the token. If the bot wins the token, it will immediately try to sell it to the original bidder at a higher price.
Best all-around: Cryptohopper
Cryptohopper has a lot of might: it works with 100+ tokens on 15 exchanges and has hundreds of thousands of users. As such, its packages—which range from $0–$99/mo— offer something for everyone. Beginners will find a wealth of educational resources, templates, and signals, while experts can design and backtest their own strategies. Hosted in the cloud for quick deployment, Cryptohopper’s deep toolbox and user-friendly interface make it a good all-around choice.
Exchanges: Binance, Binance US, Bitfinex, Bitpanda Pro, Bittrex, Bitvavo, Coinbase Pro, Crypto.com, HitBTC, Huobi Pro, KuCoin, Kraken, OKX, Poloniex,
Fees: Free to $99/mo (annual discounts available)
Programming Language: User interface, no programming required
Best bot for day traders (on-prem): Gunbot
Gunbot isn't especially easy to use, but it's full of features—if you're willing to get over the learning curve. This tool's price reflects that it's a tool for very advanced traders, particularly those who are comfortable coding their own scripts.
It works differently than most bots: it's a one-time purchase of a software download. This means that its security depends on you, and also that you can resell the license if you're not satisfied or stop using it. Gunbot has an active community for support and pre-built scripts.
Exchanges: Beaxy, Binance, Binance Futures, Binance US, Bybit, Bitfinex, Bitmex, Bitmex Testnet, Bitstamp, Bittrex, CEX, Coinbase Pro, FTX, Gate.io HitBTC, Huobi Global, Kraken, Kraken Futures, MEXC, okGunbot, OKX, Poloniex, Txbit, others through CCXT library
Fees: Lifetime licenses range from $9 or .014 BTC to .04 BTC
Programming Languages: Javascript or user interface
Best bot for day traders (cloud): HaasOnline
HaasOnline's on-prem TradeServer has long been a solid but pricey choice for traders who write their own scripts. However, HaasOnline recently expanded its offerings with the beta release of TradeServer cloud, which gives traders access to its tools 24/7/365 on any compatible device. What's more, HaasOnline's cloud version employs Edge Computing, which means its bots are closer to exchanges' trade servers, giving this solution lower latency than many competitors.
Exchanges: Binance, Binance Futures, Binance.US, Bitfinex, BitMEX, bitpanda Pro, Bitstamp, Bittrex, ByBit, CEX.io, Coinbase Pro, Deribit, FTX, Gemini, HitBTC, Huobi, Ionomy, Kraken, Kraken Futures, Kucoin, Mandala, OkCoin, OKX, Poloniex
Fees: .005 BTC to .012 BTC for 3 months (6-month and annual discounts available)
Programming language: HaasScript (proprietary)
Best for Python: Trality
What sets Trality apart is its powerful Python API, which lets traders use this familiar language and libraries to develop bots. Its in-browser coding features include intelligent autocomplete and backtesting, debugging, and soon, rebalancing. This bot has been slower than some others to introduce new features and exchanges. However, its easy-to-use Python integration and detailed documentation make complex bot building more transparent.
Exchanges: Binance, Binance US, Bitpanda, Coinbase Pro, FTX, Kraken
Fees: Free to 60 EUR/mo (annual discounts available)
Programming Languages: Python
Best bot for advanced traders: 3Commas
3Commas offers sophisticated trading options in a user-friendly, surprisingly affordable package, making it a good choice for independent traders looking to adopt more complicated strategies. For example, options trading is a tricky business, but 3Commas has a simple, highly-visual user interface that helps investors program automated options strategies. As an added bonus, 3Commas’ blog offers valuable insights, analytics, and guides for crypto traders.
