Are cryptocurrency trading bots legal?
Trading in digital currency markets always faces many problems; Because various variables are involved in this space and even the most experienced traders try to minimize their human errors and experience more profitable transactions. For this reason, many traders nowadays use automated trading systems called crypto trading bots, which help them make trades according to predetermined strategies.
Digital currency trader robots are software that are used to automate transactions and obtain specific results. These software can be programmed and adjusted according to personal trading needs. For example, you can set up your digital currency trader robot so that it buys or sells a specific digital asset at a specific time or price based on a specific trading strategy. One of the advantages of these robots is the elimination of human mistakes and weaknesses, such as trading based on feelings and emotions.
Due to the fame and popularity of these trader robots, in this article with help an article Published on the Cointelegraph website, we introduce you to these automated trading software. For this purpose, we will first take a look at the nature and way of making these robots and then, we will explain in what ways the digital currency trader robot can help the trader. Also, we evaluate the success rate of these automatic trading systems and point out the issue of their security and legality. Finally, we talk about possible costs and fees of trader robots; So stay with us until the end of the article.
What is a digital currency trader robot?
The digital currency trader robot creates an automated system for digital currency transactions by combining artificial intelligence and programmed codes. This automatic system can perform transactions with the lowest percentage of errors and almost does not require human intervention.
Since the digital currency trading market is open 24 hours, both small traders and large institutional investors can use the digital currency trader robot as an efficient tool to recognize and generate income from all market movements.
A digital currency trader robot is a software program that runs according to certain criteria. This automatic software system performs trading actions such as choosing or buying or selling a certain digital currency based on the criteria set by the programmer or the creator of the robot.
Read more: What is a trader bot?
The basics of artificial intelligence such as security and neutrality and trust help the digital currency trader robot to implement various trading strategies such as buying undervalued tokens and buying newly introduced digital currencies to the market and even trading digital currency baskets to profit from market fluctuations.
Since the rules and conditions of trading bots are pre-defined, they can help investors to be less caught up in emotions and adopt a more effective way of trading in volatile crypto markets.
Whether the trading bot is configured to provide trading signals or directly programmed to execute trades, these coded tools can assist investors in adopting a logical, AI-based approach.
How to make our own trading robot?
Although this topic covers a lot of technical details, in general, the steps involved are summarized in the image below:
How does the digital currency trader robot work?Theslow?
Those digital currency trader robots that are developed using programming languages such as Python, Java, C, or C# can use API to interact with different digital exchanges and make transactions in these exchanges.
Cryptocurrency trader robots must assess the risk of trades by collecting data from exchanges and extract trading signals, and then execute them. This applies to both types of buying or selling transactions and is repeated every time the robot trader interacts with digital currency exchanges.
Using an API to access the trader’s account, the trader robot first analyzes the data through machine learning algorithms and then identifies potential trades with its predetermined criteria.
Operation of digital currency trader robot
The manufacturer of the trading robot can specify various functions and tasks for this automated trading system, some of which are as follows:
In addition, the robot trader can adjust the capital value according to the defined risk of the trader and register buy and sell orders in digital currency exchanges. The length of code used in cryptocurrency trading robots depends on the number of trading strategies it can execute. Of course, we must mention that the programming language used in each trading robot is also related to the level of expertise of its creator.
It should be noted that most of the current advanced robots are written in Python programming language. This language is suitable for building software tailored to algorithmic transactions and provides advanced libraries to developers.
How successful are cryptocurrency trading robots?
Cryptocurrency trading robots, whether paid or free, should be selected and used based on historical performance data and the credibility of the robot manufacturer and reviews of other users who have used it before.
Much of the trading activity on Wall Street is done using algorithmic trading, which has gained momentum over the past decade. Currently, similar conditions are seen in digital currency markets; Because the trading activity of institutional investors is increasing rapidly and is much more than the volume of transactions made by small investors.
As a result, trading bots are becoming more popular every day, and more private investors are using one or more AI-based trading bots to increase profits in the cryptocurrency market.
However, with all the bots out there, it’s important to understand how they work and what they promise to their fans. In order for a trading bot to provide positive profits and returns, it must execute multiple trades at high speed and have zero or negligible errors in its code.
Risk diversification strategies are often used to stabilize profits; Because even a transaction without risk coverage can jeopardize trading profits for days and even weeks. Therefore, we suggest that traders use several trading robots and choose only the ones that can provide significant returns.
Read more: What is a trading program and how to set it up?
Are cryptocurrency trading bots legal and safe?
