How to Choose a Crypto Trading Bot: Costs, Control, and Transparency

When selecting a crypto trading bot, it is essential to understand the costs, control, and transparency of the service. Different providers offer varying approaches that impact these aspects. Three primary questions should guide your decision-making process: how your money will be used, who controls the trades, and whether the results can be verified.

Three popular trading bot platforms to consider are 3Commas, Bitsgap, Freqtrade, and MillionPool. Each platform has its unique features, costs, and levels of control. For example, 3Commas allows you to connect trading accounts and configure automated trading tools. You can select trading pairs, adjust settings, and have the software execute your instructions.

Bitsgap offers a trading terminal, bots, demo trading, and backtesting. Freqtrade is an open-source trading software written in Python, providing backtesting and simulated operation. MillionPool manages quantitative cryptocurrency spot and derivatives trading, with humans and AI contributing to strategy decisions.

To choose the right service model, determine your needs, such as which strategies you require, how many accounts you plan to use, and if derivatives features are relevant. Consider factors like workflow, required features, testing limits, maintenance, strategy code, operating records, custody arrangements, duration, settlement, and withdrawal terms.

When comparing costs, account for software fees, trading capital, and execution costs. Keep in mind that the dollar amount on a product page does not necessarily indicate the cheapest option. Annual plans often have a different monthly commitment compared to month-to-month payments. For example, 3Commas offers a Starter plan at $20 monthly or $15 monthly with annual billing. Bitsgap's Basic plan costs $29 monthly or $23 monthly with annual billing.

Deploying an open-source bot, like Freqtrade, also has associated costs, such as hardware, hosting, and maintenance time. MillionPool's $500 plan includes trading principal, with no management or platform withdrawal fees. Consider the trading frequency, as frequent trades may incur additional trading fees. Freqtrade's documentation distinguishes simulated execution assumptions from real market execution, accounting for fees on both entry and exit.

Control is another crucial aspect to consider. Understand who holds the money, who can place orders, and who can decide to stop. For tools connected to an exchange through an API, review the permissions granted. Coinbase Exchange documentation outlines View, Trade, and Transfer permissions. Be cautious about granting withdrawal access, as a tool with this permission can still allow losing positions.