Bitcoin trading robot craze: The good, the bad, and the ugly
The world of
investments is filled with dangers and perils. The idea of getting rich quick through
investing is one that’s sadly part of our mainstream, and sometimes, this alone
is enough to blind people from what would otherwise be obvious scams.
The trading
robot craze, sadly, is a part of this: You’re led to a website promising that,
after investing some money, usually around $300, their trading robot will take
over, manage that money by investing it in Bitcoin, and you’ll be making
thousands of dollars a month. Some even promise over a million dollars within a
year.
Naturally, these
promises are false, and usually, there’s no robot. At best, you’ll find that it
is like a pyramid scheme that’ll require you to refer more people for investing
before you get paid.
Said schemes are also scams, in that the money isn’t
really being invested – whatever money you receive is being taken from those
you refer (and those they refer.)
Still, even when
scams of this type are common, the question remains: Is there any validity to
trading robots? Are there any legit ones?
The truth about trading robots
Shock, horror:
What these websites promise does exist. However, it naturally isn’t as easy and
effortless as they make it seem, and no, these websites generally don’t have
any robots whatsoever.
Trading robots,
rather than ways to make people rich fast, are simply programs coded to analyze
the market and its changes, and then attempt to predict what might come.
These
robots handle astonishing amounts of data, including current and historical
information of your selected cryptocurrency AND all other relevant cryptos in
attempts to find patterns that might predict price changes.
Usually, said
robots are offered by large investment companies as part of their packages, or
they exist as standalone products given with no guarantees.
They also are
offered as an extra aid in predicting or reacting to the market, but guarantees
are never made. No serious company ever promises any earnings from using their
robots, and no robots use binary options.
The only
guarantee any serious trading robot gives you is a track record. Said track
record comes with the backup of the company and its users, and their claims can
usually be confirmed.
Still, even then, serious robots refrain from saying how much
they make on any amount of time – it’s impossible to predict the market, after
all. Nobody knows if next month BTC will be up by fifty points… or down by
sixty.
Yet, since bots
DO exist, let’s take a look at what you should expect when dealing with a legit
trading bot.
The Pros of Robots
Having a trading
robot comes with two main advantages. First, a computer program can handle an
amount of information the human mind can’t.
A trading robot
can consider the price of your crypto in several exchanges, compare it to how
other cryptos are doing, and check the price history of them all to try and
find correlation in seconds.
A human wouldn’t even be able to log in to all
those exchanges during that time. Being able to parse and interpret huge
amounts of data makes the bot desirable in many cases.
The second advantage
to a trading bot is round-the-clock availability. The cryptocurrency market is
on 24/7, and it’s easy for some investors to worry about the market crashing
while they sleep. Having a robot on making choices for them, produces calm, and
allows them to go through their daily lives with much less stress.
The Cons of Robots
Now, not
everything is fun and rosy when you have a robot. While robots can be useful
and help you make decisions, having them can actually be detrimental for some
people – specifically in those cases when the robot makes a wrong decision.
As mentioned
before, the market can’t be predicted. Robots try to use available data to
create statistical models that translate into knowing the probability of
something happening.
However, two things must be considered: First, a
probability – even one backed up by historical data from multiple sources – is
not a certainty. And second, the bot doesn’t have all the information, nor can it
interpret it all.
Let’s say, for
example, Bitcoin prices are going down. The robot examines the pattern,
finds that other crypto is also going down, and predicts a market crash. So it
automatically sells.
However, there are rumors going around about a big
announcement within 48 hours, where a large market chain (say, Walmart) will
make a statement about crypto.
That information
should be enough for many people to hold their tokens. However, the robot
doesn’t know it, nor can it understand it. So it sells when it should keep the
tokens. A robot can’t know, nor can it react to breaking news – it only reacts
to market changes, and when a market change happens, it might already be late.
Another draw of
robots is that they’re not static software. The standards they use and the
lines they draw regarding when to buy, sell, or wait, need to be updated
constantly.
Even, once the crypto market settles (and that is yet to happen) it
will still flow constantly. So good bots need to be regularly updated both on
the way they handle the data they receive and how they react to market changes.
How do I know if a robot is
legit?
The community
should be your go-to when wondering about a bot’s legitimacy. There are many
legit offerings, but it’s always good to ask around before committing to any,
paid or not. Public forums like Reddit can be an invaluable source of
information on this regard.
Also, there’s a
very important red flag when looking for a bot: Even if the bot is paid (and
there are many great free, open-source ones) it will never ask you for
investment money, nor will it “manage your money for you.”
A trading bot that’s
legit will require you to set it up and run it yourself, using your own
invested crypto for trading.
This is
important because most scams out there ask people to put money into their
“free” software and say the robot will decide what to do with it. These offers
are pretty much always scams.
Conclusion
In conclusion,
trading robots do exist. Some people have indeed made money using trading
robots, in some cases, a lot of money. But, these robots take time to set up and
require maintenance, plus they come with several draws – a lack of guaranteed
results, being one of them.
If you’re still
looking for a robot, do keep these things in mind. It’s one thing to lose your
money due to bad investments, and another one to lose it to gullibility. The
latter stings much worse than the former.
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