Are Crypto Trading Bots Risky?

If you are considering using a crypto trading bot, you may be wondering if they are worth your time and money or if they’re just another scam waiting to happen. 

Let’s face it: Trading is stressful, particularly when markets are volatile. Even the most risk-averse investors can find their nerves tested under such conditions. With this in mind, many investors, especially those just breaking into the crypto world, have looked to trading bots as a way to mitigate some of their stress and anxiety. 

This is where crypto trading bots come in handy! These automated software programs can analyze market trends, recognize favorable conditions for buying or selling, and operate the trader’s account without further intervention. 

Sounds convenient, right? Not so fast…

In the real world, opportunities to earn more often come with increased risks of losing more. Crypto trading bots are no exception. And here is why.

Crypto Trading Is Risky Itself

As with any financial market, cryptocurrency trading carries considerable risk.  The market is extremely volatile and unpredictable. At any given time, a single coin can experience a dramatic surge or crash in price, which is why trading cryptocurrencies requires special care and attention.

Trading cryptocurrencies is difficult for non-professionals with little or no experience or knowledge of programming— making it difficult to set up an electronic wallet and participate in the market.

Sometimes, such traders end up buying unstable coins that crash harder than they expected. Plus, all trades are irreversible once they go through; there’s no going back if you make a mistake on the exchange side.  

Finally, crypto trading carries low liquidity compared to stocks and bonds, which makes it difficult for investors to profit from small price changes.

So, if you’re planning to venture into this area, be sure to have a good understanding of the basics to have a competitive edge.

Algorithmic Trading Is More Risky, Unless You Are A Coder

Automated or algorithmic trading is a way to trade stocks, bonds or other financial instruments without human involvement. It’s a type of investing that has advantages and some downsides.

Automated trading has its own set of challenges that must be addressed— for example, there is a risk that a crypto trading bot account will be hacked and API keys stolen. Once that happens, an algorithm error will result in losses rather than profit or sudden crypto market movements will occur, hence traders may lose money or take a large position in a low-liquidity token.

Investors who are not computer gurus can’t make money by using automated trading systems. In most cases, they lose their funds as they don’t understand how the system works.

It’s vital that, when using automated trading, you try to have an understanding of coding and choose the appropriate hardware for your system accordingly.

Scam Bots Are 100% Risky

Most scam bots are involved in sending money to a user without their consent. A great number of scam crypto bots are reviewed at ScammerWatch.

When a fraudster creates a web page or app using bots, and you download it, doing so will grant the creator access to your device’s operating system. This enables them to control the device and perform malicious acts—including sending your money to someone else without permission. 

Immediate Bitcoin is an example of a fraudulent crypto trading bot that should not be used. It is a sophisticated strategy to defraud people of their cash, with no option to withdraw the initial investment or earnings.

Scammers prey on newcomers in the cryptocurrency trading industry, creating beautifully designed websites. The platforms are used to dupe individuals with false photos and reviews into believing they can profit from making an investment with them.

Scammers also use bots to access someone’s personal information, such as bank accounts and social security numbers. They send the target an email with a link to a website owned by another person—with malicious aims.

It’s therefore important for you to be extremely careful when choosing such a platform in order to avoid scams in crypto. Now that you’ve gotten clues on how risky crypto trading and trading bots are, you’ll need to remain aware of your online activities and the actions of others to prevent being scammed.