What Are Crypto Trading Bots?
A crypto trading bot is a program that can execute trades for you on the exchange based on the parameters which the user or programmer defines. Crypto bot trading is a way of trading using software for automated trading. Bots can communicate with exchange using API and can execute trades for you. Trading bots can be used for any type of trading, and using them is entirely legal.
A crypto bot can watch the market and can spot the opportunity in an instant. Once it finds the opportunity, it can execute the trade in an instant. For seasoned traders, the crypto trading bot can save a lot of time through automation. It can complete a lot of repetitive and trivial work that a trader usually needs to do manually. However, the crypto trading bot cannot make strategies, and it is just a tool in your trading toolkit.
How Do Crypto Trading Bots Work?
Crypto trading bots work by directly communicating with the exchanges and placing buying and selling orders automatically for the client. Crypto bots function by watching the market and acting as per the predefined strategies.
Crypto trading bots work in different ways like a browser plugin, trading servers, OS clients, etc. A few are free to use, while there are others you will need to buy or rent.
Many trading bots work on EMA (exponential moving average). EMAs track the market over some time, and bots are programmed to react to such price changes, and when the price behaves in the desired way, it can execute a trade. Other bots work on DEMA (Double exponential moving average) or TEMA (Triple exponential moving average). They work faster than the bots working on EMA. Some bots also use regression analysis and relative strength indicators to execute a trade.
A trader should remember that a successful bot trading needs the right trading strategy as a bot cannot automatically decipher the market’s condition and trends, which affects the price changes.
Are Crypto Trading Bots Legal?
Crypto trading bots are legal and internationally accepted. In the last few years, the use of trading bots in cryptocurrency trading has increased exponentially. There are more sophisticated rules and limitations on trading guidelines and trading bot’s usage in trading stocks, currency, indices, forex, commodities, etc. However, there are not many crypto market restrictions as the crypto market is not fully recognized and legalized worldwide.
In crypto trading, traders can easily use trading bots with the exchange of their choice. A trader can connect with any exchange using API keys. However, few things like pump and dump coins or wash trading are not advised as it may get you permanently banned from the exchange.
How Can We Avoid Scams on Crypto Trading Bot?
The Crypto world is full of scams, and crypto bots are no different. There are few things that you should avoid completely at all costs. Here are the tips that will help you in preventing any kinds of scams:
- Never give your exchange keys, passwords, personal details, and strategies to anyone who cannot keep it safe.
- Don’t allow anyone to make a fool of you. Crypto trading is not a simple thing, and it needs a good investment of time and effort.
- If you don’t know what a trading bot does, stay away from it unless you have verified its track record. If a trading bot doesn’t carry trading logic, say no to the black boxes too. It would help if you didn’t waste your effort and time coding bots on a platform with no control.
- It would be best if you always looked for a transparent solution that doesn’t need you to trust anybody and easily control it even when the company or project fails.
Conclusion
Undoubtedly, the right trading strategy in the crypto world can make you rich, but only when you use a proper channel for the same. If you fail to analyze the trading platform and trading bots, you may lose your fortunes. So, think and research wisely before you spend your money on such an investment platform like Stormgain. You can also check online how scams are generated out of crypto trading these days.