A bot for everyone — democratizing algorithmic trading in crypto

New players are bringing legitimacy to trading bots-for-hire

These days, a growing number of trades aren’t executed manually, but through software bots that trade on people’s behalf. This is known as algorithmic trading and it is an extremely common and important trading method on all markets — without trading bots, financial markets, including crypto, would be far less efficient.

If you check the price of Bitcoin at Bitstamp and compare it with any other legitimate fiat-crypto exchange, the number will be almost the same, even in times of very rapid market movements. This is because traders worldwide have integrated bots into their trading strategies to detect opportunities in the market and execute trades far faster than any human could. In the case of closing price gaps between exchanges, this is called arbitrage, and it is a specific use case where bots come in handy because of the trade execution speeds required.

Right now, if you’re not a pro trader, you’re probably thinking “what does this bot stuff have to do with me?” The reason we’re talking about it now is because we feel algorithmic trading in crypto has come to a point where it can start providing value to any investor, regardless of their trading skill or technical knowledge. There’s a bot out there for everyone, even if arbitrage and the efficiency of markets are the last thing on your mind.

Algorithmic trading: What’s in it for me?

For a long time, trading bots were the domain of pro trading firms and tech wizards. We already mentioned one of their uses — arbitrage — but bots do much more than that. A trading bot essentially lets you put your trading on autopilot, executing trades 24/7 according to the strategy outlined in its code.

Just like there are no barriers to entry for crypto trading, nothing is stopping anyone from developing their own algorithm and setting it loose on the market. If you google “crypto trading bot”, you will find a huge number of bots, ready-made and waiting for you to plug them in to your exchange account. Some are for sale, others are subscription services and many are open source (and therefore free). In many cases, these algorithms do not trade at profit, so we suggest extra caution if you’re going to try them out.

All of this has brought us to the following situation: pro trading firms, tech wizards and hedge funds are successfully leveraging bots in their trading strategies, because they have the skill or resources needed to make really good algorithms. The public, on the other hand, has a huge number of bots available, but most aren’t reliable. There are certainly some interesting options available to the common investor, but finding a profitable bot is like looking for a needle in a haystack. Or is it?

Licensed financial service providers now offer algorithmic trading to the public

As the crypto market continues to mature, new players are entering the algo trading space and we’re seeing a new generation of publicly available bots enter the market. Companies that used to solely focus on traditional finance are now turning towards crypto, and they’re bringing their tools with them.

One such company is Napoleon Group — the brainchild of a group of finance professionals who previously managed over $8B in assets at tier 1 banks. Napoleon set out to democratize the trading techniques they used as fund managers in traditional finance and is working on a number of products aimed at crypto. Among these products are NapBots, algorithmic trading tools that anyone can deploy on a few different crypto exchanges, including Bitstamp.

This is not free software — NapBots come with a few subscription tiers based on how much you want to trade with them. It is also not guaranteed to generate profit, as that would be absolutely impossible on a free market. So what’s the difference between the services offered by Napoleon Group or any of the hundreds of bots available online? Sure, the Napoleon team has been developing stock market bots for S&P for over 10 years, but there are a number of bot providers who claim to have similar development experience.

The difference is that this is one of the rare providers of bitcoin trading bots who is subject to oversight by a strong regulatory body and boasts a proven track record of working with financial institutions. Napoleon Group holds an AIFM license from the French financial regulator AMF, allowing them to offer asset management activities and products to institutions and professional investors. This regulatory oversight ensures that all the activities carried out by Napoleon conform to very strict standards. Essentially, it guarantees a high level of customer protection and ensures that any products offered by the company are reviewed and approved by a major regulator.

Deploying bots at Bitstamp: How to run your own NapBots

The newest series of NapBots makes entering the world of algo trading easier than ever. All you need to do is register an account at https://www.napbots.com/signup, set up your bot and let it get to work.

Setting up a bot is done through three simple steps:

1. Connect to an exchange

2. Select trading signals

3. Set the trading amount and pay for the subscription

Off with the shackles on automated exchange of value

As the original global cryptocurrency exchange, Bitstamp has been supporting the crypto industry and watching it mature since Bitcoin’s early days. We’ve seen this industry grow from an obscure space almost solely occupied by grassroots cypherpunks and tech enthusiasts to a major global financial market.

Through crypto’s history, trading bots have always been present. But it wasn’t until recently that players like Napoleon Group started entering the market and bringing a new level of legitimacy to algorithmic trading for the general public. These are professional investment tools, now available to anyone. They are subject to the same oversight required to work with the biggest players in finance, but available with essentially no barriers to entry for the common investor.

Bitstamp is not affiliated with Napoleon Group and we had no part in creating their NapBots, but we welcome this new class of players to our industry with open arms, with the hope that similar businesses will emerge to further democratize the use of automated crypto trading tools.

A final word of caution: Even though algorithmic trading can be automated, you should always monitor your bots and do your own research before using any trading services or tools!