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Cryptocurrency Trading Bots: Scam or Legit? - Botsfolio

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13 Apr, 2022

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Powered by machine learning, trading bots are constantly evolving and also self-learning with every trading decision they make. An automated trading bot can react much faster than human traders to price changes and can completely take over trading for us. But are trading bots legit ? In fact,a lot of them advertised on the market are pure crypto trading bot scams. These are quite error-prone, and do not always make the right trades. So how can you spot legit trading bots among the fakes? But first, let's quickly recap some basics.

What are trading bots and how do they work?

Trading bots are automated trading systems executing trades based on artificial intelligence and previously programmed trading instructions. They can be semi or fully automated. Semi-automated means that the trading bots will take over certain limited tasks in trading, which must then be confirmed manually by a human trader. In fully automated mode, trading bots trade automatically without waiting for approvals or any interventions from a human trader. This presents both dangers and opportunities, depending on the quality of its programming.So whether acting in semi or fully automated mode, a trading bot never sleeps. It allows trading cryptocurrencies and other assets 24 hours a day, 7 days a week. High profits can be realized and traders do not need any experience to use trading bots at all. However, a basic understanding of cryptocurrency markets is needed.

Getting started with trading bots

  1. Registration on a trading bot platform: Usually by providing email address, picking out a username and password , and any other statutory information as per local law.
  2. Deposit Funds: Depending on the trading bot, you can use fiat currency or cryptocurrencies.
  3. Start Trading: Your trading bots are ready to start trading (semi or fully automated), however, caution must be exercised here: An investment without an understanding of risks can lead to losses, falling prey to crypto trading bot scams.

How do crypto trading bot scams work?

As automated trading bots are increasingly taking over crypto trading platforms. They are being targeted for crypto trading bot scams, operated by dubious providers. These scamsters often launch a new broker platform that is heavily advertised to make profits overnight. These scam platforms lure you with a registration bonus or discount, a convincing looking demo of the automated trading bot and promises of great returns. These scamsters may release some payouts initially , convincing you to invest more, but that’s just a ruse to steal more money off you. After a while, you’ll lose access to funds and the platform operators vanish.

This is a classic case amongst crypto trading bot scams which is based on ignorance of investors just starting out in crypto. Fraudsters take advantage of the fact that their investors have no trading knowledge and rely on their trading bots 100%. In some cases, the tricksters even get in touch with their victims by means of telephone calls or spam emails. The phone based contact is used to create even more pressure to deposit money quickly offering lucrative returns.

How to recognize crypto trading bot scams?

Nearly all crypto trading bot scams are relatively easy to detect because they often follow the same pattern. First place to look for signs of trouble is Google Reviews from verified Google Users. Before you sign up for an automated trading bot account, you should always check that it is operated by a legit firm and that there are positive reports from other traders about them on Google.

Next look out for these signs indicating false advertising

  • Guaranteed returns: No reputable automated trading bot provider can promise returns because markets are unpredictable
  • Free Trading Bots: Free in the world of trading and finance is never designed for serious trading decisions, probably just good enough to give a demo or a simulation.
  • Undisclosed Techbase: Some form of disclosure in technologies or methodology used should be published by the provider to ensure transparency and invoke confidence in the trading bots.

What to do in case of fraud to get your money back?

If you have only lost money on the capital markets through the use of trading bots, then the money is just lost and no claims can be made. But, if you have lost money due to an automated trading bot that has turned out to be a scam, quick action is required. Especially in the case of large sums, contact a lawyer specializing in investment fraud to handle litigation and file claims for damages on your behalf. Furthermore, the police must be intimated along with financial supervisory authorities so that they can issue warnings, lookout notices and move a case against the fraudsters.

Crypto trading bots - are they worth it ?

Experts will tell you that it is possible to earn money with an automated trading bot. Trading bots offer a high potential to trade cryptocurrencies such as Bitcoin as well as altcoins or other asset classes profitably and automatically. However, these high and easy profits are not always guaranteed. There are risks and failures or even crypto trading bot scams to be wary of and also while using trading bots, you can still lose money.

Beginners like the use of trading bots, as it reduces or completely eliminates the relevance of prior knowledge and experience of the market. An automated trading bot decides trades based on pure facts and price developments in the market and unaffected by emotions. Human traders cannot react as quickly as a trading bot can. Nevertheless, trading bots should only be used in moderation and after due diligence as they do not replace human knowledge and experience, but rather expand and assist it.

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