Exchanges: Binance, Binance Futures, Binance Margins, Binance US, Bybit, Bybit Futures, BitMEX, Bittrex, Bitfinex, Bitstamp, Crypto.com, Deribit, FTX, FTX Futures, FTX US, Gate.io, Gate.io Futures, Gemini, Huobi, Kraken, KuCoin, OKX, Poloniex
Fees: Free to $99/mo(annual discounts available)
Programming Language: User interface, no programming required
Best bot for beginning traders: TradeSanta
TradeSanta markets itself as great for novices, and so it is, with affordable pricing, approachable mobile and desktop interfaces, risk management tools, and pre-built templates. However, what really makes it stand out is its user support chat, which isn't very common among competitors; "Santa's Helpers" are standing by to help.
Exchanges: Binance, Binance Futures, ByBit Coinbase Pro, HitBTC, Huobi, OKX
Fees: $25-75/mo (annual discounts available)
Programming Language: User interface, no programming required
Best exchange-built bots: Pionex
Pionex is a cryptocurrency exchange that gives users access to 12 free trading bots, including grid bots and arbitrage bots. The $0 price tag is appealing. So is the fact that because the bots are built into the exchange, the user doesn’t need to wrestle with any API integrations. Be aware, however; to fund your account with USD, you will need to download Pionex Lite, a second app.
Exchanges: Pionex (arbitrage is on spot-futures)
Fees: No monthly price, but .05% trading fee on each grid trading transaction and Pionex takes 10% of arbitrage profits, although holding BUB can reduce fees
Programming Language: User interface, no programming required
Best free trading bot: Ichibot
Ichibot is more of a tool than a bot. It's run completely through the command line interface and won’t make any trading decisions on its own. It’s a trade strategy design platform for those who prefer code over clicks. Users can design complicated trade strategies for Binance and FTX and execute them in real-time to take advantage of market fluctuations.
Exchanges: Binance, FTX, Bybit, GlobeDX
Fees: None
Programming Language: Used as a CLI (Command Line Interface), but written in typescript
Best social trading bot: Shrimpy
Shrimpy is focused on long-term portfolio management. In addition to enabling automatic trading, portfolio rebalancing, and cross exchange performance monitoring, Shrimpy also connects users with a unique social feature. Traders can copy trade the strategies of top users. Or, if their own trades are highly successful, they may find themselves on top of Shrimpy’s “leaderboard,” which provides an opportunity to earn monthly income from posting.
Shrimpy’s community, large number of supported exchanges, and easy-to-use interface have made it a premier automatic trading platform.
Exchanges: Bibox, Binance, Binance US, Bitfinex, Bitmart, Bitstamp, Bittrex, Bittrex Global, CEX,io, Coinbase Pro, FTX, FTX US, Gate.io, Gemini, HitBTC, Huobi Global, Kraken, KuCoin, OKX, Poloniex
Fees: $19 to $299 per month (annual discounts available)
Programming Language: User interface, no programming required
Best for long-term portfolio strategy: Stoic
Stoic is a long-term bot from Cindicator that works like a hedge fund. Linked with a user’s Binance account, the bot allows users to establish a portfolio with some or all of the altcoins on Binance with a trading volume over $10 million. Then, it rebalances the portfolio’s balances automatically based on the forecasts of a network of 180,000 financial professionals.
Exchange: Binance, Binance US
Fees: 5% management fee (minimum $1,000 AUM)
Programming Language: None, mobile app
How do you file taxes for crypto bot trading?
You’ve selected your bot, programmed its strategies, and watched its results. Now, how do you file taxes on these transactions?
Put simply, crypto bots trade on exchanges on your behalf. So, when it comes time to report cryptocurrency on your taxes, you just need to import your trades from these exchanges into cryptocurrency tax software. It’s the same process you’d use for trades you make yourself.
When choosing a bot strategy, it’s crucial to be aware of how many trades the bot will be making. High frequency trading bots making dozens or hundreds of trades a day can result in tens—or even hundreds—of thousands of transactions that must be reported. This increases the complexity of your tax calculations, even if you're using a crypto tax calculator. However, if you determine high frequency passive crypto trading is the right strategy for you, TokenTax can handle such trading with the appropriate crypto tax plan.
