Trading Bot 101: Three Main Strategies You Need to Know About KuCoin Trading Bot

2021/05/10 10:59:05

The launch of the KuCoin exchange’s official trading bot has garnered much attention in the crypto sector. Over the first half of 2021, the exchange constantly kept working on the robot in order to boost its functionalities and features and make it useful to as many users as possible, regardless of which asset they wanted to trade on the platform.

As a result, the robot can already be used for three different types of trading, with more in the pipeline, expected to come at some future date. So far, there are three main strategies that users can utilize in order to make a profit, namely:

Classic Grid
Futures Grid
DCA

Classic Grid Trading Bot

Classic Grid trading, or spot trading, is a well-known and very simple trading strategy that seeks to make a profit from market fluctuations by positioning buy and sell orders. This is nothing new in the crypto industry, and it all revolves around simple, but fully automated, placing of buy orders when the price of your preferred token goes down or placing sell orders when it goes up.

Grid trading is the basic type of trading, and so it is something that can easily be handled by KuCoin’s trading bot. However, it is also the safest way to trade, with the least amount of knowledge needed to optimize the robot and make it perform in accordance with what you need it to do.

Of course, the reason why the robot is so successful is that its decisions are not affected by the human factor. The robot is programmed to do everything on its own, from collecting data to making a forecast and then acting on those forecasts. As a result, investors gain profit after submitting an investment to get the robot started. Everything else is done by the AI.

There are certain terms that you need to know here in order to provide parameters that the robot will use as a guideline for its activities, such as the Min. Price, Max. Price, No. of orders places, and alike.

Futures Grid Trading Bot

After the creation of the Classic Grid Trading bot, KuCoin decided to also add support for Futures Grid, in order to help investors earn profits in yet another popular way. Just as the name suggests, Futures Grid Bot is a combination of futures and grid trading, which can bring grid profits for users when going long or short.

The robot will divide users’ investments into several grids, and keep buying low and selling high. The Futures Grid Bot can be used by investors who want to go short, as well as those who wish to go long, or even by those who want to increase their profits by trading with leverage.

The robot is also suitable for users who do not want to be exposed to high risks, or those who wish to trade in the futures market but lack the experience. With the futures market offering great possibilities even when the prices are dropping, futures trading is very popular during bearish periods. However, with the number of new traders being constantly on the rise, it is worth remembering that most of these traders are newcomers who do not have the knowledge, experience, and skill to trade futures.

This robot can help them, as it does most things automatically, and so the user doesn’t have to do almost anything apart from providing the initial investment and a few parameters that would provide the robot with a base idea of what is expected of it.

DCA Bot

Lastly, KuCoin exchange also offers the third type of trading robot, known as the DCA Bot. This is a robot that exploits the investment strategy known as Dollar-Cost Averaging. This is not exactly a new strategy in the world of investments, and a lot of people are quite familiar with it. In fact, many have been doing it manually for a long time.

However, this strategy can be quite a hassle if users need to purchase cryptocurrencies on a daily basis. It is a repetitive strategy that is not that interesting or exciting, although it can secure quite decent returns over time. But, this repetitiveness is exactly what makes it perfect for a DCA Bot.

Essentially, all that the user needs to do is deliver the funding to the robot, and then instruct it to purchase a certain amount of their chosen cryptocurrency in a specific time interval. Or rather, to spend a certain amount of the deposited funds for purchasing specific crypto in a specific time interval.

In other words, you can deposit a few thousand dollars and then instruct the robot to buy $50 worth of BTC every day, or every other day, and slowly build up your position.

Conclusion

In the end, every investor has their own style and preference with trading, and if you don’t, that only means that you didn’t spend enough of your time doing research. For a lot of investors, there are only a few strategies that are right for them and fit their style. Perhaps only one of the mentioned strategies will work with you, and perhaps none will. More trading bot strategies are expected soon, one of which might fit your trading needs.