KuCoin's New Arbitrage Bot Trading

KuCoin proved to be a worthy exchange to explore, but their mobile bot trading is all the rage.

“The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street.” ― Jesse Livermore

After I familiarized myself with the base functions KuCoin’s exchange and did some trading and futures, I downloaded their mobile app. I decided to give a Classic Grid (Volatility Killer) arbitrage bot a try. I went with XRP for a USDT pair as I knew it was a rapidly traded asset with a low price point and a bullish stance. I was quickly pulling profits from my phone larger than I’d been seeing recently with my familiar desktop environment, which I have always preferred with a passion. I have since made KuCoin my primary exchange.

However, bot trading via mobile comes with many advantages, such as not being glued to my monitors all day. You have the ability to set price alerts for drops and spikes. Then there is the best part - arbitrage bots make you money (or at the very least help you from losing it) by automatically executing pair trades when they are in your favor in the market. These bots run 24 hours a day, 365 days a year - which means it helps make you money while you are sleeping, studying, busy with friends, or working. Whether you knew it or not, you’ve been competing with them in the market for a long time.

Due to my hectic schedule, I knew I had to make some changes in the way I was trading, or I would continue to frustrate myself with little progress as I was making rash decisions on a far-stretched schedule that were ultimately costing me money. I am glad I went this route. I feel like a fool for not using trading bots in the past, but waiting for KuCoin’s friendly UI was worth the wait. I hated mobile trading in any form prior to using KuCoin, but I find I can do everything I could do on an exchange like CoinbasePro from my Samsung Galaxy, and it isn’t likely to make me blind from a poor UI, either. I still like to watch Bitcoin on desktop, though.

When you go to start a bot, you will need to deposit some assets to your trading account first. I have been using USDT for USDT pairs, but typical pairs are available. For the extremely active pairs, there is often a base amount required of 100 or 500 dollars equivalent in assets, but that isn’t bad; most don’t require a minimum, and there are a lot of them. For this article, I decided to do something I would ordinarily never do and buy in high in the market to XRP and let the money roll for a day or so; this way, I could illustrate the way the bot works via screen snap and show you why KuCoin calls their classic grid bot their volatility killer.

PnL is a trading term for Profit and Loss and is a calculation of your profits or losses since entering the market. Grid profits represent the profits the bots have made in arbitrage trades since the time you started the bot upon entering the market. The floating PNL is the active or current number for your total profit and loss, while your total profits subtract or add your bot arbitrage trade gains from your total losses and profits to give you an exact number for what your cashout would be at that moment in time. I bought into the market at 1.80 while it sits at 1.70 currently.

In this situation, I have built up a little over 22$ USD in bot trades which are represented by my grid profits to combat the -36$ USD I found myself in for buying high right before a Bitcoin (BTC) drop. I will be the first to note this is not ideal; the ideal move would have been buying in low and being way up in total profits multiple times by now, and you can get far more bot trades (arbitrages) than this with a more significant pay per arbitrage (bot trade) depending on how much you have invested, and what you are invested in, as well as your bot parameters which can be customized. Obviously, this is not the time to cash out, so I will let patience work its magic, bot style.

You’ll notice I won’t need to hit my entry point to break even due to the bot profits; a significant difference from typical trading where all you factor from your PNL is the trade fee. There is a small trade fee upon shutting down these bots, but it’s next to nothing and hardly noticeable. I would say a bigger factor upon cashout is that the bots can take a little while to turn off, so try to time your cashouts a few seconds or so ahead of time. Dogecoin/USDT took about 30 seconds to power off, and that was nerve-wracking, but most like Ripple (XRP) only takes a few seconds, but a lot can change in a short period of time with crypto prices. You will have the option to cash out in one or both currencies for the pair you are in; I opt to cash out to USDT.

In a traditional trading environment, all you would receive is the PNL upon exiting the market. With arbitrage bot trading, you see an increase in gains or a decrease in losses that buffer your PNL, whether positive or negative. This continuous buffer gives you an added incentive to HODL and keep cashing out at highs and re-investing at lows. While it is far from a shield to volatility, it acts as a functional safety blanket to give you added peace of mind while your assets tumble through the torrents of the marketplace.

It is 5:30 AM CTZ at the time of writing this article, so unless Bitcoin or Ripple flops, I imagine I will see profit very shortly here on Ripple’s next spike, and if not, the bots will keep on pair trading automatically; they are up to $24 now, marking over a $2 gain just in the time it took to write this article. That’s okay, too; I’ll let the grid profits stack until the market pumps again. Ripple is very up and down, which is excellent for USDT pair trades or arbitrage trades in general as it offers more opportunities at profiting from variance.

I still have more exploring to do with customizing the bot parameters and finding favorite pairs. The app allows you to easily save your favorite pairs, watch live graphs, and more. Futures and margin trading are also available; though I am less interested in those, they are highly lucrative and attractive for many people. You get up to x20 in margins without even completing KYC, which is not required to use most of their exchange and trading features. These bots are a free service to use, outside tiny “power bot down” fees that are smaller than that you’d see on CoinbasePro for single trades in and out of the market.

All you require for bot trading is a KuCoin account and a smartphone; chances are, if you are reading this, you already have at least one of them. Happy trading, I’m jumping to a new pair as soon as I see some profit, and there is nothing stopping you from running multiple bots in multiple pairs at once. There is a “Super Volatility Killer” trading bot coming from KuCoin soon; I can’t wait for that!

*I'll note my bots are doing well despite the Bitcoin crash that followed this. Stay tuned!

As always, comments, suggestions, and friendly debates are highly encouraged.

Stay smart & Stay safe.

-Thomas Wolf

Pronouns: He/Him/His

Sources:

https://en.wikipedia.org/wiki/PnL_Explained

https://www.voice.com/post/@thomaswolf/kucoins-new-arbitrage-bot-trading-1618656315-210122443

DISCLAIMER

I am not a certified financial, tax, or legal advisor, analyst, or planner. The above information should not be considered advice but as an opinion intended to share information and ideas for entertainment and independent research purposes. Cryptowriter and its writers are not responsible for any losses or damages incurred as a result of misinterpreting personal opinions for professional advice.

This post was originally published for Cryptowriter on Voice.com