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.