Let's talk about automated trading bots and compounding

There are different kinds of automated crypto trading bots out there. In this post I'll mainly talk not about the bots which simply trade your crypto based on certain trading signals, but bots that are mainly hyip. And before going on - at least 99% of those bots are scam. But some of them might actually work, or well, at least it used to, like iCenter bots.

These owners of these bots allegedly actually trade with your money to give you the 1.2 - 5% daily return (capital included). One of them has been around for couple of years which is a good sign, considering most scam bots only last a few weeks to a few months, and the other one has been around around 7 months.

With these bots you can expect to earn 20% to 50% return within 30 to 120 days. Plus you have the opportunity to reinvest your earnings every 6 hours, and by doing that compound your earnings. Here's a simple hyip calculator for you just to see how much you could theoretically earn with them.

In one of those trading bot Telegram communities some people don't really understand what compounding is. Or how reinvestments actually might not earn the owner a thing, depending on how the bot actually works. One guy there said that compounding creates new money for the owner. And this could be true, but there's a Big But.

New investments give the owner new money, compounding gives the owner new money ONLY IF he's actually trading and earning new money with the investments. Let's say you put in $10 and start compounding, if he's not doing anything with your tenner but instead at some point just has to start paying out interest on your investment which thanks to compounding has now reached maybe 20, it doesn't give the owner anything at all. Just you. And that's how the system runs out of money. If, however, he's actually earning with your tenner, making lets say 1% a day from it, then every time you don't take out your returns but compound it, he's able to make trades and earn the 1% from a bigger amount, making it sustainable to pay you as well.

When I said to one user what I just told you, he answered that "From the owner's point of view. If any investor clicks on the withdraw button. Money goes out from my liquidity. But if investor presses the reinvest button. Then the funds that I had to pay him , can now be used for a longer period of time in any of the instruments I've been making money from. So I as the owner, will be able to giVe you more returns on that reinvested amount because you let me gain profit from my investment for a longer time now.

Now coming to your point. If reinvested amount doesn't count then I'm not managing the investor's funds in a proper way, Be it any case. And if I run out of money just because many people are reinvesting, then it's not on the investor it's on me as the owner. The questions to be asked here to myself as the owner are:
1. Why did I run out of money even when all or majority of people are not withdrawing their funds and I'm telling them that they will get a 4% return daily.

2. If the reinvested amount doesn't have any positive effect on my business growth, then why did I provide a Reinvest option on my bot?"

To which I answered that "True in a sense that the owner has more time to make money with it. But at the same time, because of the compounding, he also needs to pay out more (even if it is not today but in two weeks), so in a sense he still needs to be able to make the same % of money each day from the total available balance he has, independent of the exact sum on the account.

As to your point (1) - bad trades? no trades at all (hyip) but users compounded investments where you now need to pay out shitloads and no new investments are coming in? or simply the money is currently waiting on other accounts for the perfect trades to make money with? So there are different possibilities.

As to your point (2) - it's inviting to investors, that's how you get more people to your platform. That's mainly marketing."

Just a few thoughts about automated trading bots, reinvesting, and compounding.

The idea of compounding though can be used anywhere as well, not just in those automated trading bots. Even if you're trading cryptocurrencies yourself, you can use the idea of compounding. If you manage to earn 1% today, this means that tomorrow you can trade with 1% bigger capital and also earn more from it. In most general terms, compounding could be looked at as earning interest on interest.