I’m investing $10,000 into crypto trading bots. Now that I’ve spent my money and the clock is ticking, let’s break down crypto trading bots, what they do, when you should use them, and how exactly to set them up. Everything you need to know and of course, we’ll show how much money I hopefully make towards the end of this video. The bots that I’m covering are all located on Kucoin. I will have Kucoin linked in the description of this video.
So let’s take a quick look at Kucoin’s bot page.
That way you can familiarize yourself before we jump into the specific bot types. To get to the Trading Bot menu, you just open up Kucoin and click the Trading Bot button on the home screen. Here you’ll find four pages. First is “Bots”.
This is where you’ll create new bots. Here you can also click tutorials for lots of helpful tips and videos about Kucoin bots. None is helpful as the one that you’re watching right now, though. Second is “Running”. This is where you’ll find any of your currently running bots.
Third is “Profits”. This is where you can see an overview of all your profits or losses from your trading bots. And fourth is “Ranking”. This is basically a leaderboard for everyone using Trading Bots, and you can see how much money or how much losses each and every person has made. And I do have one extremely important note here.
For some reason, Kucoin annualizes all the returns shown on the leaderboard, which is why it says APR, but you can clearly see that most of these bots haven’t even been running for two days. So those percentages are not realistic. The top bots hit upwards of like 10% to 20% returns on a fantastic day, which is awesome. But there’s absolutely no way they’re getting that every single day for an entire year. Now let’s talk about the first bot, the Spot Grid bot.
This is the bot that I just dropped $10,000 into, and it’s probably the most exciting of the four bots. So here’s how it works. The Spot Grid trading bot is designed to thrive in a volatile market by quickly buying and selling as the price of a coin fluctuates.
It does this by placing a range of buy and sell orders between two specific price points. And this is where it gets its name, as the spread of buy and sell orders creates a grid.
So let’s do an example. The price of a crypto is $1. You start a grid trading bot with a range of $0.50 to a $1.50.
If the price drops below $1, the bot buys. If it increases in price, it sells. So let’s say our coin drops below $1. The bot would then buy. If the price dropped further, it would buy more and more as it hit more of those buy orders, aka grid lines.
Finally, it would stop buying if that price hit a low point of $0.50. If it goes below $0.50, it wouldn’t buy any more. Then let’s say the price starts increasing and it climbs above $1.
The bot would then begin to sell, and the higher it climbs above $1, it hits more grid cell lines, and it would sell more and more until the price hits $1.50, in which it would not sell anymore because there’s nothing left to sell.
So the way a bot like this makes money is if the price of the coin bounces, in this example, below $1 and above $1, buying low, selling high again and again. Now when should you use this bot? The grid trading bot, like I said, is amazing for volatile markets.
So similar to how you could short a coin with futures if you’re bearish on its price, this is what you would do if you think a coin will just bounce around at a fairly stable price for a while. Now, another great use for grid trading bots is risk management. Grid trading bots allow you to profit off of price movement without the risk of human error or bad luck, and it caps your downside risk. Grid trading bots run 24/7 and stick to strict parameters. So that means you don’t have to worry about panic buying or selling or missing out on action because you’re sleeping.
In fact, one interesting way that a grid bot can be used for risk management is by trading stablecoin pairs like USDC and USDT, and profiting from little tiny price fluctuations. And while the profits here are very low, you also carry very low risk. Of course, unless USDT just goes ahead and explodes. Now, [Laughs] Now, something I came across when- when learning about the strategy, is that you need to make sure that you check the fees at the time of starting your bot.
If your profits between each buy and sell are too small, too small, that the transaction fees cost more than how much you profit, then it doesn’t make sense to run this bot.
Now, Kucoin actually takes this fee into account when telling you your profits per grid, so you don’t really have to worry about them, but some other platforms don’t. So you’ll want to look out for that. Now how to set up a Grid Bot? You’ll want to go to the bot page and click Spot Grid. This will bring you to the bot specific leaderboard that I mentioned earlier, and then you can just click Create.
Now here you have two options. You have AI parameters or customize. AI selects the price range for you based on the price history of that specific coin, then all you have to do is pick your investment investment and click Create the bot.
