What is a trading bot?

A bot is simply an automated program that operates on the Internet and performs repetitive tasks more efficiently than humans. In fact, some estimates suggest that around half of internet traffic is made up of bots that interact with web pages and users, scan for content, and perform other tasks.

Crypto trading bots operate under the same basic principle. They’re software programs that execute functions using artificial intelligence based on pre-established parameters. No more missed trades or missed opportunities - by running a set of algorithms, you can automatically buy, sell or hold assets in a timely, efficient and automated manner day or night from anywhere in the world.

How do crypto trading bots actually work?

By communicating directly with crypto exchanges and placing orders automatically based on your own preset conditions, trading bots offer exceptional speed and efficiency, fewer errors and emotionless trading. In order to trade on an exchange, you must authorize a trading bot to access your account via API keys (Application Program Interface), and access can be granted or withdrawn at any time.

Trading bots work in three essential stages: signal generator, risk allocation and execution.

  • The signal generator essentially does the work of the trader, making predictions and identifying possible trades based on market data and technical analysis indicators.

  • As the phrase implies, risk allocation is where the bot distributes risk according to a specific set of parameters and rules set by the trader, which typically includes how and to what extent capital is allocated when trading.

  • It’s go time. Execution is the stage in which cryptocurrencies are actually bought and sold based on the signals generated by the pre-configured trading system. In this stage, the signals will be converted into API key requests that the crypto exchange can understand and process.

How you can benefit from crypto trading bots

https://cryptorobotics.co

https://cryptorobotics.co/trading-bot-for-binance-crypto-exchange/

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Why should you care about automated trading bots? Two words: Wall Street. Many reports suggest that around 80% of trading on the stock market is done via algorithmic-based automated programs. Comparatively few private traders, however, make use of algorithmic trading, partially due to the perceived complexity and costs. Not everyone is an experienced Python coder or financial expert, but trading bot platforms such as Trality are doing a really good job at leveling the playing field and giving retail traders, both beginners and advanced, a leg up across crypto markets.