Do you plan to use bots for trading? Think again!
Trading bots have created quite a stir in the market. We cannot deny the fact that there are some trading bots that really do help new traders to carry out their trades. But there are numerous limitations to using a trading bot. Understanding these limitations would ensure that you think twice before you make a decision about whether you should or should not be using a trading bot.
They make too many claims
Some talk about huge returns. Some talk about daily profits. There are some that say that you could easily become a millionaire doing nothing. And there are many that tell that offer you a free demo account. Take Olymp Trade for example- where the forex trading platform doesn’t really have a demo account but talks about offering one. So, all these false claims lead you to set unrealistic expectations. And thus you end up getting disappointed as you trusted the bots too much.
Some of them are rigged
Every trading bot out there has its own strategies to make decisions. Developing a bot might be simple these days. But there is a cost involved. And maintaining one is expensive too. So every bot out there does have a tiny or big focus on the profits that it shares. The profits that the developer takes, to be precise. So there are some trading bots that are known to be rigged. Some of them might have many hidden clauses that lead to the bot earning more than the trader.
Pump and dump bots
There are some trading bots that are designed merely to manipulate the market. Any market and any asset works based on the demand at a given point and the demand forecasted. So if this demand could be tweaked then the profits could be altered as well. Some trading bots are known for their pump and dump schemes. They might be designed to unrealistically inflate the prices. They might create false demands leading to false hypes about particular assets. When the price hits the high targets set by the teams they would simply sell the assets and vanish.
Some might make withdrawals difficult
There are a few trading platforms that have stringent conditions about the minimum amount to be deposited and the minimum amount to be retained in the account. So once you make a deposit your capital would be locked in your account and you would not be allowed to withdraw beyond a set limit.
So even if you have a trading bot that really works, it is always a good idea to learn to function independently.