What are Sniper Bots and How to Avoid Token Sniping Scams?

What are Sniper Bots?

Sniper bots are programs that have the ability to perform specified functions at regular intervals in an automated manner. These functions can include options such as bidding in an online auction, making sales, and performing crypto trades.

All these functions are based on predetermined parameters that are programmed by the users or developers. This type of bot is often utilized for digital asset trading, auctioning, and sales. Since sniper bots are automated, they can generate responses within seconds allowing the owner to get ahead of the curve.

Utility of Sniper Bots

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For cryptocurrency investors, sniper bots are automation protocols that are designed to make instant transactions based on predefined parameters. Some of the main features of sniper bots include standardized trade execution, automated trading process, increased trading efficiency, and competitive edge against market participants. Sniper bots usually have automatic trading options that require pre-programmed values to function.

These parameters can include variables such as technical indicators, scalping strategies, stop-loss, purchase order thresholds, and arbitrage trading codes, etc. Trades who utilize this technology intend to maximize profits based on short-term trading strategies such as swings and automating the trading process based on long or short trading positions.

However, the success rate of sniper bots is directly correlated to effectiveness of programming, reliability of trading strategy, and efficacy of trading strategy.  

How does a Sniper Bot Work?

Sniper bots hare programmable meaning that investors are able to set different parameters as predetermined strategy. At the same time, sniper bots also collect data from various sources such as price changes, trading volume, fee fluctuations, and others to refine the trading process.

Some sniper bots also incorporate learning algorithms that allow them to edit the investment plan based on the latest market changes such as scalping and arbitrage.

Sniper bots use specified standards or prices at the starting point. At the same time, the bot continue to receive latest data from market such as price changes or technical indicators. The bots have the ability to identify links between different factors that impact the predetermined trading parameters in real-time.

Based on these repetitive patterns, the bots are able to determine optimal trading points to perform most profitable trades.  Sniper bots also perform secondary market trading such as arbitrage to enhance profits.

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Types of Sniper Bots

Here are some of the most utilized types of sniper bots:

Entry/Exit Bots

Sniper bots that are designed to make trades based on specified entrance and exit points are placed in this group. They facilitate optimal purchasing and buying positions.

Scalping Bots

Scalping is a trading process where investors try to generate profits by increasing the frequency of trading positions. Scalping bots make use of the same strategy based on price changes for profitable trades.

Arbitrage Bots

Arbitrage bots make use of price changes for the same digital currency listed on different trading platforms. They scan price projections from different trading platforms to purchase a given asset at lower prices and selling it for a profit at another at a higher value.

Technical Indicator Bots

These bots use technical indicators such as moving averages, relative strength index, Bollinger bands, and other particulars to find the most profitable trades.

AI-based Bots

These bots incorporate AI and machine learning technology to recognize market patterns and generate the most effective trading tactics based on live market projections.

What are Token Sniping Scams?

Token sniping is a type of financial scam that makes use of sniper bots to conduct various types of fraudulent trading plans. Some of the most common Token Sniping scams are listed as under:

Rug Pulls

Rug pulls are a type of scam where scammers publish a new token and create speculation around it to gain massive traction. Scammers can make use of sniping bots to artificially inflate trading volume, advertise, or create hype around a new coin. However, once the prices are overhyped scammers can fold operations and run away with profits.

Pump-and-Dump

Pump-and-dump scams take place when scammers pick a random cryptocurrency to artificially inflate its prices. They can also utilize bots to generate a false sense of demand for the selected coin. When other investors start to purchase the coin based on fake speculation, the scammers can cash out to print profits and plummet the prices back to zero. 

Flash Loans

Flash loans are a type of lending process specific to DeFi sector where investors have to lend coins, perform various trades, and return the loan within same transaction cycle. However, scammers can use sniping bots to manipulate the liquidity pools used in a flash loan to artificially inflate or deflate the price of loaned coins and make illegal profits.

Initial Coin Offering Scams

ICOs are presales for newly issued cryptocurrencies. Scamming ICOs can ask investors to raise money and disappear after manipulating token prices using bots for a while.

Conclusion

Investors can use technical market indicators and other tools to detect use of sniping bots as a preventive and risk management strategy.

Author: Isacco Genovesi

Isacco writes news articles, reviews and guides about cryptocurrencies including technical analysis, blockchain events, coin prices marketcap and detailed reviews on crypto exchanges and trading platforms.

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