A scalping bot is a computer program that buys and sells digital assets, either according to the algorithm of the program itself or with the participation of the trader. All bots use different signals, algorithms, patterns and settings defined by the scalper. Their main purpose is to automate the trading process and help to reduce the time for market analysis and signal filtering.
However, despite the convenience of scalping bots, they have significant disadvantages over manual trading. First, bots never think and cannot adjust themselves on the fly. Therefore, a bot cannot guarantee a profit or even a zero loss. The market is always in flux, and every bot, however profitable at first, becomes obsolete after a while.
Trading bots can also have security risks. Since many bots trade through APIs, these channels can be vulnerable. Double-check your permissions and IP addresses in your API management windows before connecting a bot to your terminal.
Also, scalping bots have no human instincts – therefore, they’ll never recognize a ‘chance’ to enter a profitable deal, however obvious that chance may seem. Trading bots are not able to take risks and usually bring small, albeit steady, profits.