Crypto Trading Bot Strategies in 2024

Trading crypto in 2024 is nothing like trading crypto in 2017, when DeFi summer seemed to have made trading crypto easy. It’s not even the same as trading crypto in 2020. Many old strategies are too saturated or just don’t work anymore. Fundamentally, trading crypto has become a lot faster and more precise. Which is to say, it has become the domain of those who know how to use crypto trading bots and crypto trading bot strategies. 

What are Crypto Trading Bots?

On a very basic level, crypto trading bots are programs one can use to set up buy and sell orders ahead of time, based on predefined rules. There are more active crypto markets than one can count, and they are active 24/7. Humans cannot keep up with the trading opportunities that pop up at any given second in some remote corner of the cryptoverse. But bots are designed to scan the markets 24/7 and pounce on a pre-defined opportunity in a millisecond. 

The rules set for crypto trading bots depend on the type of bot and the needs of the user: from simple limit orders to complex parlay ones, attack ones like front-running and sandwiching, and the launch-targeting token sniping ones. The question then becomes “which bot to use?” — and the answer depends on one’s strategy. 

Key points to Consider When Choosing a Crypto Trading Bot Strategy

There are a number of different factors traders should consider when selecting a crypto trading bot strategy.  These include:

• Risk tolerance: With big risk comes big reward. But it also works the other way. So a trader must realistically evaluate his risk-tolerance (and greed level) before placing trades or even choosing the type of bot to use. The general rule in trading is to always only put on the line the amount of money one is ok with losing, no more.
• Market conditions: When the market is in a very bullish pattern, it’s risky to bet against it. When the market is going sideways, it’s dangerous to bet on a big move in either direction. That being said, studying market conditions and history may lead a trader to develop powerful contrarian or predictive strategies that could pay off in a big way if they are proven to be correct. 
• Trading goals: Some traders can trade every minute for hours. Others prefer to only trade once a week. Some seek small gains repeated many times over. Others only go for big, 10x gains. A trader must be crystal clear about his trading style and goals.
• Level of experience: It should be obvious that a new trader needs to be careful, learning the curves with smaller, safer trades. More experienced traders tend to have more data points and a stronger intuition necessary to take bigger risks and put more capital into play.

Top Crypto Trading Bot Strategies for 2024

Because the crypto market is so fresh, there isn’t a definitive crypto trading strategies book. Choosing a trading bot strategy depends largely on one’s trading style. But it’s also important to understand what kinds of crypto trading bots are available (and the advantages/drawbacks of each).

Sniper Bot Platforms

Unibot: One of the earlier bots to hit the market, Unibot made waves by essentially starting the Telegram crypto trading bot trend. In addition to sniping, it offers all kinds of other automatic trading types.

Pros: 

• The original Telegram trading bot
• Has a market scanner for finding new tokens
• Works across 4 chains

Cons:

• Rather primitive compared to newer bots
• Horribly unresponsive customer service
• Lack of confidence in the Unibot led it’s token to lose almost all of its value — down 96.6% from ATH

Noti: Next-gen bot focused specifically on sniping and thus beating out other sniping bots on speed, execution, UX, and user protection.

Pros: 

• Fastest with best UX: Gets users to snipe ahead of other bots
• Automatically protects users from rug pulls and MEV attacks
• Practically free since paying the gas fee gets users free $NOTI tokens
• Uses trained AI models for market analytics and predictive analysis. 

Cons:

• Still in beta, awaiting full release
• Snipe-only at this point: no copy trading
• Token not yet released, can only buy via pre-sale

Maestro: Popular Telegram trading bot, with more features than Unibot, such as automatically cashing out of a coin once it starts trading on an exchange.

Pros: 

• More features than Unibot
• Whale tracking and copy trading
• Automated ICO investing

Cons:

• Expensive, charging a 1% fee on all transactions
• Does not work on Solana
• Learning curve favors tech-savvy users

These are just some of the sniper bots out there, each with both pros and cons that suit specific crypto trading bot strategies. At the end of the day, it’s important to not be distracted by bells and whistles. Instead, it’s recommended to use the best tool for the job. Before sniping tokens, it’s a good idea to learn more about sniper bots using on crypto platforms.

Grid Trading Bots

For those traders who not only welcome volatility but want to profit from it, grid trading bots offer an interesting strategy. Essentially, they place buy and sell orders at various price points above and below the current market price of a crypto asset, thereby forming a grid. Their hope is to buy as the price goes down and to sell as it goes up, all within the grid. This strategy has its own risks, such as one of the volatility escaping the grid and making a strong move in one direction, putting the executed grid orders deep into the read (and possibly liquidation) territory.

