With the rise of the need for crypto trading bots among crypto traders, more and more exchanges follow Pionex and provide automated trading bots for retail investors. In the past, traders needed to generate API keys and upload them to third-party trading bot service providers, such as 3Commas and Cryptohopper. By using trading bots within the exchange, traders will be free from the API glitch nightmare during the high traffic period. In this post, we’re going to dive deep into the Binance trading bot and what’s the difference between the Pionex trading bot.
Binance Trading Bot Review
Currently, Binance provides trading bot services only on the futures market. Grid trading bot is the only bot that traders are allowed to use on Binance. Grid bot helps traders to make profits from the up and down of the price. It’s one of the famous bots in the volatile market.
Binance trading fees
For a high-frequency trading bot, such as grid bot trading, the trading fee plays a vital role in determining the profitability of the bots. Even Though each trade is still profitable after deducting the fee, you will earn more using a grid trading bot with a lower trading fee. For example, Binance charges 0.1% for each trade. Traders can pay fees using BNB, Binance platform token, for the fee discount, or being a VIP member with high volume and BNB holdings average monthly. However, this method will make you exposed to the risks of holding a platform token.
Meanwhile, Pionex charges only 0.05% for each trade, which is considered the lowest trading fee and doesn’t need you to hold any platform token for this rate.
How many trading bots can I have at the same time?
Both platforms limit the maximum number of active trading bot that users can have in their accounts. Binance allows users to have up to 10 trading bots. If you have 10 active bots already, then you’ll need to shut down one of them before starting another new bot. Pionex allows you to have up to 30 bots on each trading pairs, that means you won’t be able to create new bots with BTC/USDT if you have 30 active bots with it, but you can still create a new bot with other trading pairs.
Binance Grid Bot vs. Pionex Grid Bot
Binance Grid Bot only offers their service in their Perpetual Futures market. The futures market contains higher risk compared to the spot market since it incentivizes users to use leverage. While it might give better results from leveraging the initial margin, it also has a higher risk because it will have liquidation risk if the price goes spiking the other way round.
Aside from that, the principle of the Grid Bot Strategy in Binance is still the same as Pionex Grid Bot. It buys low and sells higher while also perform very well in a ranging market. For more details about the grid trading strategy, refer to this article: The Top 8 Grid Trading Bot | What’s Grid Bot?
Binance has 3 modes of grid trading strategy, Long, Short, and Neutral. For Long and Short mode, you will open an initial position (Long or Short) while simultaneously placing buy-limit and sell-limit orders at predetermined intervals to capitalize on market volatility and ranging conditions. In the long mode, if the price increase, it will decrease the size position with sell orders on each grid level. If the price decrease, it will add more position with buy orders. Meanwhile, in short mode, it is the reverse of long mode since it will have a short initial position. For Neutral mode, you don’t have any initial position. It will place limit sell orders above the starting price and limit buy orders below the starting price.
|Binance Grid Bot||Pionex Grid Bot|
|# of Grid||149||1000|
|Maximum Grid Bot||10 for each account||30 for each trading pair|
|Risks||Higher Risk from Leverage||Lower Risk|
|Available Pair||USDⓈ-M Futures Pair Only||All pair listed (Spot Market)|
The trading strategy behind Binance trading bot
To maximize profit using Grid Trading Strategy, we need to set up several variables for the bot to place orders and execute the strategy. You can use any type of indicators, signals, or confirmation in your understandings to make these variables. These variables consist of Price Range, Number of Grids, and Investment amount.
To determine the price range, we need to analyze and predict the pairs we will trade on. For example, in late April 2021 – Early May 2021 (2-3 weeks span), the BTC Price range ranges between 48k and 59k. So, we can use this range as our grid bot strategy range for a few days on for a short-term period.
The other way to do it is finding near support and resistance to the current price. BTC retest the 48k support and 59k resistance for several times. Support and resistance are also commonly used as a method to find range variables.
Number of Grids
The number of grids will divide the price range into n part. For example, in a 52000 -55000 range, if you put 4 for the number of grids, it will put grids on 52000, 53000, 54000, and 55000. To determine this variable, you need to gauge first how the pair behaves. Is it always has one big move? Or is it usually has more volatility with small ups and downs? The bigger the moves, you can use a lower number for the grid. While the smaller the moves, you can use a higher number. The best one is if you can catch all volatility provided by the markets into your own profits. The recommended number for this one is around 0.8-2% profit per grid.
Keep in mind that the higher the number of grids means it has lower profit per grid but usually yields more transactions per day than others.
This variable is where you put the number of how much you want to invest in the bot. Usually, its minimum scales proportionally with the number of grid you have and the exchange minimum order. For example, using 10 grids with 49000 – 55000 on BTCUSDT Perpetual needs a minimum 600 USDT in Binance Grid Trading.
Meanwhile, Pionex offers the same services with less minimum compared to the Binance grid trading bot. It is made possible because Pionex is an aggregated exchange that allows people to trade in Pionex with liquidity from the others. Thus it has a lower minimum for starting the bot. With the same parameters above, it only needs 70 USDT minimum to run the bot.
Risks of using Binance trading bot
Binance trading bot is only available in the perpetual futures market, in which it incentivized for using leverage for the margin. If you open it with leverage, it poses more risk to the tradings.
This leverage would amplify your profit, and also, it would amplify your loss if the price goes opposite.