Bots are annoying to anyone who wants to make gains, but not to those who operate them!
The liquidity eating nasty little programs have been growing in popularity for quite some time! CEX bots and DEX bots have many different features the front-running on DEXs like Uniswap have been raging during the 2020 bullrun.
But can we do anything to stop them?
Well, yes and no.
Yes, because we can apply a technique depending on what bot we are dealing with
No, Depending if it is a front running bot or CEX trading bot in order to really stop the bot, everyone would have to follow certain type of strategy to stop the bot from profiting and the truth is - this is never going to happen! Unless you have very strong community in a particular project people will do whatever the bot pushes them to do! And even if you manage to convince large amount of the community to stick to certain strategy (HODL) you always have new people buying the coin without joining the community - just to trade or whatever!
But there are some things you can do without anybody else!
If you know how the bot has been programed you can predict its next move and act before the bot does!
DEX
Here is what you can do on DEX when dealing with front running bot!
1. Use large liquidity pools.
Using a large liquidity pools minimizes the risk of being front run providing your order isn’t too large!
2. Keep maximum slippage low.
Keeping your slippage as low as possible won’t allow bots to take advantage of you, however your transaction might fail if the coin moves really fast.
3. Overpay on gas.
You might want to pay higher gas fee, however this might not work unless you know nobody is paying higher than you!
4. Place a low-value order.
Placing a low value order is one of the safest ways to deal with front running bots.
5. Find a taker.
Finding someone who is willing to take the coins can be a good way to trade with maximum profit!
6. Use exchange that has front running protection
This is just a speculation as I am not sure if any DEX offers that. At least I have not found one. However, Solana had standardized gas fee, which means searchers couldn’t front-run or back-run any transaction. But now with the introduction of 3 types of gas fees Solana opens the door to front running bots the fees won’t be as high however it will be best idea to select the highest fee (still below a penny though!)
Personally I would say the best strategy is to buy at the right time, that means before everybody is rushing to buy, plus choose lower value orders accustomed to a particular liquidity pool.
CEX
CEX bots are programmed based on various indicators just need to know which one.
Here is what you can do on CEX when dealing with trading bot!
1. Watch for pattern.
Watching for developing pattern and the behavior can help you determine how the bot has been programed.
2. Use charting tools.
Bots are programed by humans and follow certain trading strategy based on various indicators. Finding out what is the bot common action on particular indicators can be game changing for you!
3. Use the bot.
Try automatic bot to see how it performs as a reference many people probably is using it.
4. Just HODL.
If you have long term prospect on the project you bough, just HODL and don’t sell when it corrects. The whole purpose of the bot is to trigger a movement to make people sell so it can buy back lower. If the people don’t sell the bot looses and has to buy back higher! The bots are doing it with buying to triggering FOMO then selling!
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