Now, if you want to customize the bot yourself, I would recommend looking back in the price history as far as you plan on running the bot. So if you plan on running a Bitcoin grid trading bot for six months, then you want to look back six months and see the low and high price for that range, which is about $30,000 to $60,000 And then you’d set your bot in that range.
Or if you plan on running an Ethereum bot for two weeks, lets say.
You could do something like $2,600 to $3,400 for your range, because Ethereum has traded in that range for the last two weeks, and you’re going out in additional two weeks. Now it’s never going to be perfect, but you wanna trade within a feasible window. And typically the AI parameter does a good job as far as picking wider price ranges. But if you plan on running it for a short period of time, at a tighter price range, it’s typically better to customize it yourself.
And for the number of placed orders, this doesn’t matter too much as long as you don’t go too low.
So if it gives you the option between 2 and 100, anything between about 50 and 100 is fine. Just definitely not 2. And like I mentioned, this is the bot that I dropped $10,000 into. I put $1,000 into ten coins, half of which I used the AI parameters and the other half my own customized parameters.
Here’s how much I’ve made over the first two days. So far, every bot is actually profiting, and I’m up $420. We’ll check back later to see where I’m at after a full week. In the meantime, let’s talk about the next bot. Smart Rebalance At some point we’ve all had a coin that we owned shoot up in price, doubling its weight in our portfolio, and we immediately start thinking, Should I take some profits?
Is it going to correct soon? Maybe I should sell half and put it into my other coins that are still at a lower price.
If this has crossed your mind, Boy, do I have a bot for you. The Smart Rebalance bot allows you to designate a percentage of your portfolio to a selection of cryptos and then automatically rebalances your portfolio. So it always stays at your strict parameters.
So if you want your portfolio to always be 25% Bitcoin, you can use this and you don’t have to think about it after you set it up. So when should you use this? There really isn’t a right or wrong time to use it. It just comes down to your personal preference.
If you’re doing research day to day, and your opinion on certain coins change from time to time, or if you’re constantly buying and selling, then this probably isn’t the bot for you.
This is really built for the type of person who has a handful of cryptos that they really believe in, and they just want to set it and forget it. Now, here’s how you set it up. To set up the Smart Rebalance, go to the bot page and click Smart Rebalance, and then click Start.
Here you’ll find a bunch of portfolios that you can use as a template if you want. It even shows how many people are using each and every one.
And this is a cool feature for checking out what other people are doing. But if you want to make your own, you’ll click Customize in the top right, Here you can click to add coins and select which one you want in your portfolio. We’re just going to pick ADA, Bitcoin, Link and Ethereum. Now you can choose a percentage of your portfolio each crypto will take up, and you’ll see that it defaults to percentages determined by some AI programming. But at the top you can also click Equal weight if you want them all to be the exact same percentage, or you can Select Market Cap to weigh them by Market Cap, which is a nice feature, but something like Bitcoin overweighs the others by a bit too much.
The AI version takes into account more factors, so it’s more evenly distributed while still favoring larger coins. So if you really don’t want to go ahead and decide percentages yourself, that AI option is a good choice, but if you want more control, you can click Advanced Settings and the first setting is the Rebalance method.
It defaults to 1%, meaning that anytime one of your cryptos in your portfolio goes up more than 1%, it will redistribute the weight of your portfolio. But I think 1% is probably a bit low for crypto, so I usually stick around 2% or 3% and then the other two settings are a stoploss and take profits, which are just percentages that you can set either to sell everything if it drops too low or sell if you profit a certain amount.
And these can actually be really useful to take out the psychology of either crypto pumps or corrections in the market.
And then you just pick your investment amount and you click Create and you’re all set. Now bot number three is Futures grid. Now what does it do? It’s the exact same thing as the classic grid bot, but with futures. The difference is this gives you access to two additional tools.
The first one is leverage. This is when you borrow money from Kucoin or whatever exchange you’re using to increase your potential reward, but also your potential risk.
This is very risky and a quick way to lose all your money if you don’t absolutely know what you’re doing. So don’t mess with that unless you’re already an expert. And second is shorting since you’re grid trading futures and not actual crypto, you can actually short crypto with your bot.
