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Trading Bot Meaning

A trading bot is an automated software program designed to execute trades based on predefined rules or algorithms. Bots can operate continuously, reacting to market data faster than human traders.

Trading bots are commonly used for market making, arbitrage, trend following, and liquidity provision. They rely on inputs such as price feeds, technical indicators, and order book data.

While bots improve efficiency and scalability, they also introduce risks related to code errors, market anomalies, and feedback loops, making monitoring and risk controls essential.

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