Have you been looking for a promising crypto trading bot? Kucoin, though its primary purpose is a centralized exchange, it now offers its users the capability to trade cryptos algorithmically. We made this guide for you to find your way easily around Kucoin Trading Bots. That however does not mean that we endorse them. We always recommend that you should trade at your own risk. Furthermore, we recommend that you use platforms that you have personally researched and feel confident about. Kucoin exchange offers 5 different bots; Smart-Rebalance, DCA (Dollar Cost Average), Infinity Grid, Futures Grid, and Spot Grid crypto trading bots. These bots allow you to grow and improve your portfolio if properly used. However, great rewards typically tend to come with greater risks. In this article, we will try to pinpoint some of the pros and cons of using each trading bot. Furthermore, we will explain in great detail how these bots can be set up to your advantage.
Kucoin Trading Bots: Smart Rebalance
Kucoin dubs this first bot "Smart-Rebalance" as the purpose of the bot is to adjust your portfolio depending on the price of various assets. Thus, if you're familiar with the decentralized algorithm of Balancer, the principle of smart rebalance bots is relatively similar. However, it is done in a centralized manner on a CEX. The concept of the bot allows the user to select which currencies he would like to trade, and what % of the total value should they hold. Then the bot automatically rebalances between the pre-selected currencies. This kucoin trading bot is triggered either based on a customizable recurring time or percentage difference.
Smart Rebalance Bots: Pros & Cons
| ✅ Pros | ❌ Cons |
|---|---|
| Easy to use and setup | If the price of one of your selected currencies goes to 0 with no hope of recovery (like luna), you would lose a lot of other preselected currencies and buy a lot of the undesired currency (in this case Luna) |
| If you're a beginner in crypto trading bots, you can easily copy the portfolio of someone else. | Similarly, if the price of one asset goes up a lot more than the other assets forever, you risk having less of that cryptocurrency than buying & holding |
| Eliminated 3rd party risks as all trades are performed on Kucoin itself. | You have to entrust a centralized exchange as long as you wish to keep the bot running. |
| No Cost to run bot | High minimum investment |
| Works in extreme market conditions | Bad for small market-cap cryptos |
As you can see above, using a smart rebalance bots if properly set up can be very profitable. However, if you use a smart-rebalance bot and have it set up badly, or are backing the wrong crypto, it is possible to lose it all. To find out more about setting up kucoin trading bots, simply follow this link to get a detailed explanation from Kucoin themselves or watch the video below.
How to use the Kucoin smart-rebalance bot?
Kucoin Trading Bots: DCA (Dollar Cost Average)
The dollar-cost average bot is the perfect bot to enter a cryptocurrency during a bear market. All you can do is essentially set the bot to purchase your desired cryptos. Furthermore, you can set up the bot to automatically sell when your profit has reached a certain %. Therefore, the bot helps you get a lower average price (as the price of cryptos decreases over time in a bear market).
DCA: Pros & Cons
| ✅ Pros | ❌ Cons |
|---|---|
| Great entry to some cryptocurrencies during a bear market. | If a cryptocurrency just keeps going down, you will still end up losing (it will simply purchase the cryptos and hold them). |
| Removes emotions from purchasing and entering a particular cryptocurrency. | Have to trust a centralized exchange to hold your funds while they are running in the bot. |
| Great for long-term strategies, (you can set it up to simply notify you when reaching the take-profit point, thus not selling any cryptocurrencies). | Bad for shitcoins, if you're investing in a shitcoin, you want to catch the hype. |
| No Cost to run the bot |
The DCA bot is one of the best options to enter a cryptocurrency, be it a bear or bull market, purchasing cryptocurrency over time allows you to acquire a decent average price and be prepared for the bull market. Dollar-cost average bots do not bank on volatility. Therefore, even if the crypto prices drop and rise at around the same price level, the dollar-cost average bots will not capitalize on these market movements.
