Automated trading (trading bot) is something that many traders regularly use in the forex market. And after the cryptocurrency market was developed, exchanges using trading coin bots were quickly chosen by traders. Binance is one of several cryptocurrency exchanges that allow the use of trading bots. The following article teaches how to use the trading bot on Binance and some notes.
Table of Contents:
What Is Binance Trading Bot?
According to a default strategy, a trading bot is a software application or program designed to automatically buy/sell on an exchange on behalf of a trader.
Using a trading bot makes trading faster, more disciplined and saves more time for users.
Trading Bot on Binance uses a trading bot created via a programming language and installed on a Binance account via API (Application Program Interface) keys. This feature requires users to have skills in using Python code generators or using bots created by 3rd parties.
In addition, Binance also has a Spot Gid feature that easily supports automated trading. Spot Gid is a tool that supports an automated trading strategy with a preset time and a predefined price range. The Spot Grid feature helps users profit from price movements when the market is volatile or sideways.
How does the binance trading bot work?
The trading bot connects to the cryptocurrency exchange and automatically opens trading orders based on the presets. Users of the trading bot on the Binance exchange must authorize their account via an API key. Trading robots work in three stages: signal generation, risk allocation and trade execution.
Signal generation: After connecting the trading bot on Binance, the signal generator makes predictions and identifies the best trading opportunities based on market data, technical analysis and the parameters required in the trading bot. Translate.
Risk allocation: This feature of the trading bot allocates risk according to preset rules. Like the allocation of trading capital, these rules determine the percentage of activity that the trading bot can make trades.
Trade execution: After the signal generator finds a trading opportunity and determines the risk allocation ratio, the bot executes a buy or sell order. The bot does operations by sending a request through the API key associated with the Binance account and the transaction is executed.
How to use Spot Grid on Binance
To trade automatically through Spot Grid, you need to log in to your Binance account. If you have not opened an account, register an account by following the link below:
On the toolbar, click the Trade tab and select Strategy Trading.
Click Next to see detailed welcome instructions when you access the Bot Grid feature for the first time and select Start Trading.
Then, choose the type of trading asset you want to use Bot Gird: Spot Gird or Future Gird.
Select Automatic or Manual Mode. With automatic mode, users only need to fill the volume of the investment and select Create. Trades are executed according to the preset parameters of the rate of profit and the highest and lowest price fluctuations.
In manual mode, there are two modes Arithmetic and Geometric.
- In arithmetic mode, each grid has an equal spread.
- In Geometric mode, each grid has a rate equal to the price difference.
Enter your transaction information and click Create to complete.
- Lower price: the lower limit price in the grid. Trade is not executed when the market price is below the lower price level.
- Higher price: the upper limit price in the grid. Trade is not executed when the market price is above the higher price level.
- Grid: Divide the upper limit and lower limit price ranges into different grids.
- Invested currency: The user chooses to invest in a cryptocurrency or a cryptocurrency pair.
When you want to stop the active belt bot, click Finish to stop. Running trades will be automatically canceled and Binance will receive profits or losses for you at the market price.
Overall, the Grid feature is a pretty simple form of bot trading. You need to understand how it works to place an order without knowing the 3rd party code generators.
How to use trading bots on Binance?
Using the trading bot is more challenging than using the Bot Grid feature. Users can create bots on their own through the Python code generator or find free bots on the internet. How to use the trading bot is as follows:
Step 1. Generate API key
Log in to your Binance account. If you do not have a Binance account, please register at the link below:
From the Account Management tab, select API Management.
Then, name the transaction bot you want to create and click Create API.
Enter the verification code and confirm the request to create an emailed Binance bot. After clicking the link, the user is redirected to the api management page.
Store API passwords and secret passwords in a safe place.
Do not grant withdrawal permission to the trading bot to ensure the safety of trading.
Step 2. Link the trading bot to your Binance account
Log in to the account containing the trading bot and copy and paste the API key and secret key into their respective blanks. Click Connect to finish.
Step 3. Create your own rule
After successfully connecting the trading bot, the user must set the parameters for the trading bot on the bot’s management page and save it.
Step 4. Activate the trading bot to work
To activate the trading bot, click Start on the bot’s management page. A pop-up window summarizes the set trading rules. Then click Live Launch.
Conclusion
Manual trading has always been the choice of many amateur traders. However, automated trading also has some advantages, such as:
Trading Bot is not affected by emotions.
More than 80% of traders do not make money and lose even more when the mood is not stable. If a suitable trading strategy is chosen, a trading bot helps users to trade more efficiently and disciplinedly. From there, it brings greater efficiency.
Commercial bots are faster and more accurate.
The trading bot can make purchases/sales at any time. This helps traders to be more proactive in managing their personal time and trading time.
