Home Bitcoin Scams Bitcoin Trader Scams- Understanding Trading Bots to Avoid Problems

Bitcoin Trader Scams- Understanding Trading Bots to Avoid Problems

by Josh Pit
Bitcoin Trader Scams- Understanding Trading Bots to Avoid Problems

Often defined as a financial market that doesn’t close and never sleeps, cryptocurrency essentially offers you two ways of making money. You can either choose to purchase some coins, hold onto them for a long time and then sell them once their value has increased significantly or you can start trading with cryptocurrencies. Here, you have the option of going manual i.e. trading yourself or choose crypto trading robots. While there is no doubt that holding onto cryptocurrencies for longer durations has certainly proven to be rewarding, it takes a lot of patience and a long time for people to see an increase in their investment’s value.

If you think you don’t have the patience to wait for such a long period of time, then the best opportunity for you to make money is through crypto trading. Lots of cryptocurrency traders will suggest you to buy low and sell high. However, doing this is easier said than done. From the very beginning, cryptocurrencies have proven to be a very volatile instrument. As a matter of fact, they are the only trading instrument whose value movies in double digit percentages on a daily basis. Also, the price doesn’t always increase. Therefore, if you want to be a successful trader, you have to time the market carefully.

Cryptocurrency trading isn’t exactly a rocket science. All you have to do is create an account on a crypto exchange and have some crypto in your wallet. But, the problem is that this would have worked out well for you if you had begun crypto trading back in 2010. The scenario has changed dramatically since then. These days, if you try placing a limit order on any popular crypto exchange, another order will appear right above yours, one that offers a better deal. Hence, you have no choice but to place your orders at market value.

An important thing to note is that just because your offer was immediately countered by a better one doesn’t mean there is always a crypto trader grinding in front of a computer. Most times, people end up triggering crypto trading bots when they place an order. The best Bitcoin trading bots have had a major impact on the entire crypto trading ecosystem and this is primarily because they prove to be more patient than humans, especially when it comes to trading. Now that you are aware that crypto trading bots can be used, you have probably come to the realization that the odds of making money when you are working against millions of bots are very slim.

Sure, you do have the option of mastering the various technical analysis techniques for outdoing the bots. However, not only can this be tiring, but also very time consuming. Thus, rather than spending more time learning about technical analysis, you can simply let crypto trading bots do the job. But in order to do that, you first need to know how they work. Xtrgatereview is here to explain you in detail.

What are Trading Bots?

Put simply, trading bots are software programs that interact with financial exchanges for placing a buy or sell order for Bitcoin or another cryptocurrency on behalf of a trader for making a profit. The buy or sell order is placed, depending on the market data interpretation. The bots monitor price trends in the market and decide to place orders automatically by reacting according to a set of programmed rules. Market actions are analyzed by a trading bot, such as time, orders, price, volume and more. However, you can program these actions according to your preference and convenience.

Many traders don’t have the time to analyze the market due to passive crypto trading. The purpose of the bots is to continue trading efficiently when traders have limited time for keeping up with the market.

How do Crypto Trading Bots Work?

The first step for using a trading bot is to exchange data. Traders have to provide their chosen bot with access to their account and this can be done by providing their API private and API public key. The purpose of these public and private keys is to authenticate authorization from the trader to the crypto bot. Generally, the best and most efficient trading bots work in three steps, which are:

  • Signal generator

This is when predictions are made based on the data that’s entered in a signal generator. These signals indicate whether to buy or sell.

  • Risk allocation

The second decision that you have to make is decide how much you should allocate to a buy or sell signal. Should you dedicate all your capital to a single trade or just a part of it? Should you make your purchase in a single transaction or averaging in is a good idea?

  • Execution

Once you have decided how much capital you want to invest, you can execute your trading bot. The bot waits for the signal and then invests the specified capital accordingly.

Purpose of Trading Bots

The main aim of crypto trading bots is to automate actions that are considered time-consuming, complex or difficult for traders to carry out manually. The crypto market is still evolving and it can be difficult for traders to keep up and understand how it works. They don’t want to make mistakes because even small ones can have disastrous consequences financially, which is something everyone wants to avoid. Trading bots, on the other hand, are equipped to sophisticated tasks like routing trades between assets for portfolio diversification, automating a trading strategy against a single cryptocurrency and more.

Furthermore, some crypto bots are designed to enable traders to implement a full portfolio management strategy. This can help in saving a lot of time. Traders don’t need to be online constantly for making trades because your strategies can be executed day and night by these robots. In addition, these bots are able to collect data with high speed and do it accurately. They can crunch numbers quicker than a human and place orders more precisely.

All of this indicates that crypto trading bots can be very helpful. But, the problem surfaces with Bitcoin scams Trader. If you do a simple search, you will discover that there are hundreds of Bitcoin trading bots in the market, but only a handful of them are reliable and effective. Most of these bots are just scams that lure people in, get their deposits and constantly make losing trades until the deposit is wiped out. These trades are made at fake exchanges, which means it is just a tactic to scam people of their hard-earned money. Therefore, you have to be very cautious when you wish to choose a Bitcoin trading bot because you don’t want another Bitcoin Trader scams to deal with.

What should you look for in a Bitcoin trading bot? Here are some of the top features:

  • Reliability

The reliability of trading bots is one of the most important aspects you need to consider. You don’t want to lose a golden opportunity just because your bot went offline or is not accurate or fast enough. Some people may argue that it is difficult to ascertain the reliability of a trading bot, but there is one way you can do so; reviews. You will easily find reviews from others who have used the Bitcoin trading bot and they will give you an idea of its reliability and effectiveness. This can help you root out Bitcoin Trader scams.

  • Security

Where cryptocurrencies are concerned, you don’t have anyone to blame other than yourself if a hack happens. Why? This is because it is your job to opt for a Bitcoin trading bot that has robust security measures in place. When you choose a bot, they have access to your funds and if they are lax in their policies, you could end up losing your money. It is essential for you to do your due diligence when you are choosing a robot in order to ensure they have done their job in terms of security.

  • Profitability

This is perhaps the most important factor that most traders will consider. How much profits can you earn from the Bitcoin trading robot? Finding an accurate answer can be very difficult, but you can get an estimate. While there is no point in choosing a trading bot that doesn’t offer you any profitability, it doesn’t mean that you choose one that offers you impossible percentages. Most Bitcoin Trader scams occur this way. They offer extremely high rates of return that are hard to resist and people end up investing their money, only to find out it was just a scam.

  • Transparency

Cryptocurrencies have become so popular amongst people due to their transparent nature. They are not controlled by a central organization and transactions are open for everyone to see. This should also apply to the Bitcoin trading bot you choose. Try to look for a bot that has been created by developers who are well-known in the Bitcoin community. Not only can transparency help in building trust, it also enables you to get in touch with the right people if an issue needs to be fixed. If a bot is vague about its team and its operation, it could be another one of the Bitcoin Trader scams that you should avoid.

  • Ease of use

Last, but not the least, always consider a crypto trading bot that’s easy to use. This is necessary if you don’t want to get involved in the complicated nature of crypto trading and want to start earning profits right away. The right Bitcoin trading bot can help you maximize your investment.

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