How to use the kucoin dollar cost average bots
If you're looking for a step-by-step tutorial on how to use the bot check out this article made by Kucoin. Furthermore, the article linked describes the use case and some other pros for using their service. Please keep in mind, once the cryptos are purchased using the DCA, they are simply sitting on the exchange. We strongly advise you to withdraw your cryptos to an external wallet upon completion of the automated recurring purchase.
Kucoin Infinity Grids Explained
The primary purpose of the infinity grid bot is to capitalize on the volatility of a cryptocurrency during a bullish market. The concept of the bot is to maintain a certain value in cryptocurrency. For instance, if you have set up the bot profit to 1%, then whenever your portfolio goes above 1% it would sell, likewise, whenever it would go below it should buy automatically.
Infinity Grid: Pros & Cons
| ✅ Pros | ❌ Cons |
|---|---|
| Capitalizes on the volatility of markets | Has a minimum price thus if the cryptocurrency goes down below it, it would not be optimal |
| Keeps a $ value of your selected cryptocurrency | High minimum investment |
| Great bot for a bull market | Extreme market conditions are limited by the grid |
The Infinity Grid bot offers an impeccable trading opportunity when in a bullish market. However, when the markets take a turn for the worse, this bot can quickly lose its value. Furthermore, this bot is not suited for extreme market conditions. We do not recommend using this bot if you're new in trading cryptocurrency, or if it's your first time setting up a bot.
How to use Kucoin Infinity Grid?
You can check out this in-depth explanation of the Kucoin infinity grid by following this link. Make sure to set a stop price when investing through this means.
Kucoin Trading Bots: Futures Grid
The kucoin futures grid is a feature that allows you to automatically place orders with leverage. The principle of this method is to utilize the market's minor swings to make a quick profit. Thus, the bot's main use case is for short-term trades (perhaps even day trades) where the markets are relatively stagnant. To find out more about how you can set up your own Futures Grid bot, please visit the following link for a detailed explanation.
Futures Grid: Pros & Cons
| ✅ Pros | ❌ Cons |
|---|---|
| Perfect for minor crypto movements (when the price remains relatively stable) | Big market moves in the wrong direction will most likely end up liquidating your position |
| Brings great profit if you correctly predict the markets (when you place a long you bet it will go up, and when you place a short order you bet it will go down) | High minimum investment |
| Utilizes grid mechanism for minor market swings | High risk & high reward |
| Great for short-term trading | Bad for medium/long-term |
Spot Grid Trading Explained
Finally, we come to the most famous bot around. The Spot Grid trading bot is a cryptocurrency trading bot that will automatically place buy & sell orders between two price points. The principle is that as long as the price comes back to the point at which you entered the bot, you are in profit. However, if the price of your selected cryptocurrency rises too much, you will be left with only dollars. Similarly, if your selected cryptocurrency falls too much, you will end up only with your selected cryptocurrency. The main use-case of this trading bot is for stormy market conditions, where the price comes back to the same point over and over again.
Spot Grid Bot: Pros & Cons
| ✅ Pros | ❌ Cons |
|---|---|
| Great for volatile markets where the price remains relatively stagnant | Stops trading when out of the price range. |
| Can be very profitable and easy to setup | If you select the wrong cryptocurrency, the total loss of funds can incur |
| The price range can be set to what you want, fully customizable | When the market goes up too high, it no longer capitalizes on the currency |
| Works well short to medium-term. | Suited for pre-set market conditions |
How to use Kucoin Spot Grid?
If you're more of a reader than a visual person, you can check out this text-based article to set yourself up with kucoin spot grid trading.
Disclaimer
There are risks when investing in crypto trading bots. Familiarize yourself with these risks before making any investment. Thus, as always, DYOR!!! Furthermore, Kucoin is a centralized exchange, as such, all funds on the exchange should not be considered yours. As the saying goes, "not your keys, not your coins!".
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