Most trading transactions in the financial markets are carried out by automated trading systems or, to put it simply, bots. According to ZeroHedge, the share of such transactions in the total volume of trading operations in the financial market is more than 80%. The cryptocurrency market, which is in a legal vacuum, is no exception - auto trading and manipulations prohibited in traditional finance also flourish here. Moreover, the crypto exchanges themselves often encourage high-frequency trading in every possible way, which brings liquidity to the platforms and, of course, a considerable commission income. Many experts are convinced that the loosely regulated digital currency market is dominated by trading bots that influence trading volumes and pricing. The problem of market manipulation is the object of close attention from regulators, including the US Securities and Exchange Commission (SEC), which, by rejecting applications for the launch of bitcoin-ETF, hinders the development of the cryptocurrency market by institutional investors. What is automated trading and why do we need trading bots? Automatic trading systems (ATS) or trading robots are programs that are used to fully or partially automate trading.

They use special trading strategies where bots open and close positions within fractions of a second. ATS is often mistakenly identified with the term "algorithmic trading". The fact is that the latter does not aim to make a profit. Algorithmic trading is a method of executing a large order when it is divided into several sub-orders with special price and volume characteristics. Each of them is sent to the market for execution at a specific time. Algorithmic trading is designed to reduce the cost of executing a large order, minimize the impact of the latter on the market and reduce the risk of non-execution of the transaction. Another thing is trading robots, the only purpose of which is to make a profit.

These programs interact with exchanges via API, receiving and interpreting market information, and placing appropriate buy or sell orders. The actions of bots obey the given rules and algorithms. For example, the bot can take into account market parameters such as price, volume, orders in the order book, time, etc. They can also take into account data from technical indicators, such as exponential moving averages (EMA) or Bollinger bands, as well as various variables set by the user. In addition, bots can interact with each other and with various trading platforms (if we are talking about arbitrage strategies). Trading bots allow the trader not to devote much of his time to analyzing the market and price movements on various currency pairs. Bots have advantages over real people, mainly due to their ability to complete transactions in fractions of seconds, 24/7.

Unlike people, programs are devoid of emotions and can work with a large number of exchanges and currency pairs. PBXs are used by professionals, including fairly large financial companies, and by "amateurs" - simple owners of cryptocurrencies who seek to receive passive income and increase their capital. Note also that high-frequency trading firms and individuals usually do not need a huge amount of capital, nor do they need to accumulate and hold positions. In addition, the potential Sharpe ratio for high-frequency trading can be several times higher than for traditional strategies such as Buy and Hold. Progress does not stand still, algorithms become more complex, and various bots compete not only with people, but also with each other. .