Most trouble with a Kraken API trading bot does not start in the market — it starts at setup. The mistakes below are common, avoidable, and far cheaper to fix before a key ever goes live than after.
1. Over-scoped API keys
The single most dangerous mistake is granting more permission than a trading bot needs — above all, withdrawal access. A bot has no reason to move funds off the exchange. Scope the key to query and trade only, and leave withdrawals disabled. See how to create and scope Kraken API keys for the least-privilege setup.
2. Skipping paper mode
Connecting a live key first and "watching it carefully" is how avoidable losses happen. Paper mode runs the full bot against real prices without real funds, so it should always come first. The paper-to-live gate exists precisely so this step is not optional.
3. Ignoring transparent rejections
When the bot rejects a signal for failing the cost bar, that is the discipline working, not a bug to suppress. Treating rejections as noise — or worse, loosening the rule to force more trades — removes the very protection you set up.
4. No recovery plan for the kill switch
The kill switch will eventually fire. A bot owner who has never thought through what to do next tends to clear it in a panic and resume blind. A calm, written recovery routine turns a stressful event into a checklist.
5. Trusting automation you cannot inspect
A bot you cannot audit is a bot you are hoping about. Every order, signal, and rejection should be reconstructable from the log, so nothing it did is a mystery after the fact.
Work through the recovery routine in how to recover the bot after a kill switch, and connect the limits the bot enforces in the risk pillar. This is original guidance, not affiliated with Kraken, and it promises no profit — only fewer ways to get hurt.