Now, the way that you profit when shorting with a bot is either with volatility or if the price decreases and you set this up the same exact way as the other spot trading bot.
Now again, shorting is also extremely risky. So trade with caution. The fourth and final bot before we reveal our profits from that $10,000 bot bet, is the DCA bot, the Dollar-Cost Average bot. Now, this is very useful.
It allows you to invest a large sum of money into a cryptocurrency over an extended period of time without lifting a finger. So instead of buying, let’s say $1,000 of Bitcoin all at once, with the DCA bot, you can buy $100 of Bitcoin ten times over ten days, or maybe $10 in Bitcoin over 100 days.
Now, when should you use this bot? As we all know, cryptos can be a little bit volatile, and anytime you’re buying a large amount of one crypto, you run the risk of accidentally buying on a peak and having a very high average cost. By dollar-cost averaging, you spread out the amount of money and you remove the risk of accidentally buying on that peak.
The only issue with dollar cost averaging is it can be an absolute pain to keep buying these small amounts and remembering, Hey, okay, I need to buy $100 of Bitcoin every single day at 9AM. And this is where the bot comes in because it does it all for you.
So in order to set up this bot, you just go to Bots, you click DCA, then you click Create and you have three steps from here. First, you select the coin that you’re buying. We’ll just do Bitcoin.
Then you customize your DCA. This is where you’ll select how much you want to invest and how frequently. So if we’re buying $1,000 in Bitcoin, we could just do $100 once per day and then we have our profit target.
This is where things get a little bit weird. It gives the option to shut off the bot after a specific profit is reached.
So you can either choose to have it shut off after a specific goal is met, or you can just leave it on continue and the bot will run until you manually turn it off. In our case, we’ll just have to set a reminder in our phone ten days from now to shut off the bot.
Or another way you can do this is by only keeping $1,000 in your trading account and it will just notify you when you run out of money. *One week later* The results are in. I have now been running bots on ten cryptos for an entire week, five of which I set my own parameters, five of which I used the AI parameters.
The coins are a huge variety of market cap size, so hopefully this gives us a lot of data points. My one week profit came out to $545.25 That’s a 5.4% gain in one week. I’m actually surprised at this result.
It’s higher than I expected. So if we look at the daily profit here, we can see every single day was actually profitable, except for one day, I lost a little bit of money.
And the first two days there, I made more money than the rest. And if we go to the individual profits per bot, we can see that none of the bots were actually negative, not a single bot lost money in the last week, and the profits here range from about $9 to $112 is the most profitable bot in that week. So that one was 11.
26% profit. Extremely- I mean, I’m excited about this. Now, I did learn a couple of lessons here because I could have actually made more money. So knowing what I know now, I would have just used the bot parameters for literally everything. The issue is I was setting my price parameters too small and for a few of the cryptos, it just went outside of that parameter and then stopped trading where the AI parameters were much larger.
So I would have made more money had I just kept it with AI. And a bot like this is really good at limiting the downside risk. But unfortunately, that also limits your upside potential. So in many cases, I would have actually made more money by just holding the coin outright instead of using a bot. Now, my biggest blunder here was Shiba.
I set a bot on Shiba with my own parameter and then Elon went and tweeted about Shiba just the other day, during this experiment. The coin went crazy and went up 295% in the last seven days, literally since I bought it’s up 295%.
Meanwhile, my bot, this is painful Meanwhile my bot, made 0.93% less than 1% profit. I would have made $1,950 in profit if I was just holding that crypto.
Now why did this happen? It’s because I set that trading parameter and the coin blew that parameter out of the water and stopped trading. So I got none of those gains. But as much as that sucks, I did have downside protection because if you use a bot and the price tanks, your bot will simply stop trading at a certain point and you’ll lose less money than if you actually just held the coin instead of using the bot. So I made less money than I could have.
But I also had less risk. And, you know, this happens. I can’t complain about making $550 in seven days doing absolutely nothing. I didn’t even check the app for five days, so I can’t complain at all.
So that’s gonna do it for today.
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