What is a crypto trading bot?

A crypto trading bot is software that trades for you. It watches prices, applies a set of rules and, when the rules say so, sends orders to an exchange through your account. It does not get tired, distracted or afraid, and it does exactly what it was told. That last part is both its strength and its main risk.

How a trading bot works

Every trading bot repeats the same loop:

1. Read the market. The bot receives prices from the exchange, usually as candles: the open, high, low, close and volume of each period.
2. Apply the rules. It checks the strategy's conditions, for example "the price closed above the 50-period moving average and RSI is below 70".
3. Size the trade. It decides how much to buy or sell, based on your capital and the risk you accept per trade.
4. Place orders. It sends the entry and its protective orders to the exchange through an API key.
5. Manage the position. It moves a trailing stop, takes partial profit or closes the trade when an exit rule fires.

The exchange account and the money stay yours. The bot only acts through the permissions the API key gives it.

Common types of trading bots

Bots differ mainly in the kind of rules they follow:

• Rule-based strategy bots trade signals from indicators and price structure, such as trend following, breakouts or mean reversion.
• Grid bots place a ladder of buy and sell orders inside a price range.
• DCA bots buy a fixed amount at regular intervals or on dips.
• Arbitrage bots look for price differences between markets.

Algonney runs rule-based strategies: you decide the entries, exits and risk, and the bot follows them on spot or USDT perpetual futures.

What a bot can and cannot do

A bot can:

• trade around the clock without missing a signal;
• apply the same rules every time, without fear or greed;
• place a stop loss the moment a position opens;
• run several symbols at once.

A bot cannot:

• know the future, or tell a good strategy from a bad one;
• avoid losses that its rules allow;
• protect you from a key with too many permissions;
• replace testing.

The risks to understand

• Strategy risk. The rules may simply not work, or stop working when the market changes.
• Overfitting. A strategy tuned to look perfect on past data often fails on new data.
• Leverage and liquidation. On futures, leverage magnifies losses and a position can be liquidated.
• Technical risk. Exchanges and networks can fail. A stop loss placed on the exchange keeps protecting a position even when the bot is offline.
• Key risk. A key that can withdraw is a key that can empty your account if it leaks.

Read the risk disclosure for the full list.

How Algonney approaches bots

Algonney is built around a few fixed rules:

• every strategy needs a stop loss, and it is placed on the exchange first;
• a guard that cannot be turned off checks every entry against your daily loss limit, position caps and, on futures, the liquidation price;
• exchange keys that can withdraw or transfer are refused, and keys must be bound to the server's IP address;
• the bot never touches orders or positions it did not place.

You build strategies by chat with Jarvis, the AI assistant: describe the idea and it writes the rules, checks them with the validator and shows them on a card. See the crypto strategy builder.

How to start safely

1. Build a strategy with a clear entry, a stop loss and an exit.
2. Backtest it on real history with realistic fees and slippage. See How to backtest a crypto trading strategy.
3. Paper trade it with virtual money on live prices. See Paper trading.
4. Connect a trade-only key bound to the platform's IP address. See Exchange API key security.
5. Go live small, with a daily loss limit set, and watch the first trades closely.

Backtests and paper bots need no exchange key, so you can learn how a bot behaves before any money is at risk. To compare platforms, use the neutral checklist in How to choose a trading bot platform. The bots guide in the docs explains each setting, and plans are on Plans and pricing.

Past results do not guarantee future returns.