Crypto trading bots might give suggestions 24/7, but they carry a massive risk: Experts

Experience of trading any asset class be it crypto, commodities or equity market can give an idea to a trader as to when to buy or sell as asset class. However, experts have warned that the AI operated trading bots can cause a major interruption that would impact crypto markets. There might be a time in the future when its usage would be termed beneficial and those not using will be left behind.

"Crypto trading bots carry certain risks apart from benefits, including market volatility, the need for regular monitoring, and potential security vulnerabilities," Edul Patel, CEO, Mudrex told Republic.

"Traders and investors should conduct research, understand the risks involved, and approach them after careful consideration," Patel adds.

Investments in equities and cryptos are risky, different studies on the internet suggest that more than 80 per cent of people involved in day trading lose money. Knowledge of market sentiments and their analysis is important before investing to attain what is called conventional wisdom in the market.

AI crypto trading bots are automated software designed to execute cryptocurrency trades based on predetermined parameters, aiming to generate profits, say experts. Different tools leverage the concepts of generative AI and analyse crypto price fluctuations. Some of the popular AI-based Crypto trading bots include 3Commas, Kryll, Pionex, Mizar, CryptoHopper, Bitsgap, TradeSanta and so on.

The AI trading revolution has already started with bots

The basic idea of using these tools is to put them to work and move ahead with the daily chores of life.  These bots offer advantages such as 24/7 trading, emotion-free decision-making, fast transactions, and simultaneous data analysis. 

Certainly, it has already changed the way people earn profits, eliminating the conventional methods of sticking to computers can be avoided. 

Experts guarantee effectiveness, but not wealth | Image Credit: Pexels

These bots offer advantages such as 24/7 trading, emotion-free decision-making, fast transactions, and simultaneous data analysis.

In terms of understanding the market, the tools are also utilising the concepts of social media activity to understand market sentiments. This leads to understanding fluctuations in volume and helps the passive income.

However, the entire market has not witnessed the adoption as traders at present are still apprehensive about the impact it can have. Current innovations also highlight that there are limitations to the traditional bots which can only work on the set of instructions provided. With the passage of time and more advances in AI, users can expect pattern recognition of different coins and suggest investment suggestions.

In the future, AI could track every cryptocurrency in the market and can figure out complex patterns. It is supposed to ensure more accuracy and effectiveness. Further, it is also expected to scan the inefficiencies in the market. 

While some bots are free, others come with costs, and their legal status may vary across jurisdictions. It is important to comply with local laws and regulations. Crypto trading bots can be valuable tools, but they do not guarantee wealth according to experts.