Arbitrage Bots

Because each exchange (both centralized and decentralized) has a specific mix of liquidity it has access to, the price of an asset on one exchange may be different than on another. Arbitrage bots monitor multiple exchanges to catch significant enough price difference to make a profitable trade buying a crypto on an exchange where it is cheaper and immediately selling it on the exchange where it is more expensive. The drawback of this strategy is in how quickly prices change and in the variable gas fee costs. Even the fastest bot may not be able to always get the second part of this arbitrage trade executed in time for it to still be profitable.

Other Potential Strategies

As mentioned above, there are all kinds of trading bots. Basically, for every strategy out there, a bot can be built. Here are just a few more examples:

• Trend Following Bots: Crypto markets are all about trends, whether a multiyear bull/bear one, or shorter-term ones. Bots can be used to recognize pre-programmed indicators of a trend forming and then execute orders that would allow the bot’s user to ride the wave of the trend to profit.
• Mean Reversion Bots: Just like there are trends, there is also reversion to the mean. Price action momentum to either side tends to get exaggerated by fear and greed. More often than not, sudden sharp bursts in volatility will at some point revert back to the pace of movement more consistent with historical price action. Bots can take advantage of this pullback.
• Scalping Bots: There are two types of scalper bots. one purchases valuable or rare assets (such as NFTs) as soon as they are available to sell them once their value grows. Another type is similar to trend following bots in that they will purchase a rising asset to squeeze out profit from its continued climb, quickly selling it off after their minimal profit has been reached. The goal is to make many tiny profitable transactions, aka high-frequency trading. 
• Accumulation Bots: These bots are not about a quick profit but rather to help you accumulate a large position in an asset without revealing your intentions to others. It does so by placing seemingly random orders across price  points and time intervals.  
• DCA (Dollar-Cost Averaging) Bots: As the name suggests, these bots place periodic orders for the same asset in order to make sure it doesn’t miss the times when the asset’s price is low. The goal here is accumulation over the long term.

Whichever combination of bots you use, it’s important to keep track of them and reevaluate your strategy periodically based on the results. Bots are not a panacea: using them has both pros and cons.

Pros and Cons of Using Crypto Trading Bots

So what are the pros and cons of using crypto trading bots? A tool is just a tool, no matter how good. Knowing its advantages and issues puts the user in a stronger, smarter position. It may even lead traders to find the most profitable crypto trading strategy.

Pros:

• Automate trades and remove emotions from the decision-making process: Humans are prone to fatigue, emotions, and various human-specific errors. A well-built bot does exactly what it’s been asked to do.
• React to market changes faster than humans: The human brain is powerful, but today’s software is much faster. When profit and loss can be separated by microseconds, bot traders have a distinct advantage over their human counterparts.
• Backtest strategies and optimize performance: Bots not only execute fast but can backtest millions of scenarios faster than a human can even imagine one.
• Help with portfolio management and diversification: Even if the human user is really good at analyzing one strategy in one market, the bots can be used to diversify into other strategies and markets. 

Cons:

• Risk of malfunction or bugs in the bot’s code: Any program can have bugs in the code. Bots are heavily tested and audited both internally and externally, but bugs happen.
• Limited ability to adapt to unforeseen market events: Bots only know what they’ve been programmed with. Integrating AI models (like in the Noti example above) helps a lot, but it’s still early. Bots can easily miss a “black swan” event.
• Dependence on the quality and reliability of the bot: Many bots don’t come as advertised, with their actual performance failing when it comes to order execution, usability by humans, and customer support (perhaps why Unibot’s token price has fallen so hard).
• May not outperform the market consistently: Just like humans, the bots are not guaranteed to always be successful. Sometimes the best strategy is to buy a token and HODL. Bots are more suited for people who look to make outsized gains and are willing to take on some risks. 

Conclusion

In summary, there are many different bots out there, with quite a few of them offering multiple bot trading strategies. It’s up to the user to choose the best bot and the most profitable crypto trading strategy. When choosing a bot, traders should consider both how effective and how usable that bot is.

FAQ (Frequently Asked Questions)

Understanding that readers may have questions not addressed above, a quick FAQ section could be helpful.

• Are crypto trading bots legal?

Yes, most bots are legal. However, any illegal activity done using a bot is still illegal, including insider trading and fraud.

• Do crypto trading bots guarantee profits?

No. Profits are never guaranteed in any trading market, else that market would not exist. Bots simply help traders sharpen and automate their trading strategies.

• How much do crypto trading bots cost?

The cost depends on the bot. Some charge a flat fee. Others charge a percentage point of trades. Yet others are free or essentially free. It is worth pointing out that many bots share some of their profit with their token holders, often driving the price of that token up significantly. This may be less applicable to already established tokens like $UNI, but can be lucrative for newcomers like Noti, whose $NOTI token is currently still in pre-sale at prices lower than the last public sale round.