Opinion: Bots are a Critical Tool for Retail Investors

Bots assist in removing emotions from trading. These features make them even more helpful to novice traders than to specialists.

The future, in which robotic super traders struggle over micromovements in stock price, is already here. With the ability to access algorithmic trading bots at the push of a button, we may see the demise of human investors and the triumph of artificial intelligence.

Algorithmic trading bots are programmed to purchase and sell when certain criteria are met, and they may execute almost any trading strategy. They’ve been utilised by experienced traders for two decades, and they’ve now made their way into the crypto markets.

Now, a new generation of accessible crypto trading tools has hit the market, designed specifically for retail clients. I know since I’ve built several of them. I’m currently developing a technique to assist novice investors in determining their own risk preferences based on previous trading and investment data.

Given that retail accounts for up to a quarter of crypto trading activity, the adoption of these bots could have a significant impact on the crypto market in the future. What’s most intriguing about this is that it could herald a democratisation of market access and participation.

If this is to happen, open education must be linked with access to trading bots and other specialised tools. It is elitist and regressive to recreate a gated system in which only “accredited” investors have access to the crypto markets while everyone else is excluded due to a lack of expertise and capital.

Unfortunately, financial education is not taught in schools, leaving many people vulnerable to clever professionals and outright con artists. Trading bots, in conjunction with appropriate knowledge, are one step toward levelling the playing field.

This system provides a form of experiential teaching for novice traders, allowing them to feel market swings with small positions and an automated approach. They can play with several bots to learn about various tactics such as arbitrage, dollar-cost averaging, and futures trading.

Furthermore, people who gain proficiency in trading bots — for example, deploying multiple bots at the same time to reflect a hedged or diversified strategy — may surpass experienced players. After all, no human can constantly watch the crypto markets’ 24 hours a day, seven days a week, but a bot can.

Trading bots, in fact, thrive in the 24-hour crypto markets, where they can exploit arbitrage opportunities and ride the waves of extreme volatility. No human can keep up with these markets and will inevitably miss opportunities that a bot can.

However, a trader must still make critical decisions that determine how a bot works, such as selecting the asset and price range for the bot to buy and sell in. So, while bots are an excellent tool, they are not without risk.

The better traders grasp entry and exit spots and trade timing, the better their bots will perform. Most users, however, do not require expert-level understanding; they simply need to comprehend why running a long-term grid bot on a microcap that has just pumped 200% is a bad idea.

Another advantage is that trading bots remove emotion from the equation. Even expert traders struggle to keep a level head when significant quantities of money are at stake.

Some people may find themselves “marrying their bags” and holding when they should sell. This type of behaviour leads to “dumb money” trades, which are trades that are made emotionally in response to market movements rather than rationally.

Trading bots are not affected by this emotional handicap. They carry out their plans in a planned vacuum. On their way to become independent traders and investors, neophyte traders may find a lot of value in these products.

Professional traders used to polish their abilities as part of their employment. However, with the introduction of AI trading, retail investors now have a chance to catch up. As the threat of inflation looms over huge economies around the world, it is critical that the most recent investing tools be made available to everyone as a method of access and education so that ordinary people can best conserve their wealth and generate economic opportunities.