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How Crypto Trading Bots Work

Crypto trading bots function as automated traders, executing buy and sell orders based on pre-set strategies. They scan market data, identify opportunities, and place trades faster than any human could. Here’s how they work:

Market Analysis – Bots monitor price trends, indicators like moving averages, and volume data to make decisions.

Trade Execution – Once a signal meets the bot’s criteria, it places orders automatically, ensuring quick execution.

Risk Management – Many bots include stop-loss and take-profit settings to limit potential losses and lock in gains.

Continuous Monitoring – Unlike human traders, bots run 24/7, adapting to changing market conditions.

Bots range from simple DCA strategies that spread investments over time to complex algorithms using arbitrage or momentum-based trading. However, while bots remove emotional decision-making, they still require oversight and proper configuration.