People all around the world have been wanting to trade bitcoin and other cryptocurrencies since the start of the cryptocurrency bubble in early 2017. The issue with any commodity in the global marketplace is that traders cannot remain on duty 24 hours a day, seven days a week. Even the most devoted trader does not choose to spend their entire life staring at cryptocurrency price charts.
Because the market is so unpredictable, cryptocurrency trading is extremely addicting. While long-term investors may not be concerned about taking advantage of such movements, cryptocurrency traders may profit handsomely from such volatility in the cryptocurrency price.
The trading bot is the answer to these problems. For decades, firms have employed bots to establish buy/sell commodity prices on worldwide stock markets. Trading bots assist in automating the process, easing the burden on businesses and traders.
Trading bots are software programs that communicate with financial exchanges via APIs. They actively watch transactions 24 hours a day, 7 days a week, and will respond based on any specified criteria they have been set with.
How do crypto bots work?
For example, if a trading bot is directed to purchase a commodity when the price falls below $1 and sell when the price rises over $2, it will behave in line with these parameters, presumably profiting.
To facilitate the buying and selling of bitcoin and other cryptocurrencies, a cryptocurrency trading bot works on the same principles.
Also Check: Blockchain Product Development
Different bot trading strategies – How to build a crypto trading bot
Download an open-source bot that already exists.
You may create a crypto trading bot in a variety of ways. Finding an open-source crypto bot that you can download and use right away is the cheapest and easiest option. This requires only a small grasp of technological concepts and helps to cut development costs and time.
You’ll need at least one experienced software programmer to add your own features, maintain development, and address any bugs/security concerns, among other things. Because the bot has already been built, the disadvantage is that it is frequently more difficult to incorporate your own features or change the trading algorithm.
Starting from scratch
Establish a strong development team and get to work. For those that are successful in developing cryptocurrency trading software, it may be both a personally and financially rewarding task. The most essential aspect of this strategy is to have a team that is passionate and dedicated, as well as having all of the necessary abilities and expertise.
Read: Crypto Fear and Greed Index
Key steps to developing a trading bot from scratch
Deciding on the programming language
Getting hold of your APIs
Before you start writing, you’ll need to get your hands on the APIs that will allow your bot to access the exchanges you want it to trade on. The good news is that all of the major cryptocurrency exchanges have APIs for accessing their data.
Create accounts with all the exchanges you will use
The process of creating an account is quite simple. Please bear in mind that the procedures for creating new accounts vary amongst exchanges. Personal information must be verified and authorised on certain exchanges, while others allow for anonymous trading. Vetting takes extra time, so keep that in mind while planning your project.
The architecture of your bot will have a significant impact on how it works and performs. Choosing the algorithms a bot will use to understand data is crucial to how it works. Algorithmic trading is a large sector with annual revenues in the billions of dollars.
Clearly identifying the type of data you want your algorithm to comprehend is an important part of the process. For more complicated trading models, your bot will need to be able to spot market inefficiencies and other anomalies. As a result, as part of its job, it will need to be able to evaluate past trends.
You may begin coding when you’ve described the architecture of your bot. This is, without a doubt, the most time-consuming component of the procedure. If you have a group of developers working on different aspects of the bot, it’s critical to have excellent project management and communication protocols in place.
Testing has two purposes. First and foremost, you must ensure that your bot works properly and is capable of dealing with the kind of data variations that will be thrown at it. At this level, risk vs. benefit, as well as modelling mistakes like “overfitting,” should all be considered. The second function is performance fine-tuning.
You’re now ready to let your new auto bitcoin trading bot free on the markets after you’ve straightened out any kinks. While you may fantasise about generating immediate millions, keep in mind that no platform has ever been established without teething issues.
It takes time for a good trading bot to evolve. You will get more out of it the more you put into it’s development. At the very least for the first several months, constant monitoring of your bot’s performance is strongly advised. After that, you should feel comfortable letting your bot do things on its own.
Most common crypto trading bot
To summarise, cryptocurrency trading is once again on the increase, attracting a large number of risky investors. You can use open-source trading bots if you just want to try your luck and treat it like betting. There are several options with reasonable membership rates if you want to give it a try and put your investing abilities to the test.
Consider creating a custom trading bot for optimum safety and efficiency if you want to make bitcoin trading a regular source of revenue. You have complete control over your trading programme or platform, which was created by specialists, including strategy selection, modification, scam prevention, and so on. Additionally, you may earn money by utilising the bot or selling it to other enthusiasts.
Minddeft has the resources and know-how and skill to successfully develop custom blockchain solutions for the modern-day mobile-first requirements. Are you looking to create a custom trading bot for crypto traders? Feel free to get in touch with us.