This is not financial advice and my results are no guarantee and not responsible for your own success or failure.
A while ago I discovered 3commas.com. I’ve experimited a lot with crypto trading bots in the past, most of which you have to run on your own machine (leaving it running 24/7) or on a VPS.
3commas is a hosted bot service that takes away that hurdle. Aside from a sophisticated trading terminal they also offer different types of trading bots. They support most major exchanges.
Since Binance offers you a discount on transaction fees if you hold some of their own BNB coin I’ve decided to use them as the trading platform.
Two days ago I decided to give them another try and was utterly surprised by the results:
Here are the steps I took:
1 — Create an account a 3commas.com
Simply follow this link and create your account. It will give you a 3-day free trial to try out their service. After using the trial some months ago (and completely forgetting about them) I had decided to give them another try, after noticing that during those 3 days the platform was able to earn me nearly $40 in profits.
2 — Decide on the platform you will use.
As mentioned above my exchange of choice is Binance. They are mature, trustworthy, fast and flexible. But 3commas works with many others too, such as FTX, Bitmex, Bittrex and so forth.
3 — Select the base crypto from which you will trade
Just like with Forex coins are always traded in pairs. Think USD/EUR or USD/CAD. The first listed currency within a currency pair is called the base, while the second currency that is the benchmark is called the quote. Currency pairs are meant to be compared against one another in order to understand how much of the quote currency is required to buy one unit of the base currency. I have selected USDT as my base currency
4 — Deposit your base currency at the exchange.
The settings I use are based on a base capital of 4000 USDT. If you have less to invest you’ll need to make some adjustments to the setting I’ll show you later
5— Setup some DCA bots
DCA stand for Dollar Cost Averaging. Dollar-cost averaging (DCA) is definitely an investment strategy by which a buyer divides up the total figure to become invested across regular purchases of the focus on an asset in order to decrease the impact of volatility within the general purchase. The buys occur regardless of the asset’s price at regular intervals.
In essence, this strategy removes a lot of the detailed function of attempting to time the marketplace in order to make purchases of equities at the best prices. Dollar-cost averaging is also known as the frequent dollar plan.
If your base capital is lower than 4000 USDT make sure not to create too many bots, as this will cause all your capital to be stuck in open trades.
Step 8 will explain how to set up these bots.
6 — Creating your 3commas account
If you follow this link you’ll get a 3-day trial allowing you to play around with the platform. If you want to get serious I’d advise you to either get the Advanced or Pro plan. You can select to be billed monthly or yearly. I’d advise you to try it out for a month first and if you are happy, just upgrade to a yearly subscription so you can save a lot of money on the subscription fee.
7 — Connecting your exchange
If, like me, you are using Binance; log in to your account, in the top menu hover over the round face icon and select “API Management”.
Here you’ll need to create a new API key for 3commas. Give the key a name and click on “Create API”.
After this, you’ll see an API key and API secret. Write them down! (or copy and paste them somewhere ;-)
Next, click on “edit restrictions” and make sure to select at least spot trading. If you plan on doing margin to future trading, select those too (if you have no idea what those mean, don’t!!)
Now go back to 3commas. There, navigate to “My Exchanges” and select Binance. Here you can enter the key and secret from the previous step.
Once your account is successfully connected you can start creating your first DCA bot.
8 — Creating a DCA bot
Assuming your base currency is also USDT, you’ll want to look for pairs that have a high trading volume. Some new exotic altcoin with low volume (that might even get delisted from the exchange) is not a good choice. You can use a tool like Coingecko to check the popularity of coins. Focus on the 24h volume and market cap columns.
In 3columns click on “DCA Bot” in the left column. Next click on “My Bots” and subsequently on “Create DCA bot”
On the next screen be sure to click “Advanced”. What appears next might be a bit overwhelming, but don’t worry. The settings are simple.
Make sure the correct exchange is selected and choose for “single pair”. Trading multiple pairs is a great option if you’re more familiar with this concept, but it’s best to start with just a couple of single pairs.
Next, scroll down to the “Pairs” section. Click on “Pairs” and filter them on your chosen base currency (in this example USDT). Pick a pair, as you can see below I’ve chosen BCH/USDT (for those paying attention, in this particular case BCH is actually the base currency, but since you’ll be buying BCH using USDT this should be the option to select).
Scroll back up and give your bot a proper name. We’re going long (expecting the coin, BCH in this case, to increase in value). Going short is a whole different story about which I might dedicate a different article to.
Next, scroll down to “Strategy” and enter those values. 10 USDT is the minimum amount on Binance you’re allowed to trade with. The 15 USDT you see is the amount used for rebuys according to the DCA principle.
The next section to fill is “Take Profit”, which will tell the bot when to close a position and take profit. When trading using USDT I use 1.2% as a profit target. Should you decide to use BTC I’d advise a slightly higher target such as 1.5%.
Next, navigate to “Safety Settings”. My settings of choice are as follows:
The max safety trades count means the bot will open a maximum of 24 positions. A new position will be opened when the price of the coin goes down by the value defined in “Price deviation”, which I put at 2.5%.
The 1.05 you see under “Safety order volume scale” means each new buy order will be for the amount of “Safety Order Size” times “Safety order volume scale”. So the 1st buy order will be for 10 USDT, the 2nd for 15 USDT, the 3rd for 15,75 USDT, the 4th for 16,54 USDT and so forth. Until it reaches the maximum of 24 trades (which hardly ever happens, usually I have 1–5 active trades per pair).
On the right side you can see the effect of your settings:
What these tell you is your bot will need at least 683 USDT free capital to properly function (which in my case in 69,02% of my free capital). You can also see it will survive a crash of up to 60%.
If your capital is lower, I’d advise adjusting the number of “Max Safety Orders”
9 — Enable that bot!
All that’s left is to wipe the sweat from your hands and click ‘Create Bot’. If all went well you should see this popup:
Now simply click “Start” to enable your bot and let it start trading.
It usually won’t take long for your bot to make its first trade:
Now simply walk away from your computer and go do something nice (like sleeping)… Check the next morning to see the results.
If you aren’t satisfied you can always close any open positions and stop the bot. Simply navigate to “DCA Bot” and click on the green status toggle, making it turn grey.
If you like you can also liquidate any positions the bot might have opened. To do this navigate to “My Deals” and click on “Close At Market Price” to sell your position (BCH in this example)
I hope this quick introduction to 3commas was helpful. Any questions or remarks? Please leave them in the comments!
Happy trading!
