Nice overview,

Thank You for your kind words my friend @conceptskip.

would such a bot have its own wallet where i send coins to, or how would that work?

Honestly I do not use bots because I am ordinary guy and work with old methods - like I liked do research on coin check all things and then I do trading. Thank You for asking this question, I am thinking about making detailed post on this topic. Because it's hard to explain in some lines that how they work. But anyway let me try to explain in short.

Every bot supports some specific exchanges (yet I not heard any bot that works universally - will search on this more for sure). We need to sync our exchange API with it - when we sync api we need to make sure that we allow trading option in API. Then it comes to bot - every bot work differently with different algorithm and different functions. Basically there is always "more than" and "less than" or "long" & "short" options to set.Then according to instruction we set there and it's algorithm it will start automated trading. Bots are too faster some bots do hundreds of trading in time when we do only one.

I don't know how much this helpful to you. But will surely try to come up with detailed topic soon.
Thanks :)