Welcome.
I am not a student of Economics, fate brought me into the world of crypto-trading but, kindly read.
1 - What is a "BOT"?
According to dictionary.com
noun
a device or piece of software that can execute commands, reply to messages, or perform routine tasks, as online searches, either automatically or with minimal human intervention (often used in combination):
intelligent infobots; shopping bots that help consumers find the best prices.
Now let us replace some words in the last statement like "info-bots" with trading-bot or "shopping" with trading, this gives us " intelligent tradingbots; trading bots that help traders find the best buying or selling price.
2 - What is "Trading Psychology"? According to investopedia.com
Trading Psychology is the emotions and mental state that dictate success or failure in trading securities. Trading psychology refers to the aspects of an individual’s mental makeup that help determine whether he or she will be successful in buying and selling securities for a profit. Trading psychology is as important as other attributes such as knowledge, experience and skill in determining trading success. Discipline and risk-taking are two of the most critical aspects of trading psychology, since a trader’s implementation of these aspects is critical to the success of his or her trading plan. While fear and greed are the two most commonly known emotions associated with trading psychology, other emotions that drive trading behavior are hope and regret.
I do believe the definition above is referring to human beings and with good study and experience, one should be able to predict peoples' actions or reaction. Now, how do I predict a bot's action or reaction? When do they become afraid or get greedy? I know one of the main strategy of trading revolves around the volume of buy or sell orders, this most times determine the direction or flow of the market. Mind you, this direction do change in a jiffy maybe because of these bots.
How do you experts determine the direction of the market when bots starts placing several buy or sell orders of 0.0001 and increasing those orders by just 1 digit? i.e.,
buy/sell 1 unit of x @ 0.00001234, @ 0.00001235, @ 0.00001236, @ 0.00001237, @ 0.00001238, @ 0.00001239 to let's say 0.00002400.
I noticed because of this type of orders, I compete unnecessarily, trying to place orders and they most times do not get honoured. The bots quickly push the price up above or down below my order depending on the direction I want to trade (buy or sell).
QUESTION
1 - All these buy or sell orders by bots, are they not going to affect the following?
a - The "TRUE" market value of these crypto-currencies.
b - Volume of transactions and market capitalization as quoted by sites like cryptocompare.
c - Won't prices or value of coin become unnecessarily high or low?
2 - Am I still fairly trading against individuals or the exchange, and is the exchange still a neutral body in this same market or they are the ones manipulating the market?
3 - What is the "TRUE VALUE" of Bitcoin?
4 - How are you coping trading against BOTs?
5 - Does the crypto market need regulatory bodies? If yes, when do they come in?
Your comment and advise will greatly be appreciated.
Thank you.