Top 10 FAQs About Trading Bots by Newcomers

Q1. Are KuCoin trading bots free? What are the trading fees?

KuCoin trading bots are available to all users at no additional cost.

Spot Bots
Trading fees for the bot are the same as KuCoin’s standard spot market rates, with a 20% discount on Lv. 0 Maker/Taker fees for selected coins when used with spot trading bot strategies.
Applicable to: Spot Grid, Infinity Grid, Smart Rebalance, DCA, Martingale, and all future Spot strategies.

Example: Using a KCS/USDT Spot Grid Bot, KCS is classified under Class B with a Lv. 0 Maker/Taker fee of 0.2%. As such, the discounted fee rate for Bot users is 0.16%.

Futures Bots
Futures strategies incur a fixed Maker/Taker fee of 0.06%.
Applicable to: Futures Grid, DualFutures AI, and all Futures strategies in the future.

 

Q2. I’m a HODLer and I pursue long-term value. As a long-term holder, which trading bot should I use?

HODLers tend to prefer long-term asset growth. Over time, they’re looking for a rate of return that could be anywhere from 10x to even 100x the initial price.

As such, even market downturns could be considered a good time to hoard assets, since the price of the asset would be relatively low. In times like these, the Smart Rebalance and DCA bots are better strategies for accumulating assets.

The DCA bot uses a regular fixed investment strategy, commonly used in traditional financial markets for assets such as gold and stocks. In a volatile and downward market, using an appropriate DCA strategy can help to average out buying costs and optimize asset allocations for potential high returns.

Smart Rebalance automatically makes intelligent and dynamic adjustments to your existing asset portfolio, according to the market ups and downs. With the purpose of maximizing income, it works to optimize the ratio of your positions in each asset.

For example, say you have both BTC and ETH in your currency portfolio. When the price of BTC rises, the bot would automatically sell a certain amount of ETH to buy more BTC, and vice versa.

The bot can take advantage of exchange rate fluctuations between different currencies to earn coins. In this way, your funds will continue to increase, and your returns will increase accordingly once the market begins to pick up again.

 

Q3. When trading in a bear market, which trading bot should I choose?

“Is it possible to make profit in a bear market?” some might ask. Of course! One such way is by buying bottoms and earning short-term profit amid the market’s fluctuations.

However, timing the bottom is difficult for most, and it’s even possible that the market reverses further on you in volatile conditions. In short, bear markets can be an incredible test of skills and market psychology, and not all newcomers may be equipped to handle them yet. Furthermore, the volatility of bear markets can range much wider, requiring traders to commit more time and energy to find success.

With all this in mind, the trading bot strategies KuCoin offers can help you better compete in a bear market.

1. Grid Bots: Spot Grid and Futures Grid
In bear markets, prices can often chop up and down repeatedly, leaving few if any trading opportunities. This means about 70% of it would be considered a volatile market. One way to capitalize on this is to use grid trading to automatically buy low and sell high within a certain price range. This earns you small grid profits, which can add up over time.

2. DualFutures AI
In volatile markets, rebounds and pullbacks can frequently occur. DualFutures AI can quickly capture rebounds, using pullback trading signals that are based on technical indicators to open and close positions. This is suitable for profiting from swing trades after small and mid-cycle trend reversals. As such, regardless of whether the market is an up or downtrend, it’s able to seize opportunities and obtain two-way profits, be it going long or short.

3. Martingale Bots
In both long and short volatile markets, the Martingale bot continuously buys as price drops by a fixed percentage, and sells once the market reverses to reach a predetermined selling point. This way, the risks are relatively manageable, and returns are generally stable. It is suitable for most markets except for one-sided markets, and works best for medium and long-term volatility.

To learn more about the various trading bot types, check out the KuCoin Crash Courses on KuCoin Learn to get started on each product.

 

Q4. Which coins are best suited for trading bots?

Different types of bots are suitable for different coins.

Grid strategies, such as the Spot Grid, Futures Grid, and Infinity Grid prefer mainstream currencies such as BTC and ETH, or trending tokens with larger trading volume and high volatility. Only with a large enough trading volume can there be sufficient trading depth, letting the grid bot's orders be executed quickly. During volatile markets, the high volatility help grid bots trade frequently, finding more arbitrage opportunities, and thus earning more profit.

For DualFutures AI, the strategy also prefers trading pairs with high volatility and large trading volume. This gives it more room to find trading opportunities when a rebound or pullback occur. As such, it’s great for both mainstream and meme coins.

