Using 3 Commas to Fully Automate Crypto Profits
You may have noticed trading bot activity increasing on cryptocurrency exchanges lately. While on the surface it may look like manipulation or something more sinister, this activity is perfectly legal and supported by most exchanges.
In fact, there are a number of third-party applications which allow traders to set parameters for trades to be executed automatically. Many of these client tools are either complicated, expensive, or too underdeveloped to achieve consistent gains. This guide will discuss the one I use to automate my trading process.
Why Should I Automate My Trading?
There are many wonderful benefits to trading with bots. Once you get past watching every single tick in the asset you are tracking, you can let your system of rules take over and trade for you 24/7. Here’s a short list of some of the advantages:
- Minimize emotions and stick to the trading plan
- Save up to hours of charting & order entries per day
- Trade 24/7 and double down on profits
- Remove guesswork, redundancy, and trading errors
- Diversify with multiple coins and/or strategies
- Set targets, stops and safety bids in seconds
- Trade multiple accounts from one central place
How to Get Started With Automated Trading
To get set up, you will need to create an account at 3Commas. My personal choice is the 1-year Pro subscription. If you use this link, you will receive 10% off whichever subscription you choose.
You will then need to create API keys for each exchange account you wish to connect. The instructions to do so are covered in this article. On the left panel of the page, you will find instructions on how to create keys for the various supported exchanges.
At the time of writing, there are 17 supported exchanges including Binance, Coinbase, and Bitfinex. An important note here is that your API keys will not give the third party permission to move funds from your account. This setting should be turned off by default, but just to be safe, you should always make sure that is the case when creating the key.
How Does Automated Trading Work?
Once you have your exchange account(s) connected, you can begin setting up bots to trade your balance. You can choose to trade from a selection of base currencies, including BTC, BNB, ETH, and USDT.
The actual bot configuration is straightforward. If you click on the Presets heading in the side panel, you will arrive at a page that allows you to view bots created by the community. Not only can you view the individual bot configurations, but you can even choose to copy them for yourself.
After clicking on Copy Bot, you’ll be able to see the current settings and alter them to your preference. Most of the bots here are programmed to follow basic Tradingview buy/sell signals. A Tradingview account is not required, however, unless you want to create your own custom signals. We will explore some of the basic settings in the following section.
It is wise to view a few of the existing configurations before charging ahead. In fact, when I first turned on 3Commas, I spent quite a few hours looking at these settings and experimenting with them. I also advise starting with small positions and using safety trades. These will be discussed a little later.
Which Trading Bot Settings Should I Use?
This is where things start to get exciting. The next images show settings for a simple long bot running on Binance Futures. This bot is set to DCA into positions based on a cumulative multi-timeframe buy signal and oversold 15-minute RSI.
A safety trade is triggered whenever the coin drops a certain percentage from the first bid. We’ll be cost averaging into positions in oversold assets that are trending. The main benefit in doing so is the ability to close profitable trades as quickly as possible. For scalping strategies, this is imperative.
The target profit for this bot is 0.8%. We will earn 0.8% ROI, net of trading fees, each time a trade is closed. When it comes to momentum plays, these types of trades can close within minutes or even seconds of each other.
The profits can add up very quickly this way, and due to the cost averaging, one can capitalize on volatility to make outsized gains. For this example, my bot is set to trade a range of 24 different assets whenever entry conditions are met.
Bot Trading Suggestions
To make the most of 3Commas bots, it is important to find the right coins to trade. Being part of a trading community or signal provider can definitely help. Beyond that, it is highly recommended that you learn how to read charts and apply technical analysis. Long-term success depends on these skills.
The amazing potential of 3Commas bots can be realized through identifying and trading cryptocurrencies with strong momentum and/or price support. These factors are sometimes news-driven, but are quite often brought on by the breach of an important technical level.
How to Trade With Hedging (Short) Bots
A more advanced feature of 3Commas is the short bot. Although less commonly used, this is a valuable tool for what it can achieve. There are at least a couple of ways it can be used to put on a hedge.
If you currently hold a position in a coin that is dropping in value, you can use a short bot to sell portions of your stack and buy back at lower price targets. This is an excellent way to build up your long-term holds without coughing up additional fiat to buy more.
The other way to hedge is more strategic. An example will help us understand how to do it. Say our full-size position in a coin is going to be $120. We want to use a long bot to scalp it on the way up but we also want some protection if it starts to drop more than usual.
In this case, we can allocate $120 to a long bot and $60 to a short bot. When the short bot receives a signal, it will hedge 50% of our long trade by entering a position in the opposite direction. This way we’ll remain net long, while applying a short hedge when conditions dictate. This can minimize drawdowns when market conditions quickly turn.
How to Use SmartTrade
The SmartTrade feature of 3Commas is another incredible asset. Within this section, you can place trades on any of your connected exchanges. This offers a huge time advantage, as you no longer need to log in to each individual account to perform a trade.
SmartTrade also includes features like trailing stops, split targets, and trailing for last target to help you maximize profits. You can create multiple buy/sell orders, profit points, stop losses and trailing stops within seconds using this effortless layout. Most of the activities that make trading time-consuming and redundant can be avoided with SmartTrade and 3Commas bots.
Final Thoughts
3Commas is a web-based trading platform that you can use to fully automate the trading process. Its user-friendly layout drastically reduces time spent organizing and planning trades and it provides seamless integration with multiple crypto exchanges including Binance, Coinbase, and Bybit.
The platform allows you to create bots based on in-house signals or custom Tradingview alerts. The SmartTrade feature lets you send dynamic orders to multiple exchanges with lightning speed. The end result is convenience, time savings, enhanced profits, and peace of mind from unparalleled capital management.
