Passive income with crypto trading bots using 3Commas
Introduction
Disclaimer: Trading crypto can result in a loss. Do your own research.
Have you always dreamed about making money while you sleep? With 3Commas, this is now a possibility. Not all of us are traders, and those that are unavoidably need a certain amount of sleep.
3Commas is an automated crypto trading platform. You can use the platform to implement bots to make automatic trades for you. Some of these will use AI, others will use certain signals that trigger an action.
I signed up for a 3Commas trial a few days ago, and put in a minimal amount of funds. I started off with a total of $1500, of which $1k in USDT and $500 in BTC.
In three days, I have made $65 profit. If this trend should continue, I could make roughly $650 a month.
Now if that sounds interesting to you, then let’s get started.
In this article I will go over how you sign up, integrate your exchange, and start your first bot.
Tl;dr — A platform where you can use trading bots for automated profit.
Creating an account
If you’re curious about this platform, and would like to test it to see if it would work for you, you get a 3-day free trial to the Pro plan when you sign up. This means you can use every feature available and not pay a dime. So let’s get started and set up an account. I would appreciate it if you used my referral link, but if you’re not up for that feel free to sign up through the 3Commas homepage instead.
Tip: Enable 2FA to secure your account.
Once you’ve set up your account, you need to integrate your account with your exchange. You do this through an API. (I use Binance, if you’re using another exchange please refer to Google to find the help pages).
If you don’t have an exchange account yet, you can sign up for one through 3Commas for a 30-day free trial. In your 3Commas account, go to Dashboard. On the top of the screen there should be a banner you can click to make a Binance account. Once your account is set up, you will still need to integrate your API.
If your account is set up with the API and added security measures, you can continue to enabling bots.
Crypto Trading Bots
Once your account is all set up and integrated with your exchange, you can start adding bots to do the trading for you. There are several types of bots, and it’s important that you understand the difference:
- DCA Bot — A DCA (or “Dollar Cost Averaging”) strategy is the practice of investing into a currency at preset intervals to reduce the entry price of a position over time and mitigate volatility risk. Tl;dr spread out your investment to average it out and sell at a profit.
- Grid Bot — GRID bot helps you to automatically take profit with little effort. Simply choose a coin and initial investment, and the bot will buy when the price drops and sell when it rises. Tl;dr use a grid on the price chart, buy low and sell high.
- Options Bot — Options can be one of the most difficult financial instruments to master, but this barrier to entry is made up for in their potential for extreme profitability. Tl;dr predict the market in a different way than future trading.
The safest option for beginners would be the Grid Bot. To set up a grid bot, you will need a bit of trading understandance. We will go over the basics of tradings now.
How to use TradingView
You might use CoinGecko or CoinMarketCap to keep an eye on the market. While those are extremely useful, there is a better way to inspect the charts of your favourite coins, and that is TradingView. Firstly, you will need to sign up for an account. You can use it without being signed in, but it’s very handy if you want to make your own indicators and save these, or put charts on your watchlist for easy access.
To demonstrate how to inspect charts on a basic level, I’ll be using the HNT/USDT chart.
The bot works by putting horizontal lines on the chart, half of these “grids” will be for selling, and the other half for buying. As you can see, this means you always buy low and sell high. Be careful when picking your pair, you want a coin that has a high enough volume so that you don’t risk the coin never going up again. Now let’s take a look at this chart in TradingView:
As you can see, this coin loves to dip and go back up. For a grid bot, this is extremely good news. It will keep buying dips, and selling tops. To use grid bots to their maximum potential, you should always keep your eye out for charts like these.
To even better understand the volatility of the coin, enable an indicator.
Once you enable the Relative Strength Index, you will see a purple line underneath the chart. This is, basically, the volatility of the coin. You can notice a pattern here, and if you did, you might be a natural trader. Let’s go over the indicators:
- RSI below 30 >> Huge climbs
- RSI above 70 >> Huge dips
The number 30 and below means that the coin is underbought, and has huge potential for steady climbing. The number 70 and above means the coin is overbought, and will likely dip (hard).
Please note that these are general indicators, there is always risk involved with trading. The coin might not go up once below a certain threshold.
RSI is treated as a “signal” in the DCA bots that 3Commas offers. You can set a bot to trigger once the RSI reaches a certain number. However, only when you have a good understanding of trading, will DCA bots become beneficial. If you don’t know a lot about trading, DCA bots can be very dangerous and result in big losses.
If reading about basic trading and indicators got you interested, I encourage you to learn more about it!
Creating a Grid Bot
A grid bot is by far the safest option, in my opinion. It’s a great way to start your adventure into trading bots and make a decent profit. If you want to read more about how grid bots work, click here.
In order to run a grid bot, you need some of the currency you choose already available in your wallet. Let’s say you’re starting a BTC/USDT bot, you will need both BTC and USDT available. If you don’t have the required balance, the bot will alert you to buy some and tell you amount you’ll need.
Step 1. Select your market, I will use USDT.
Step 2. Select your pair, I will use HNT.
Step 3. Put the amount of USDT to use in. Make sure you don’t use 100% of your balance. Around 80% maximum is safest.
Step 4. Click Create Bot.
Step 5. Activate the bot by clicking the green arrow.
Step 6. The bot will tell you to buy some HNT, if you don’t have any available. You can buy it from the market or set a limit order. Once you acquire the coin, check back on your bot and activate it in case it’s still disabled.
Setting up a grid bot with 3Commas is extremely easy. There’s little maintenance needed to run this type of bot, so I would recommend beginners to only use this type of bot until they’re comfortable with their trading knowledge.
Grid Bot Maintenance
Now that your bot is running, there are some things that you need to keep an eye on. A grid bot only works when the coin is volatile, so if it stops being volatile, you might risk your orders not closing. Therefore, the best remedy is putting your pairs on your TradingView watchlist and taking a look every day. If you notice trends that are not beneficial to the grid bot, it might be a good idea to pause the bot and look for another pair.
Once you stop a bot, the coins will remain in your spot balance. If you wish to sell them, you can do so on the exchange, and reinvest those funds into another grid bot. Obviously, if the coin dipped a lot, it might be worth more to create a short bot instead of selling the coins. However, short bots should only be created once you have a basic understanding of trading, as with DCA bots. So be careful, sometimes it’s better to just HODL.
Final Notes
Now all there’s left to do is to leave your bot running for three days. Make sure you check that there are no error messages during this time. In your account settings, you can connect your Telegram account in order to get notifications straight to your phone. You can also download the 3Commas mobile app to receive notifications there.
If you enjoy using the bot and are enjoying profits, consider extending your membership by purchasing a plan. There is a 50% discount welcome gift active right now, so take advantage of that if you plan on making a purchase.
If you have any additional questions about using the 3Commas platform, please reach out to me through Twitter or Telegram. I will try my best to help you. Furthermore, you can always ask your questions in the general 3Commas Telegram channel, located here: https://t.me/Community_3Commas
