Should trading bots be banned?

[paahde]

On bitcoin exchanges, such as Mt. Gox and Bitstamp, there are multiple bots that buy and sell bitcoins at the same time cluttering the markets and the rate of bitcoin. The purpose of these bots is to gain profit, so traders will get more more tempated to start to use some kind of homespun trading bot. What will we see in six months? War of bots, that rally the rate of bitcoin and make markets completely volatile? That defintely isn´t good for the arising bitcoin ecosystem. So if the bitcoin exchanges want to be trustful, the bots should be banned, or should they? 

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[worldinacoin]

For the exchanges to be trusted, they should be able to withstand any such bots.   This is normal in the real world, impossible to be banned.

[paahde]

Far from normal. Easy to ban, just limit orders in API.

[monsterer]

Bots are good for exchanges and good for traders - they are more likely to lose money to real traders because they just follow extremely simple rules and cannot cope with things they haven't been designed to deal with, whereas real traders have a much greater range of experiences to drawn upon.

They provide liquidity as well and actually decreasing the volatility of markets by narrowing the spread (in the case of market makers).

In short, don't fear them - they are dumb and the vast majority of bots actually lose money for their owners, meaning they're great for real traders.

[countryfree]

You shall learn that there trading bots everywhere, buying and selling oil, metals or currencies. Unfortunately, there is just no way to ban them. Often, you can't even tell they're bots.

[01BTC10]

http://www.youtube.com/watch?v=aq1Ln1UCoEU

[Stephan224]

TS, what you are thinking is not possible or true.

As a trade bot developer myself i can tell you that every user MUST be unique in its trading moments. If not, the trade bot will not get approval from the exchange. The same could be said about the trade signals, with the software you are allowed to send only 1 trade signal per X time. So with these limits the exchange makes sure that not all the trade bots could give the same signal at the same time.

Something funny 2 know....
If you want to debunk a trade-bot seller then you should ask him or her about the used trading technology. They should mention how they keep users unique, if they do not or if they do not disclose how then it is a scam for 99,9% sure.

[Infinum]

every user MUST be unique in its trading moments. (...) with the software you are allowed to send only 1 trade signal per X time.

I must admit I do not understand your response at all. What do you mean by "unique user in its trading moment" and what is this "trade signal"?

[01BTC10]

every user MUST be unique in its trading moments. (...) with the software you are allowed to send only 1 trade signal per X time.

I must admit I do not understand your response at all. What do you mean by "unique user in its trading moment" and what is this "trade signal"?

If every bot do the same exact trade at the same exact time then the server will get overwhelmed.

[daybyter]

Hmmh..my shortest request intervals are like 15s. Bost most bots check every 10mins, or so. So it's quite unlikely, that they all trade at the same time...

[Infinum]

If every bot do the same exact trade at the same exact time then the server will get overwhelmed.

Do you mean multiple bots from the same IP?

[daybyter]

If several bots request the same data from the same IP, it's more likely, that they get banned. That's why I use a single ChartProvider instance delivering data for all bots. So I request the btc/usd rate only once and let all bots use this info.

[Infinum]

That's why I use a single ChartProvider instance delivering data for all bots. So I request the btc/usd rate only once and let all bots use this info.

OK, that is a good design. Bots don't get banned because they are the same but simply because multiple requests from a given IP may be seen as DOS attack.

So it does not matter if bots are different or the same but how much resource strain they put on the trade server in terms of number of concurrent requests.

[neutralist]

HFT programs help maintain liquidity in the exchanges. You stripped them away, you get more unstable prices.

[hayek]

The only thing I understood in your post was that bots = profit, profit = bad.

This is false.

[neutralist]

The only thing I understood in your post was that ... profit = bad.

This is the result of the Obama generation education.

[Infinum]

The only thing I understood in your post was that ... profit = bad.

This is the result of the Obama generation education.

Obama is a communist so at least he is consistent in one area  

Bots are essential in providing liquidity and hence stability to the market.

[Cypherpunk38]

On bitcoin exchanges, such as Mt. Gox and Bitstamp, there are multiple bots that buy and sell bitcoins at the same time cluttering the markets and the rate of bitcoin. The purpose of these bots is to gain profit, so traders will get more more tempated to start to use some kind of homespun trading bot. What will we see in six months? War of bots, that rally the rate of bitcoin and make markets completely volatile? That defintely isn´t good for the arising bitcoin ecosystem. So if the bitcoin exchanges want to be trustful, the bots should be banned, or should they? 

I definitely don't think that trading bots should be banned. IMO, if Bitcoin is going to prove to be a longstanding, viable, economy, then it's going to have to withstand things like trading bots and not really be horribly effected by them.

Full Disclosure: I'm developing a trading bot.

[cryptoanarchist]

Trading bots are awesome.

They can't help an idiot get rich because they're only a tool, and only as efficient as the trader that's using them.

[Radelderth]

Please ban trading bots, a lot of bot flooded bitfunder and they keep puting 0.0000001 BTC higher then your selling price or 0.000001 BTC lower then your buying price....