How to Beat Trading Bots

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How to Beat Trading Bots

In our other post this week we outlined a report by Cochran.io showing the prevalence of bots in the crypto space.

With more than 86% of capital in cryptocurrency being managed by bots, it can be hard for an honest trader to find success in the market.

We broken down the Cochran.io report to outline the top three strategies you can use to be effective at trading in a market so over run by bots.

Tip #1 - Exchange Choice

In the automated trading report, we found that only 20 out of the top 150 (1.3%) of were supported by publicly available bots.

This means, by choosing to trade on an exchange that has less coverage from bots, you’ll find a slower market that is more likely to be human trading and more rational in its price movements.

Decentralized exchanges also present a larger challenge for bots, and therefore tend to have much lower levels of bot activity.

Which exchanges have no bots or lower levels of bot activity?

  • COSS

  • Beaxy

  • IDEX

  • OKEx

  • BitForex

  • Gemini

  • CoinSquare

Tip #2 - Trade on News and Events:

90%+ of bot trading in the crypto space comes from one of three sources:

  1. "Expert Signals" (usually just pump and dump groups)

  2. Technical analysis.

  3. Listing news.

These data points are taken as input into the bots code and a trade is executed based on those factors. Some will go as far as scraping news sites for mentions of certain coins, but, gathering if the sentiment of the coin is positive or negative is a non-trivial problem, so most stick to inputs that are easy to calculate.

Given that these types of inputs are easy for bots to act quickly on, trading on this basis likely doesn’t make sense.

Instead, consider looking at things like crypto event calendars, where groups post events and release announcements. Since it is hard for bots to estimate the impact and sentiment of these types of posts, they are rarely used in trading - but, going through them manually will prove a great source of information for a human investor with a bit of patience.

Some of these sites include:

Tip #3 - OTC Trading:

Over-the-counter trading (OTC) is the act of trading crypo assets without using an exchange software.

Most exchanges offer private OTC services for large scale clients, but, even if you don’t qualify for the large volume trading you can use OTC services like: