The Major Risks Of Cryptocurrency Trading Bot In The Cryptoecosystem

source

Hello fams,

INTRODUCTION

It is your favourite blogger @mato445 and today, I will be discussing with you all on the risks associated with the use of cryptocurrency trading bots, please stay tuned.

Cryptocurrency trading continues to gain much prominence amongst crypto enthusiast as some who were once bystanders now want to get involved in trading cryptocurrency and many utilise so many strategies in trading cryptocurrency with the objective of making gains some trade cryptocurrency in futures while others prefer to do in spot depending on their respective risk appetite and their skillset.

In this market many have gained the skill of technical analysis and have become quiet good in it in that most often than not when they analyse a particular pair it's more likely to play out and they even trade cryptocurrency on futures and even though they lose overall they are profitable, this is a skillset which when trained and properly harnessed under the right condition could fetch one real money in this market but then some others wishing to make the money this people make attracted by the allure of it all but lack the skill set to they go on to utilise bot to help them trade.

Yes many utilise trading bots in trading cryptocurrency in other to also participate in the financial market and the thing is this trading bot though they claim is a machine and likely to be more efficient in price delivery is actually plagued with it's faults, they are risks associated with cryptocurrency trading bots and all who want to utilise it should be aware of this risk and today in my post I will highlight some of the possible risk that comes with cryptocurrency trading bot.

• MARKET VOLATILITY

The cryptocurrency market is very volatile, this is a highly volatile market more than any other financial digital traded market and sometimes it's difficult to accurately forecast a price trajectory even for the most skilled trader and they often make mistakes and lose money despites their years of experience and watching the market and ofcourse we know humans learn quickly and are able to quickly adapt accordingly, howbis that different from bots?

Bots are machine programmed and sometimes depending on their programming they maynot be so quick to respond to a rather sudden change in market condition the way a human would given the same circumstances, bots are not as flexible as human and doesn't always adapt quickly in cases of extreme market volatility and this usually attracts huge loss.

So it's important for cryptocurrency bot traders or any who wants to utilize this too to be aware of this risk and that is not all shine and rainbow and that risk of significant loss in real here due to inability to adapt accordingly with quick change in market condition.

source

• SCAMS AND FRAUDULENT BOTS

Often many wishing to utilse or buy this trading bots fail to account for the fact that there is possibility of it being scam, I mean we have hackers and scammers everywhere constantly looking for opportunities to ripe users of their money now knowing that many have dependance on this bot make them to create their own and their the unsuspecting users damble into and it and what happens is instead of profit the one they have it's been wiped.

So it's important we know that not all the trading bots are legit even some are scams and created by malicious individuals for their own nefarious purpose which does not bode well for us at all so this bots could offer attractive returns making it sweet deal even with less price to make it attractive and when we use them then we simply lose everything we have because they show no mercy, they will reduce one to ground zero.

So it calls for caution especially on the part for those who fancy these trading bots.

• COSTS AND FEES

Some if this trading bots are well too expensive and basically are more expensive more than they are worth, imagine purchasing a bot and then having to pay for weekly or monthly subscriptions to keep using it and most times this fees are rather at an insane high numbers to the point we wonder if they are even worth it.

Imagine using a trading bot and at the end of the month you find out that the fees accrued by it or you need to pay it's higher than the profits it has made for you, when the expense of keeping the bot is more higher than the profit then it's no longer worth it and that is what is seen in many of this bots, they are more than they are worth and has a potential of attracting quiet an enormous cost for trading.

• SECURITY RISKS

There is also a security risk that comes with using this bots, users have to share sensitive information with this bots and mind you they are offered by a third party so by sharing this information with them we are merely handing ourselves over to their mercy, imagine what happens if they are shady and are fraudsters.

By sharing our API keys with the third parties offering this bot we expose ourself greatly being hacked because even if they are legit they could also be hacked by the outsiders who when they gain access to their system then our data's would be amongst their spoils.

So know this that there is a great security risk that comes with using trading bots and make the wise decision.

source

CONCLUSION

For me though am not discouraging the use as every one has the right to utilse whatever tool they feel will make them the most gain in the financial market but inasmuch as this is not a financial advise it doesn't hurt to know the risk that comes with what you are about to do and know if it's worth it.

If your risk appetite allows you to use trading bot despite the risks then so be it it's a personal choice so it's important we all carry a proper research before our wrong decisions cost us greatly.