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What is a trading bot?
A trading bot is software that places buy and sell orders automatically according to programmed rules, without a person approving each trade. Some run on your own exchange account through an access key; others are sold as services that trade pooled customer money.
What it means for you
The CFTC warns that fraudsters tout AI trading bots promising huge returns, sometimes described as guaranteed, and that AI cannot predict the future or sudden market changes. A bot holding an exchange key with withdrawal permission can move your funds out. Fees, spreads and subscription costs come out of any returns.
A common mistake: “An AI trading bot can predict the market and win almost every trade.”
In fact: The CFTC says AI cannot predict the future or sudden market changes, and calls claims of huge returns or 100 percent win rates dubious claims made by scammers.
How it works
The CFTC describes bots as algorithms that automatically place trades, often sold alongside algorithms that send buy and sell signals to subscribers. Its advisory cites a commodity pool that claimed a proprietary bot guaranteed at least 10 percent a month; very little money was actually traded, and it operated as a Ponzi scheme, paying older investors with new money. The CFTC's checks: research the company and people behind it, check the age of the website's domain, get a second opinion, and weigh fees and spreads against claimed returns.
Sources: CFTC Customer Advisory: AI Won't Turn Trading Bots into Money Machines, CFTC press release 8854-24: advisory on AI scams · checked 4 October 2026
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Educational content, not financial advice. Written by hand and checked against the source named above. Something wrong? Tell us and we reply within two business days.