Crypto traders are increasingly turning to AI-based trading bots. These autonomous systems trade using artificial intelligence to maximize profits. While many of these bots promise effortless profit, they also come with significant risks. One trader lost around $400 (approx. €380) in just 24 hours, illustrating the dangers of automated trading solutions.
The dangers of AI trading bots
For many newcomers, the start of the… Crypto-World overwhelming. Profits often fail to materialize in the first few months, which leads many to use trading bots. These bots act independently, based on AI and predefined settings. The concept of an automated money machine sounds tempting – a dream for many investors.
A trader named Derek Phyo Paing took this step and invested around 1,800 euros in the AI bot PowerAI. Despite a stop loss of 20% – a safety limit that automatically triggers sales if a loss of 20% occurs – he suffered a loss of 400 USDT in 24 hours. The bot strictly followed the programmed rules without reacting to unforeseen market dynamics.
The crypto markets are heavily influenced by human emotions such as fear and the “Fear of Missing Out” (FOMO). These emotional factors remain invisible to AI systems. While bots utilize market analysis and algorithms, they lack the ability to assess panic selling or market rally opportunities – something that experienced human traders could recognize.
AI trading bots as a complement, not a replacement
Although AI systems eliminate emotions, this does not automatically mean better decisions. Successful trading in volatile markets requires both logic and intuition and the ability to react flexibly to changes – skills that bots do not possess.
AI trading bots can be useful tools, but they are not a guarantee of quick success. Traders should be aware of the risks and use AI as a supporting tool, not as a replacement for their own strategy. As this example shows, blind trust in technology is expensive – humans and machines must work together to be successful.