Are Trading Bots Legal?

Trading bots: are they legal and how to choose them?

2023-12-22 10:58:00

When we hear the word "trading bots", the first thing that comes to mind is how bots can make trades. Are they efficient enough to perform trading tasks accurately? Are traders legally allowed to use them?

Read this article to learn more about trading bots and how to use them.

What are bots?

Trading bots or trading advisors are computer programs created using coding languages such as Python, MQL, C++, Java and others. According to the trading strategy, algorithms are developed that analyze the market and execute entry and exit positions.

Theoretically, traders can create a trading strategy and let trading bots execute their trading plan. However, control and small changes are necessary with automated trading.

However, it takes traders months and years of trading bot development, analysis, and hard work. Trading bots can outperform manual trading in the short term, but they usually cannot compete with long-term trading strategies and often fall short of manual trading. This opinion is debatable.

Trading bots are suitable for traders who don't want to sit around all day waiting for the best trading opportunity. They can leave it up to them and spend their time on something else, such as self-improvement. Using a bot does not require excessive trading skills on the part of the trader. Bots are capable of performing both the analytical and execution part of trading operations.

Are bots legal?

If we talk about the regulation of trading bots, they are legal in almost all jurisdictions. This means that there is no law restricting the use of trading bots. However, many brokers are still skeptical of trading bots and strictly prohibit their use.

It depends on the broker whether they use them or not. Brokers who are strictly against bots are very, very rare. Trading bots are widely used in almost all leading trading platforms. Therefore, it is not very difficult to find a broker or trading platform that uses trading bots.

The issue of legitimacy of trading bots has always raised concerns. The reason for this is the presence of many fraudsters in the trading market. There are many known cases where bots have failed to deliver what was promised by the companies that sold them. Due to the poor performance of these trading bots, many traders have fallen victim to irreparable losses.

During the sale, many companies lure traders by showing fake results of their robots and offering money back guarantees. Rarely do any of them fulfill their promises. Sometimes after successfully deceiving people who bought their bots, the scammers disappear altogether.

This does not mean that all companies on the market sell illegal trading bots. Even though they are few in number, some companies have potential trading bots that work as promised. While the best way to get a good trading bot is to create your own, this will require a reliable trading system that can turn strategies into a program.

Creating a bot may require your programming skills or someone who can do it for you and can be trusted. A trusted creator is a must, as many of them end up selling trading bots to other people built on their strategies.

Are cryptocurrency trading bots legal?

Yes, cryptocurrency trading bots are legal in the United States and around the world. Traders encourage the use of these strategies because trading with cryptobots increases broker commissions (more trades than manual trading) and increases the liquidity of the cryptocurrency market. The peculiarity of cryptocurrency trading is that economic news and fundamental news practically do not affect the price, and everything depends on supply and demand in the market.

However, crypto brokers can ban bots based on arbitrage strategies of price delay or any other price manipulation if these manipulations are created with the purpose to harm the brokers.

All political and economic news fed to raise or lower the cryptocurrency market is only speculative and short-lived. The cryptocurrency market has no financial condition that can affect the price of cryptocurrency in the long term. For example, there are no interest rates, industrial production, or GDP that can affect the future value as in conventional national currencies.

Conclusion

Trading bots are a legitimate tool that can be used by traders to automate trading operations. However, it is important to exercise caution when choosing a trading bot to avoid becoming a victim of fraud.

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Damian

Damian

Author

I have been trading Forex for more than 5 years, mostly with manual and automatic trading. I set up advisors for round-the-clock automated trading. I'm sure I can help to establish your trading skills....

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