How to choose a coin to trade with Gunbot
Selecting good trading pairs is a complex topic about which hundreds of articles can be written, but thats not within the scope of this article. Let's stick to the very basics.
- Decide which base coin you want to accumulate. If you are interested in growing your BTC then choose a coin that can be traded with BTC. If you are more interested in accumulating USD (or a similar stablecoin), pick a coin that can be traded with USD. Your options will vary depending on the exchange you use.
- Make sure there is sufficient trading volume. Higher trading volumes make it more likely that your orders get filled, usually you will also generate more trades on coins that have high trading volume. Of course there is nothing preventing you from trading low volume coins, but beware that such markets are usually riskier. You can expect higher trading volumes during office hours in Europe, this is because parts of Asia and USA will are still awake during these hours. Expect less volume, and probably less trades, when both Americans and Asia are asleep.
- Try to avoid coins that just went through (or are going through) a very big move, either downwards or updwards. Typical examples are coins that just got listed on your exchange or just went through a hard fork.
- Make sure there is enough volatility! If you aim for trades that generate 1% profit per trade, pick a pair that has at the very least 1% difference between dips and peaks. Try to find pairs with at least 1.5x the expected volatility vs. your desired gain per trade, this because you won't always buy at the absolute bottom and won't always sell at the highest peak, also there will be trading fees that need to be paid.
Examples of coins not to trade
Make a habit about looking at the charts for the coins that you condider to trade.
It's generally a good idea to look at different periods too, a 15 minute period chart can show a very different picture from a 1 hour chart.
Unless you specialize in bear market trading it is probably better to stay away from a coin that looks like this.
Think twice before trading a pair that just went through a huge pump.
So how does a good coin look like?
Coins that are great for easy bot trading show frequent dips and peaks, with the general trend going slightly up or sideways.
This looks great to run Gunbot on for a day!
You made a mistake and traded a pair that turned out to be a disaster? In this topic you'll learn how to not panic and let Gunbot make the best of it.
~Gun