Code that watches the market and trades for you, following rules you set instead of decisions you make in the moment.
A trading bot connects to an exchange through an API (a programmatic interface) to read live market data — price, volume, order book activity — and execute buy or sell orders automatically based on predefined rules, without a human approving each trade. Because it’s connected via API rather than a human clicking buttons, it can react in milliseconds and run continuously, day and night.
The appeal is speed and consistency — a bot doesn’t hesitate, panic, or get tired. The risk is that it’s only as good as the rules it’s given: a bot executes a bad strategy just as fast and tirelessly as a good one.