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CRZ

Let's talk bots

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I read a lot about bots on xrpchat and other forums, I have a rough idea what they are but want to know more.

How exactly do they work ? Does anyone on here use them ? Do they cost? Can someone like me with zero trading experience use it successfully? How do they work with exchanges? 

Fire away .

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2 hours ago, CRZ said:

I read a lot about bots on xrpchat and other forums, I have a rough idea what they are but want to know more.

How exactly do they work ? Does anyone on here use them ? Do they cost? Can someone like me with zero trading experience use it successfully? How do they work with exchanges? 

Fire away .

I played with some bots for a few weeks, but gave up after realising that this would cost me too much time and is way too stressful.

All bots are basically reading the data / prices from an exchange api. This is mostly done via https. In most cases you have to create an api key + secret and configure the bot with this data. Some bots cost money and are closed source. This means that nobody can really tell if the bot creator robs your account one day. There are some technical measures against this (like permissions on the api key, analyzing the traffic that the bot creates, installing the software on a dedicated machine that is locked down with a firewall) but there no 100% protection.

There are different kinds of bots: Arbitrage bots that make profit by buying / selling between different exchanges, because sometimes the prices differ by quite a margin.

There are also bots that work with the spread between buy and sell orders. They only make very little profit per trade, but they are active all the time and can take opportunities that a human may not even see, because the market sometimes moves too fast.

The most popular type of bots is most likely the ones that make use of TA tools. They basically calculate the different indicators and react when certain conditions are met. 

Without trading experience and knowledge about technical analysis you should not even think about running a bot. No matter which type of bot you want to run: You need a strategy, read and understand the current market situation and teach the bot what to do. A bot can only be successful with a good strategy. In some cases basic programming skills are very helpful or even mandatory. The biggest problem is that a bot may work fine under certain circumstances, but sometimes there are these huge green / red candles where all the indicators are going completely mad. And after such a huge spike there is sometimes another one ... too bad when your bot is already out of the trade or even worse: It loses your money or precious coins, because a big whale is farming all the small bots / stop orders.

Before you consider running a bot you should learn how to trade (in a bull as well as a bear market) and how to protect your position. There are many helpful resources / tools out there. And don't forget the taxes ... they can really spoil your party. 

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As a person using their own bot I agree with 90% , of what @DavyJones said. They did a good job talking about the risks so I will talk about the advantages.

Humans are flawed , we have these things called emotions that really don't belong in investing. Using a bot (derivative of a constant value strategy) takes this weakness away and forces me to trade programically. It also allows trading to happen while I'm sleeping or unavailable etc. If you decide to try to write your own you first need a back tested strategy. I used a free language called python to program in and found a API interface on GitHub.

All the risks davyjones mentioned are reasonable ones but for me , the satisfaction on having my own creation make money  is worth it.

Now I just need xrp to go up a little more....  

 

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