How do Bid-Bots work?

Today I am writing about Bid-Bots and I want to to tell you how Bots work, how you bid and how you calculate your ROI or return on investment. This is based on articles I read, videos I watched and most importantly my use of bid-bots for two months.

First thing to understand is bid-bot voting power

We all have ten votes per day at 100%, but making a vote reduces your voting power by about 2%. So while the power of your first vote is 100 percent the next votes are reduced by approximately 2% each vote, so in reality they are worth less then 100%.
The math is like this: the first vote is 100%, the second is 98%, the third is 96%, etc until your at 80% and then it takes 24 hours to regenerate your voting power back to 100%.
So ten votes, 2% drop in voting power with each vote and 24 hours to regenerate your voting power to a true 100%.
So how do the bots give true 100% voting power votes each day?
They wait 2.4 hours between each of their ten votes.
So instead of voting ten times and waiting 24 hours, the bid-bots vote one time and wait the equivalent of 24 divided by ten or 2.4 hours.
This waiting gives the bid-bot back their true 100% voting power every 2.4 hours. So that’s why the bid-bots wait 2.4 hours for the next vote.

The next thing to understand is how the bidding system works and how to calculate your profit

This is my understanding based on daily bidding for two months.
A bot has a maximal amount it can vote, a 100% vote based on its SP. The bots pay every “round” or 2.4 hours, according to how much is bid or sent to the bot that round. The reward is calculated using the value of one 100% vote in proportion to the total bids during that round. The greater the difference between the value of the 100% vote and the amount of the bids, the greater the reward per bidder. Conversely a large number of bids reduces the reward or return on investment, which is abbreviated ROI. Bids are accepted during the entire 2.4 hours. You can calculate your ROI based on the amount of bids at the time you bid, but you don’t really know the total amount of the bids and thus the ROI until the very end. Because many people wait until the last possible time to bid, the ROI often changes from the time of your bid until the end of the round.

This’s is best explained by examples.

Example#1
My bid-bot has a 100% vote equal to 100$
There are 5 bids during the round which total 50$
Each bidder gets paid the total value of the 100% vote or 100$ divided by the amount of the bids or 100$/50$ or 2$ per dollar invested. In this example the ROI is 2$-1$=1$ Profit per 1$ invested and 1/1 equals 100% Profit or 100% ROI. The person who invested 2$ makes 4$ and the person who invested 20$ makes 40$. Every investor made money that round.

Example#2
My bid-bot has a 100% vote equal to 100$
There are 9 bids and the total of all bids are 90$
Each bidder gets 100$/90$ or 1.1$ per dollar invested.
In this example the ROI is 1.1$ -1$= 0.1 dollar, or 0.1/1= 10% profit or 10% ROI. The person who invested 1$ gets 1.10$ and the person who invest 10$ gets 11$. Every investor made money that round.

As you can see the ROI is dependent on the total bids per 2.4 hour round. And you don’t know the ROI until all the bids are made in that round, so you can’t control or predict the ROI.

Example #3
My bid-bot has a 100% vote equal to 100$
The total of all bids in the round is 100$.
Each bidder gets 100$/100$ or 1$ per dollar invested.
In this example the ROI is 1$-1$= 0 and 0/1 equals zero % profit or zero ROI. Every investor got their investment back with no gains and no losses.

Example #4
My bid-bot has a 100% vote equal to 100$
There are 11 bids and the total of all bids is110$. In this example the total bids are less then the value of the 100% vote. Each bidder gets 100$/110$ or 0.90$ per dollar invested. In this example the ROI is 0.9$ -1$= -0.1 and -0.1/1.0 equals -10% or a negative 10% ROI. Every investor lost money that round.

Please note:
Some bid-bots pay out the entire vote so 100% ROI is possible.
Some bid-bots limit ROI to 10% so you can never make greater the 10% regardless of the number&amount of bids.
Some bid-bots limit your loss to minus 10% or zero loss.
You need to know the rules for each bot.
The application steembottracker calculates the ROI for you at any given time during each round. If investors check the ROI they can be warned there are to many investors and no profit or possibly a loss. Your success or ROI with bid-bots depends on you knowing the bots rules, watching the ROI indicators, tracking the amount of bids coming in and a bit of luck.

Before closing, I must say that I am sure there are factors I haven’t learned yet, but I hope to learn.
I hope someone will write in and tell me more!

Let’s learn how to earn here and just Steem On.