AI trading bots can sound exciting because they promise automation. The first question is not whether the bot had a great backtest. The first question is whether the user understands the risk.
Bot checklist
- Who holds the funds?
- Are returns net of fees?
- What was the maximum drawdown?
- Is the strategy explained clearly?
- Can you compare it against Bitcoin, cash, or the S&P 500?
- What happens if an exchange API fails?
A bot has to beat its own fees before it beats the market.