Crypto Trading Bots: Unethical or Necessary? 

crypto bot trading

If you've been into cryptocurrencies for a while, you've probably heard of crypto trading bots.

Now this may sound unfair or even a bit unethical, but you'll be surprised to know that it's completely legal.

Let's discuss the advantages and disadvantages of bot trading in crypto...

What is Bot Trading?

Quick Definition:

"Bot trading is the act of using a predetermined algorithm programmed into computer software that automates your trades based on the selected algorithm settings."



The bot trading software is used to monitor market conditions and consign trades for you.

The procedure is done arbitrarily through a medium of predefined algorithms that allows automatic and high-frequency trading to take place.

The idea of trading bots originated to help users to earn cash from the markets in the fastest way possible.

Crypto trading bots can yield very high profits if configured properly by an expert.

So how do you find good trading bots?

Don't worry, we've tried and tested many crypto trading bots.

Here are the best crypto trading bots in the market.

If you're a programmer, here's a step-by-step guide on how you can build your own trading bot.


Is Bot Trading in Crypto Legal?

Many people find it unethical to link themselves to the whole bot trading and cryptocurrency game.

However, bot trading in crypto is completely legal.

Crypto trading bot

We know many brokers don’t allow it, but there is no law against the bot trading concept in stocks and crypto.

If you want your trading bot to be completely legal, choose or make a bot that follows a market maker's indicators or aspects.


How Does Bot Trading Affect the Crypto Market?

The cryptocurrency markets are natively digital, running 24/7, and completely automated.

This leads to the usage of trading bots.

As we can see, the assets and exchanges of a cryptocurrency market are online-based.

Using bot trading in crypto makes the integration simpler and easier.

bot trading

These kinds of digital markets are never seen to close for a single second, so a trading bot puts off the burden from a person's shoulder.

These markets are not large like the traditional markets, so the price regulation in the crypto markets can rise or fall at lightning speed. A bit risky!

On the other hand, the bots concentrate on raising the profits for those who deploy them.

In the cryptocurrency market, a small group of individuals can influence or detriment the market price as a whole by implementing these trading bots.

The crypto market can sway like the wind with bot trading. This is why the crypto market is considered the best application for bot trading.


How Does Bot Trading Work in the Crypto Market?

Bot trading in crypto follows three simple steps:

  • Signal Generation
  • Risk Allocation
  • Execution


1. Signal Generation:

This is the prediction step. With the signal generator's data input, a trading signal pops out and predicts the future crypto market.

If a bot comes up on your screen with "technical indicators," back off!

They are the troublemaker crypto trading bots.

2. Risk Allocation:

This calculates the trading signals and tells you how much to spend. It tells you whether to assign the whole capital or a portion of it for exclusive coin deals. Should you be buying all of it one go or wait for a better opportunity? This step in bot trading is the most important step for crypto market investors.

3. Execution:

This is the part where you execute or implement your investments according to the algorithms of the bot.

If you notice glitches in the aforementioned three steps, your bot is probably not a good source of profit.


Why Are Trading Bots Used in Crypto?

Crypto trading bots are used because they have a few advantages compared with humans when it comes to trading...

bot trader vs human trader

1. Longevity:

The Cryptocurrency market is open 24/7. Trading bots don’t need rest and can work 24/7.

2. No Emotions:

Trading bots aren’t driven by fear or emotions. They will always do what’s statistically best for their clients.

3. Speed:

Bots have a much faster thinking capacity than humans. The algorithm will make decisions based on the highest probability in a split second.

4. Capacity:

The trading bots can process tons of data in a nanosecond which humans cannot compete with.


What are the Positive Effects of Bot Trading?

The positive effects of crypto trading bots are:

  • It makes the market more efficient
  • No price variations according to country
  • Statistically perfect calculations
  • Boosting liquidity and expanding markets


What are the Negative Effects of Bot Trading?

Crypto trading bots can have the following negative effects on the market:

  • Manipulatation of exchanges
  • The classical pump and dump theory
  • Unfair advantages of many institutions


Final Thoughts

This is how crypto trading bots are affecting the market.

They have their advantages and disadvantages.

Developers are constantly working to level the playing feed as much as possible.

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