Choosing a Strategy
What is the best bot strategy for you?
There are all kinds of different bots out there whether it is an arbitrage/MEV bot, token lending bots, margin or leverage bots, or market maker bots. Then on top of that, you have a handful of strategies within each bot, Scalp bots, Day Trading bots, Swing Trading bots, Buy & Hold bots. It can be a bit overwhelming picking what type of bot you want to trade.
For the average person they will just be using a regular bot that doesn’t do arbitrage, lending, or market maker. Most regular bots will give you the option to choose if you want to use leverage or not.
Scalping bots involve very fast trades and usually very low profit and stop loss levels. These types of bots may also be trading the 1 minute or 5 minute chart. For example, a scalp BTC bot may operate on the 1 minute chart and has a 0.5% take profit level and a 1% stop loss. So BTC may only need to go up or down a few dollars and you could be in and out of that trade in a matter of minutes. These strategies usually offer up multiple trades per day.
Day trading operates quite similarly to scalping, it is just a little bit slower. Day trading bots may execute buys and sells same day or within a few hours, where as scalping bots may be in and out in minutes. Day trading bots generally target volatility in the market and capture it intraday. These bots generally operate off of the 1 minute, 5 minute or 15 minute chart.
Swing trading bots generally try to generate profit from price fluctuations that may occur between a 2-7 day time frame. These bots you may be entered into a trade and it may not hit take profit or stop loss levels for a few days or a week. The longer time frames utilized generally result in lower risk levels as they have more data to base their trades on. Swing trading bots generally operate off of the 15 minute, 1 hour, 4 hour, or daily chart time frames.
Buy & Hold
Buy and hold bots operate off a fairly basic premise, they identify buy points based off the bot creators preset parameters but usually don’t have take profit or stop loss zones set, or if they do, they are set very high. The point of this strategy is to allow the bot to catch lows on a token you want to hold long term and the bot can help you DCA your position. These bots are usually created off of the daily, weekly or monthly chart.