Trading bots suitable for long-term investment include the Infinity Grid, DCA, and Smart Rebalance. These work best for mainstream coins or value coins with some sort of market recognition. When it comes to opening a position in a bear market or bottom and holding it until the next phase of a bull market, the increase in value for such tokens are bound to be the highest.

 

Q5. Is there any risk of loss with trading bots?

First, we’ve to understand that trading bots are but a tool. They are designed to automatically execute specific trading strategies for a chance to yield profit under certain market conditions. As for how to use it, select the right bot for each market, and when to enter and exit, every trader's decision-making process is different.

Put simply, all trading decision still have to be made by yourself and yourself alone, and the trading bot is just another execution tool. Thus, just like any other investment, there is no guarantee of profit and it comes with risk of loss.

When facing possible risk of loss:
1. One should exercise reasonable money management, and invest only funds that one can afford to lose. These investors should also regularly review and adjust their trading strategies.
2. Investors should actively track market dynamics and the assets they are trading to make more timely decisions.
3. Any investment decision should be based on sufficient research and understanding. Before investing, it’s a must to exercise due diligence. Create trading plans, and seek advice from professionals where necessary.

 

Q6. How long should a trading bot be run for?

This depends on the trading bot strategy you’re running.

Long-term strategies: Smart Rebalance, DCA Bot and Infinity Grid
People who use these strategies tend to be position traders. They usually use these bots to open positions in bottoms or bear markets and let the bots run long enough to go through a bear-bull cycle. As such, it can be normal to run these bots for several months or even over a year.

Short and medium-term strategies: Spot Grid, Futures Grid, DualFutures AI and Martingale Bots
Such strategies are suitable for running in the medium or short-term volatile market. As long market volatility persists, the bot can continue to run. However, this requires you to still monitor market trends and adjust the runtime of the bot from time to time. Norma runtime can range from a few weeks or months.

The Futures Grid is also suitable for when the markets fluctuates greatly in the short-term. If you predict that the market will rise or fall in the near future, you can create a Futures Grid in advance, choosing to go long or short and closing the bot in time the moment your profit target is reached.

 

Q7. My Spot Grid or Futures Grid is operating at a loss, what caused it?

Common reasons include entering at high prices or misjudging market directions. Here are some scenarios to avoid:
1. Spot Grid Bot enters at a high price, followed by a one-sided fall.
2. The Futures Grid was opened in the wrong trade direction, resulting in unrealized losses.
3. In volatile markets and due to a lack of patience, the bot was stopped ahead of time before reaching take-profit position.
4. The grid parameters were not set properly, or the price interval is too small, causing profits from the bot to be worn out by trading fees.

Is it possible to remedy such issues? Of course! Since we know that trading results are affected by win rate, profit and loss ratio, and the number of trades, working on these 3 areas can help increase profitability when grid trading. Some ways include:
1. Getting better at deciding when to long or short while using the Futures Grid to increase your win rate.
2. Improving position management and allocate your risks within reason.
3. Set appropriate parameters, focusing on the number of grids and the grid interval, which determines the frequency of grid trading.

 

Q8. How to get more profitable with the Futures Grid?

First, accurately predict market trends over extended periods using reliable technical indicators. This helps you capitalize on significant market movements.

Secondly, use it for automatic arbitrage trades. This strategy allows you to generate profits in volatile markets and mitigate losses due to price pullbacks in trending markets.

In summary, by tracking trends to forecast market directions and using grid profits to counteract losses from pullbacks, you can optimize your trading outcomes.

 

Q9. Can trading bots automatically manage my stop losses and take profits?

Yes, KuCoin’s trading bots do support automated stop loss and take profit functions within their advanced settings.

Setting a stop loss means the bot will sell all of a position when the market hits your predefined loss threshold. Similarly, a take profit setting prompts the bot to sell when the market reaches your targeted profit level.

 

Q10. How to set parameters when using trading bots for the first time?

For beginners, there are two user-friendly options available. The first would be a simple AI setting, which uses historical data to automatically suggest the optimal trading parameters.

The second method is AI Plus. As of now, the AI Plus mode is exclusive to the Spot Grid. This mode does not require setting any manual parameters. Instead, the AI automatically configures them and executes trades based on strategic algorithms.

For experienced traders, one might prefer the Custom Mode, which allows for manual adjustments based on personal market analysis and strategic preferences.