Bot-traded futures, explained

How do bot-traded futures work, what are the top tips for success, and what are the common pitfalls to avoid? This explained article reveals all.

How popular are trading bots in the crypto market right now?

According to TradeSanta, demand for trading bots has increased substantially of late.

The latest figures from the platform’s website suggest that it now has more than 100,000 active users, and over 3,200 active trading bots. More than 3.8 million deals have also been completed since the software launched.

A range of technical indicators are provided by TradeSanta, and the software also allows large volumes of crypto to be bought and sold without causing prices to spike or drop. Trading bots can also be launched in just five minutes using pre-set templates — and alternatively, users have the freedom to build customized strategies from scratch.

Futures and other derivatives have become increasingly popular in the world of cryptocurrencies as the industry matures. TradeSanta is hoping to provide the technology that allows traders to make the most of this new trend and enjoy levels of automation that are commonplace in stocks, bonds, commodities and forex.

Which exchanges support futures trading bots?

Several trading platforms now support futures trading bots via an API, including Binance.

Binance Futures enables traders to use leverage and enter into short and long positions alike. It offers trading pairs that are linked to the USDT stablecoin, and the exchange’s size helps to deliver high levels of trading volume and liquidity. Data from Skew shows that Binance is the biggest platform in terms of futures volumes over a 24-hour period — exceeding the likes of Huobi and OKEx.

Users can hedge positions by shorting cryptocurrencies during bear markets — or go long if they believe that major digital assets are set to appreciate further in the future. All of this can provide a crucial form of risk management for traders in the volatile word of crypto.

One cloud cryptocurrency trading software platform that supports Binance Futures is TradeSanta. But given how bot-traded futures are best suited to those who have higher levels of experience, support for this exchange is only provided through its top subscription package, which provides an unlimited number of bots.

Can trading bots be more accurate than human traders?

Yes — and better than this, they can also remove the emotion from trading.

Automated trading bots can crunch a staggering amount of data every second and come to rational conclusions far faster than human traders can. Whereas a seasoned trader can only digest one chart at once, these bots can capture a snapshot of the whole market instantly. They also cut the time it takes to enter and exit a position.

But accuracy isn’t the only advantage here. Emotions can sometimes get in the way of traders making a rational decision. Thankfully, bots are immune to fear and excitement. This means that a futures trader can set clear objectives in advance, and they won’t have to make snap decisions that they may later regret. And with the Fear & Greed Index flashing scores of “extreme greed” in recent weeks as the crypto markets surged, bots can also allow traders to protect their profits in the blink of an eye.

What are the biggest risks traders need to be aware of?

Futures trading, especially with margin, is riskier than spot trading.

Although bots can have their uses, traders need to be aware that — if the markets aren’t acting as they anticipated — their positions can be liquidated a lot faster if leverage is being used.

These cutting-edge solutions also can’t make decisions on which contracts to trade, meaning that you’ll need to play your role.

If you use a particular exchange for futures trading, you’ll need to find a trading bot provider that offers compatibility through an API. And last but by no means least, you should check these computer programs are fast and reliable. A malfunction at an inconvenient time could cause sizable losses and significant amounts of frustration.

Are there any top tips for successful trading?

Remember that you need to constantly analyze how the markets are moving.

When you’re using a bot to trade futures, you can’t set everything up and forget about it for days on end. Trading bots are designed to enhance the experience, but aren’t a substitute for good old-fashioned human involvement.

Traders who use bots are typically recommended to check their positions at least once a day, as well as how the market is performing. That way, they’ll be able to use their judgement to make tweaks to their strategies. It’s also essential to set stop-loss orders above liquidation prices.

Many trading bot providers offer tools that make it easier for traders to keep track of sudden, significant developments in the markets. For example, some deliver Telegram notifications when action is needed, and mobile apps so strategies can be accessed on the move.

What’s different about using a bot to trade futures?

They allow you to gain exposure to the crypto markets 24 hours a day, seven days a week.

One of the biggest complaints that traders normally have is how they are constantly stuck in front of their screens.

The world of cryptocurrencies never stops, and the market can make big moves at any time… irrespective of whether it’s a Wednesday afternoon or at 3am on a Sunday. This makes it inevitable that sleep-starved traders will miss out on opportunities sometimes.

Trading bots can be the solution here. They allow experienced professionals to set their desired parameters for entering and exiting positions — eliminating the need for them to be in front of their computer nonstop. It also makes it easier for traders to execute multiple orders at the same time.

This technology is also popular in the spot market, where it can be advantageous for forex traders as well as cryptocurrency specialists.