Although cryptocurrency trading bots are legitimate and many institutional investors use them, there have also been numerous reported examples of fake bots or bots with insecure and weak code being sold to unsuspecting investors.
Despite many considerations regarding the legal status of cryptocurrency trading robots, these robots are used all over the world and are considered legal. The scope of automated trading and the use of trader robots in traditional financial markets is also constantly growing, and there is no doubt that this applies to the digital currency market as well.
However, being legal is not synonymous with being safe. This should be of particular concern to traders trying to make significant profits from high volume trades in volatile markets.
Undoubtedly, the digital currency trader robot helps to make large transactions in a few milliseconds; But if the trading strategy employed is not sufficiently tested, the possibility of huge losses will be very high in the meantime.
In addition, the cryptocurrency market does not operate solely on technical analysis, and traders should also pay attention to important protocol changes or updates in the cryptocurrency network they are considering. It should be said that trading robots cannot check these fundamental issues; Because they rely solely on price movements to identify and execute trades.
Therefore, if traders are looking for stable profits, in addition to choosing a robot with a suitable trading strategy, they should use trader robots for digital currencies that have a good fundamental and network condition.
Laws related to trading robots in Iran
The issue of legislation regarding the crypto market and digital currencies in Iran has always been controversial and ambiguous, and so far (Azer 1401), despite the efforts of some officials of the judiciary and the Central Bank, a clear and clear law has not been issued regarding the trading and buying and selling of digital currencies.
According to the latest rules proposed by the central bank in Bahman 2017, despite the illegality of buying and selling digital currencies, the transactions of these assets have not been directly prohibited, and currently, some domestic trading platforms provide their customers with specific digital asset buying and selling services by obtaining official licenses. .
Therefore, by placing trader bots under the branch of trade and digital currency trading, it seems does not arrive that the use of digital currency trader robots in Iran is under a special ban. However, we must not forget that the risk of unforeseen risks can be high in an environment that is full of legal uncertainties, and the responsibility of using any digital currency trading tool, including trading robots, rests with the user.
How much does each cryptocurrency trading robot cost and is it worth it?
Although the services of most cryptocurrency trading robots are provided for free, these robots include some other costs such as transaction fees or withdrawal fees that should be evaluated before use.
When choosing a cryptocurrency trading robot, investors should weigh the pros and cons of “free” robots versus robots that charge a fixed monthly or annual subscription fee. Most of the popular digital currency trading robots such as Naga, Pionex and eToroX do not charge users; But for every transaction made through their platform, they deduct a fee, often starting at 0.05%.
This point is especially important for people whose daily trading volume is often estimated to be more than tens of thousands of dollars. Sometimes they may have to pay a much higher fee to cryptocurrency trading bot providers than other trading bot subscription fees.
For example, cloud-based trading robots such as “CoinRule” and “CryptoHopper” allow their users to use their services for free for a period of time, and then depending on the plan and scope of the chosen service, they charge him an amount between 19 and They deduct $450 per month in fees. These trading robots seem more logical for investors who have a large trading volume and want to use these services anywhere in the world.
Read more: 8 Reasons Traders Fail and How to Fix Them
Another thing to consider when buying or renting a digital currency trader robot is the issue of the robots support of the digital exchange that the user uses. For example, the Coinbase exchange does not allow trading bots to interact with the platform, and its customers only have access to these services through CoinBase Pro. Also, exchanges like Binance support a wide range of cryptocurrency trading bots and offer better performance for people trying to make quick trades through trading bots.
TotalTheclassification
In this article, we talked about digital currency trader robots in detail and explained the purpose and steps of creating and functioning of these programmed software. Also, we examined various aspects such as functionality, success rate, safety, costs and important points related to trader robots and pointed out some of the most commonly used digital currency trader robots.
Since the digital currency trading market is open 24 hours a day, 7 days a week, many traders who intend to profit from all market movements favor digital currency trading robots. Some of the advantages of these trading robots are: very high speed, accurate time or price detection, avoiding complexities of calculations, minimizing the impact of emotions in trading and checking different aspects of the market with minimal human error.
However, working with these programmed software requires a thorough knowledge of configuration and settings and possible risks related to their connection to trading platforms. In addition, it is not recommended to use these robots in some volatile market conditions. Therefore, before starting work with any digital currency trading robot, it is better to get the necessary information about its conditions and features.
We recommend that you limit the level of access of the robot to the trading platform to the limit of ordering and to withdraw assets from exchanges manually. Also, don’t forget that even the most efficient trading robot cannot guarantee profit from the market; So, be sure to visit it regularly and make necessary changes according to market conditions.