ELI5: How Telegram crypto signals work

Telegram has been adopted by cryptocurrency enthusiasts as the de-facto community messaging app.

Several crypto investment Telegram groups exist, which range from professional groups to utterly hilarious groups where Pepe The Frog stickers scroll up the screen as fast as Bitcoin prices change.

Bots & Telegram API

One interesting aspect of Telegram, which sets it apart from other similar apps, is its open API.

In fact, the official desktop Telegram app is simply an implementation of the API.

Anyone can create their own bots and applications and run them on the Telegram network.

One such application is to create artificial intelligence bots that perform several tasks, monitor channels and uses Telegram to notify users about relevant events.

As cryptocurrencies reach more and more users, high frequency crypto trading platforms also began to emerge.

These platforms depend on signals in order to enter and exit positions.

Telegram Crypto Signals

Telegram is an excellent messaging platform.

Not only is it stable even under extreme loads, its open API makes it ideal to use as a notifications and signaling system.

Instead of firing up emails or expensive SMS notifications, Telegram allows any network participant to receive instant data anywhere there’s a Internet connection.

This makes Telegram perfect for the broadcast of trading signals.

A trading signal is a message which contains a suggestion for an immediate trade to be performed at a cryptocurrency exchange.

One example could be BUY(BTC,1.005,3800,'spot') which, in a hypothetical signals language, would mean buy 1.005 Bitcoin at U$ 3800 per BTC  spot price.

Paid Telegram Crypto Groups

Closed and exclusive Telegram signal groups exist where members must pay a periodic fee in order to be granted access.

These groups are usually targeted at professional traders and do not allow memes, jokes or off-topic discussions.

One of the group members is actually a robot which periodically prints out trading signals. Users listen to messages from this bot through a custom client which is also implemented using the Telegram API.

Telegram crypto signals provided by trusted users may be very profitable.

Telegram Crypto Trading Bots

The members of Telegram groups may also be automated software instead of real humans.

A bot could be programmed to listen to a Telegram crypto signals group and then act upon the messages of only one trusted member – and ignore all others.

This kind of system would typically be deployed at a closed professional trading group and not at public chats.

Trusting public chats for trading signals is sure to bring heavy losses caused by trolls and fake information. Unfortunately, red herring is very common in crypto chat rooms.

Caution with Accidental Pump and Dumps

Some exchanges take a zero tolerance stance against coordinated pump and dump.

If a group of users is detected to be heavily buying into a cryptocurrency, with a coordinated subsequent dump, exchanges may carpet ban the entire participating group. This is done to protect individual investors from collectively coordinated market manipulation.

The pump and dump may actually be accidentally triggered by large Telegram groups suggesting an immediate trading action.

Some Telegram crypto investment groups have tens of thousands of members. One single broadcast signal could trigger a massive accidental bull run or even a flash crash. This can be even more dramatic when many users have leveraged positions which must be liquidated all at once, causing major artificial market fluctuations.

For this reason, many Telegram crypto signals groups prefer to stay small. Usually a high price is paid by members in order to filter out smaller investors.

Conclusion

We hope this short foray into Telegram crypto signals has given you a better idea about how this incredible messaging platform can be leveraged for profitable crypto trading.

Telegram allows for fully automated solutions to be built on top of it, which makes it a very powerful tool to send and receive trading signals from trusted users.

Some care must be taken to only consider signals sent by trusted users. Large groups must also watch against triggering accidental pumps and dumps.

Having been spontaneously adopted by the cryptocurrency community, Telegram has become a indispensable tool for cryptocurrency investors looking for real time information and trading signals.