Trading Bots: What They Are, How to Choose, and How to Use Them

We live in a digital age, and artificial intelligence (AI) has become a game-changer for many industries. Some people love it, others doubt it, but one thing is certain: if used correctly, AI can be incredibly helpful, especially when automating repetitive tasks.

Traders also benefit from AI by using trading bots, which reduce trading time and boost their results. In this guide, we’ll explore what trading bots are, how to choose them, how to use them correctly, and their advantages and disadvantages. Whether you’re new to trading or experienced, this guide will help you understand trading bots and pick the best one for you.

What are Trading Bots?

Trading bots are computer programs that automatically trade based on a predetermined strategy. Basically, these bots watch market data — like price changes, trading volumes, or trends — and buy or sell automatically.

Because bots respond instantly, they make trading faster and more efficient than humans.

Humans have limits — we get tired, lose focus, or make emotional decisions. A well-programmed trading bot eliminates these issues and helps traders be more productive and save time.

Recently, trading bots have become popular because they operate 24/7, watching the markets constantly and making trades day and night. They’re especially helpful for beginners, guiding them to follow structured strategies that make profits.

Types of Trading Bots

There are several types of trading bots, usually grouped by the strategies they use. The most popular ones are:

Trend Trading Bots

These bots look at current market trends and buy or sell based on what’s happening at the moment.

Arbitrage Trading Bots

These bots take advantage of price differences for the same asset across different markets. They buy assets at a lower price in one place and sell them at a higher price in another.

Scalping Trading Bots

Scalping bots make many quick trades each day, profiting from small price changes. They aim for small, rapid profits and close trades quickly once profitable.

Signal Trading Bots

These bots follow trading signals provided by experienced traders. Signals tell the bot when to open or close trades based on profitable strategies.

Customized Trading Bots

Customized bots are built from scratch with personalized strategies. They usually perform better but require significant trading knowledge, initial investment, and programming help.

One example is BustersBot — the world’s first trading bot based entirely on Statistics and Probabilities.

This trading method was created 6 years ago by George Statie, the CEO & Founder of Trading Busters, after losing $100k using Technical Analysis. This mathematical approach removes emotions and subjective decisions from trading, relying only on logic.

After perfecting this strategy, George automated it and created BustersBot. Now, over 350 traders from the Trading Busters community use this bot, enjoying consistent and safe profits.

Advantages and Disadvantages of Using Trading Bots

When well-designed, trading bots can greatly improve your trading, regardless of your experience. However, many trading bots promise more than they deliver, trade carelessly, take excessive risks, and lose money. So, using bots can have downsides if you don’t choose carefully.

Advantages of Trading Bots

• Fast and Efficient: Bots instantly place one or multiple trades without mistakes or delays.
• Emotion-Free Trading: Human emotions can cloud judgment, but bots strictly follow their programmed strategies.
• 24/7 Productivity: Bots don’t need rest — they constantly watch markets and make the best possible trades for you.
• Save Time: Think about the hours spent trading manually. With a bot handling everything automatically, you regain valuable free time to do other things you enjoy.

Disadvantages of Using Trading Bots

• They can lose your money: Many trading bots don’t perform as promised and can risk losing your funds. It’s important to keep an eye on them to ensure things go according to plan.
• They occasionally need your help: You can’t just turn them on and forget about them. To get the best results, you’ll need to check on the bot from time to time and adjust its settings.
• They lack human intuition: Sometimes, your personal intuition might help you read the market better than a bot.

• Creating one requires special knowledge: If you want to build a bot from scratch, you need advanced trading and programming skills.

How to Choose the Best Trading Bot

Your success with trading bots depends completely on knowing what to look for. So, what separates a good trading bot from one that promises too much but delivers too little?

Know who created the bot: Never choose a trading bot if you don’t know who made it. At Trading Busters, this is our golden rule. If you know who’s behind the bot, you can verify their results and see what other traders say about it.

User-friendly interface: Always pick a bot that’s easy to use. If you struggle to figure out how it works, it’s probably not the right choice. The interface should be simple and easy to understand, no matter your experience level.

Compatibility with major trading platforms: A good trading bot should work with popular trading platforms. This way, if you want to change platforms later, you won’t have to change your bot as well.

Customization and control: Your trading bot should be easy to customize and adapt to your strategies. You should be able to start, stop, check trades, and update your strategy whenever you want. This control is key to your success.

Good support and customer service: Always choose bots with live chat support where you can talk to real people, not other bots. This ensures you can always get help if you run into any issues.

Strong risk management: Protecting your money is your top priority. Avoid bots that take big risks or can lose your money quickly. Look for bots with good win rates, consistent profits, and disciplined trading strategies.

How to Use a Trading Bot on Trading Platforms

If you’ve chosen a good trading bot, setting it up and starting to trade should be easy. Here’s what you’ll generally need to do:

1. Download and install the bot: After choosing your bot, download and install it onto your trading platform.
2. Set up your trading bot: Configure your bot according to your trading strategy and preferences. Be careful not to set too high risks or overly ambitious targets.
3. Start the bot: Turn on your bot and let it trade. To be extra safe, first do a backtest. This shows you how the bot would have performed using past market data. If the results are good, you can start using it on your real (LIVE) trading account.
4. Monitor and adjust: Regularly check how the bot is performing and make adjustments when needed. Over time, you’ll get better at seeing opportunities for improvement, so stay patient and keep an open mind.

Costs of Using Trading Bots

The cost of trading bots varies a lot, depending on their features and customizability. Consider carefully how much you’re willing to invest and what the bot offers in return.

Free or cheap bots: These typically don’t have good support or advanced features, and you can’t easily optimize them. Your results may be limited.

High-performance, customizable bots: These usually cost more but offer greater flexibility and support. Although the initial investment is higher, the results will be more consistent, and you can rely on them longer.

We recommend thinking of this as a long-term investment. Don’t just think about money when choosing a bot. A good bot can easily pay for itself by giving you more time, less stress, fewer impulsive decisions, and additional income without much effort.

Things to Watch Out for When Choosing a Trading Bot

You can never be too careful, especially when it comes to protecting your personal data and money. Before making your final decision, ensure that:

The bot’s creator has a good reputation: The credibility of a bot depends on who built it. Since this industry has many scammers, avoid bots that promise unrealistic results. Instead, choose bots created by experienced traders with proven results and trusted communities.

The bot is safe and protects your data: Good trading bots aren’t just effective at trading — they also protect your personal information. Choose bots that use strong security measures, like data encryption, two-factor authentication, and protection against unauthorized access.

The bot receives regular updates: A regularly maintained bot will perform better over a longer period. Updates help the bot quickly adapt to market changes and integrate new strategies or technology.

Now that you know exactly what to look for, it’s time to try out a trading bot and enjoy the benefits of automated trading!