Crypto trading bot psychology

The psychology of crypto bot trading

When you are trading with a crypto trading bot, it is a completely different ball game than manual trading. Crypto bot trading involves using automated software to make trades on your behalf. While this may sound like a convenient and profitable way to trade, it is essential to understand the psychological challenges that come with using bots.

In this article, I will tell you more about those challenges and share some of my experiences. Let’s dive in!

Bots are not perfect

Firstly, it’s essential to remember that bots are not perfect. They are programmed to follow specific rules and patterns, which means that they can make mistakes just like humans can. However, when a bot makes a mistake, it can be easy to blame the technology instead of taking responsibility for your trading decisions. This can lead to feelings of frustration and helplessness.

Another psychological challenge of crypto bot trading is the lack of control that comes with using automated software. When you use a bot, you’re essentially entrusting your trading decisions to a piece of technology. This lack of control can lead to feelings of anxiety and uncertainty, especially if you’re new to trading or if you’re not familiar with the bot’s programming.

It is important to know the risk management of your trading bot. While it’s always nice to make profits, you should also consider the possibility of losses. You need to know the worst-case scenario and how a loss or multiple losses will impact your performance in the long run. If you understand what’s at stake and know that your bot can recover those losses in the long run, you’ll have less stress in letting it trade.

Give your trading bot the time to trade

When your trading bot experiences a losing streak, it can be frustrating. However, it’s important to remember that it’s normal for bots to have losing trades. To cope with this, it’s essential to get used to the idea of losses, know your risk management, set boundaries, and give the bot time to trade. It’s also crucial to evaluate the results on a monthly basis rather than daily. Only after trading for an extended period, which could be several months, can you see how the trading bot is truly performing.

It can be tempting to interfere with a trade made by your trading bot, especially if it’s in a nice profit or loss. However, if you do this, you’re interfering with the trading strategy, and the backtesting and forward testing can no longer be trusted. It’s important to remember that you’re the one trading, not the bot. If you interfere with the bot’s trades, you’re indicating that you don’t trust the bot’s trading strategy. If that’s the case, it may not be the best choice for you.

Crypto trading bots CAN be a powerful tool

Overall, while crypto bot trading can be a powerful tool for traders, it’s essential to understand the psychological challenges that come with it. By being aware of these challenges and taking steps to address them, you can ensure that you’re making informed and mindful trading decisions. So, before you start using a bot, make sure that you’re mentally prepared for the challenges that come with it!

Get informed

One way to address the psychological challenges of crypto bot trading is to stay informed and educated about the technology. This means taking the time to understand how the bot works, what its limitations are, and what strategies it uses to make trades. By having a solid understanding of the technology, you can better anticipate potential issues and make informed decisions about your trades.

Another important step is to establish a clear set of rules and guidelines for using the bot. This includes defining your risk tolerance, setting stop-loss orders, and establishing clear targets for profit and loss. By having a clear plan in place, you can reduce the impact of emotions on your trading decisions and ensure that you’re making rational and strategic choices.

Building your own or using a bot as a service?

There is a big difference between using your own bot and using a bot as a service. If you’re using a bot as a service, it’s important to know the people who are developing and operating the trading bot. Get to know them, have a video call, and check their strategies. If you’re building your own bot, you’re in full control of all aspects of the trading bot, but have you built a good product?

Here’s a small checklist for evaluating a trading bot as a service:
  • What is the trading strategy?
  • What is the timeframe for trades?
  • Do you understand the bot’s risk management?
  • Does the bot use stop losses?
  • Does the bot use limit orders?
  • What is the percentage of risk per trade if the trade is stopped out?
  • Is the backtest too good to be true?
  • Can you get a free trial to test?
  • Do you need to transfer your funds to their account to trade? If so, be cautious of potential scams.
  • How many trades does the bot execute per month?
  • Is the bot still profitable with trading fees included in the backtest?
  • Does the bot use cross leverage? If so, be aware that your entire account could be liquidated if things go wrong.
  • Is the bot trading in a liquid market?
  • How can you monitor the bot’s performance?

By considering these factors, you can make a more informed decision when choosing a trading bot as a service.

Get involved

It’s also important to remember that using a bot doesn’t mean that you can’t be actively involved in your trading decisions. While the bot may be making trades on your behalf, it’s still up to you to monitor its performance and make adjustments as needed. This means staying informed about market trends and developments, and being willing to adjust your strategies as necessary to ensure that you’re maximizing your profits and minimizing your risk.

My own experiences

Crypto bot trading can be very stressful. I have been doing it for a long time, and when everything goes well, my bots are generating nice profits, and I feel great. I have lots of free time to spend with my family, work out, or even go surfing. However, when my bots are experiencing challenging market conditions or having a losing streak, it can be stressful. The first time I experienced big drawdowns, I did not know how to cope with it. It gets better when you experience it more, but it is never enjoyable.

What works for me is to think about how I got here. I have put a lot of energy into this, and I can trust this system, and we will get over this. So, if I trust this system, do I need to interfere? The answer to that is no. So, that means I cannot do anything about this situation. In that case, I need to make sure I keep a close eye on the trades, check that everything is working the right way, but nothing more at this point.

Thinking this way won’t mean the stress goes away. However, it is critical to deal with stress. I work out, go to the beach with my kids, and make sure I get enough sunlight on my face. I do the things that I enjoy, and make sure I am in good condition, be fit, be healthy. You will need it!

Overall, it’s essential to find ways to manage stress when you are trading with a crypto bot. It’s crucial to focus on things that make you happy and take care of your physical and mental health. By taking care of yourself, you will be better equipped to handle the ups and downs


Ultimately, the key to successful crypto bot trading is to approach it with a balanced and mindful mindset. By understanding the psychological challenges that come with using automated software, and taking steps to address them, you can ensure that you’re making informed and strategic trading decisions. So if you’re considering using a bot for your crypto trading, make sure to approach it with caution, and always be mindful of the potential risks and challenges.

The opinion expressed in this blog article is for general informational purposes only and is not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.