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The prospect of new blockchain trading platforms promising lower fees is enticing. In a trading world increasingly run by smart trading bots, though, switching trading platforms could mean losing trusted automated trading tools. Whether you buy, build or copy trading algorithms, closed trading systems can turn you into a captive audience. Even if you are only eking out a profit on good days using your favorite trading bots, familiarity can breed complacency. Before switching trading platforms, the DIY algorithmic trader should ask, are trading bots and tools on the blockchain worse, as good, or better?
The coming cryptocurrency trading convergence
Once you make the leap to trading on a blockchain platform, you will be privy to all the advantages of trading with open source trading systems and decentralized applications (dApps). Ideally, these systems should aim to allow traders to use their trading apps and analytical tools across currency trading platforms and exchanges. In other words, you can take your bots — automated programs that place buy and sell orders based on pre-programmed trading rules — with you. For blockchain trading, however, it is still early days. Since Nasdaq opened its blockchain services to over 100 market operators, trading has been considered one of the most promising frontiers for the digital ledger. The allegiance to open source code among new and incumbent currency exchanges points to a world of interoperability ahead.
The good news is you may not have to wait for the future of currency trading. Some crypto trading platforms are bringing the market to you, by enabling seamless trading across the major cryptocurrency exchanges and pairs on one trading platform.
This is an exchange that has wasted no time leveraging open source code to bring an unparalleled convergent trading experience to cryptocurrencies. 3 Commas shows all your trading activity across multiple cryptocurrency exchanges in one window, while doing away with the need to individually log into each exchange. Once a preferred exchange is selected, traders enter their API to connect a new exchange to their 3 Commas trading interface. You can now use your favorite set of trading bots opportunistically across all exchanges.
Building better bots
Automated trading algorithms are becoming indispensable to the novice and professional trader alike for the basic functions of entering, executing and canceling trades within predefined profit and loss limits based on price, volume, liquidity, moving averages or other metrics. These bots have traditionally been confined to one trading platform, be it a Metatrader or Bloomberg. Large traders commonly have trading algorithms written for each of the different platforms they trade on. As automated trading programs become smarter, they are becoming even more indispensable.
3 Commas has built a platform on which traders can build, track and copy trading bots. On the 3 Commas trading screen, traders can build their own Bots as easily as placing a trade. Behind the easy to use interface is a powerful trading platform. A unique feature is the ability to place a trade across any of 12 leading cryptocurrency exchanges listed on 3 Commas — Bittrex, BitFinex, Binance, 0 Bitstamp, KuCoin, Poloniex, HitBTC, Cex, GDAX, OKEX Huobi. Traders may choose to trade one, dozens, or more, currency pairs, limited only by the currencies listed on these leading participating exchanges.
When it comes to trading performance, 3 Commas is shaking traders out of their complacency. The average monthly profit of 3 Commas’ 33,000 active traders is 15 percent. Daily trading volume is $10.5 million, doubling over six months ago.
While some traders will still maintain their proprietary trading algorithms, or black boxes, they are incentivized to participate in social trading. All bots can benefit from 3 Commas’ safety trade mechanism, which operates similar to dollar cost averaging — a stock investment method that smooths out the effects of volatility by investing a fixed amount at set intervals — for example, monthly — over a long period of time, which has been shown to produce superior investment returns over a more active trading approach long term.
Let’s say you invested $100 in the ETH/BTC currency pair with a TakeProfit price of $110, or a 10 percent gain. After the automated bot opens a trade under the predetermined scenario, if the price moves up to the predetermined sell price e.g., a 10 percent gain, the order is filled.
However, if the price moves against the sell order by declining, the safety trade mechanism would be activated. If the price falls, the bot places safety orders every x% below the purchase price while averaging the buy price — to $90 USD, for example, thereby lowering the TakeProfit price. When the price bounces 10 percent higher, the bot sells and takes the predetermined 10 percent profit — i.e., $100.
3 Commas makes it easy to identify and follow its profitable bots through its analytics interface and Social Trading feature. A ‘copy a trade’ button is placed beside the daily ranking of bots by performance. Currency pair performance is also listed.
New traders can take advantage of current promotional programs, including free coins and trades, and discounted commissions.