How to Build Crypto Trading Bots - A Minddeft Guide

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. 

In this article, we will talk about why it is important to build a crypto trading bot, how it works, the features and benefits of a crypto trading bot, and a step-by-step guide on how to build a crypto trading bot.

Why build crypto trading bots?

Crypto trading bots offer many advantages, and that's why they make better options for traders. Crypto trading bots allow users to trade 24/7 in the market, so they never miss opportunities in the crypto market. Also, it can handle complex trading strategies that are difficult to execute manually and remove human errors. 

As we know, the crypto market is highly volatile; trading opportunities can appear and disappear in no time. These bots can execute trades with speed and efficiency to make sure you never miss trading opportunities. Also, the crypto trading bot offers to trade on multiple crypto exchanges simultaneously and helps traders trade different crypto on different exchanges.

Additionally, crypto trading bots offer different technical indicators, including moving average, RSI, and many more. These help users analyze the market and capture trading opportunities. Crypto bots offer a customizable dashboard to help users monitor their trading performance, their portfolio status, and the market analysis of different crypto coins.

In conclusion, building a crypto bot offers many advantages, including improved performance and efficiency, 24/7 trading, cost-effectiveness, increased profit, and reduced emotion-based trading. Ultimately, well-designed crypto trading bots provide traders with a powerful tool to trade complex trades easily and offer better trading opportunities for successful trades.

How does crypto trading bot 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.

Features of crypto trading bots

1. Automated trading

This feature allows bots to trade 24/7 without the need for humans. This ensures that trading opportunities are not missed, even for an hour when the user is not available. Also, this bot trades based on a predefined strategy and does not let emotion affect the trade. That's why this is a primary feature, including in automated trading.

2. Backtesting

This feature allows users to test their marketing knowledge and strategy with historical market data. By analyzing how strategies worked in the past  and which strategies worked, the trader can optimize their approach to increase their chances of success in the market.

3. Multiple exchange support

This feature allows the crypto bot to trade on multiple cryptocurrency exchanges simultaneously. This also helps to trade different crypto on multiple exchanges. This feature allows the user great flexibility and provides a broader range of trading opportunities.

4. Analytics and reporting

This feature provides full insight on bot performance on different trades and the trading strategy the bot uses. These features provide different analytics metrics, including win rates, profitability, and drawdowns. This will help the user  understand the effectiveness of the trades and review and analyze the past trades to improve in upcoming market trades.

5. Community and customer support

This feature provides all the resources you need to set up a crypto bot, including all the documentation you need and a video tutorial guide. Also, you can participate in a community where groups of people share their strategies, learn from other users, or receive support for better trading strategies.

6. User-friendly interface

Crypto trading bots offer customizable dashboards that allow users to monitor their performance, portfolio status, market trends, and win-loss metrics. Additionally, some crypto bots offer alerts and notifications to keep users informed about important trades and events. A user-friendly interface is important for a better trading experience.

7. Risk management tools

Risk management tools are important to protect user's investments or manage potential future losses. a feature such as stop-loss allows the bot to automatically close the positions at a predefined profit level or loss level to manage risk. 

8. Technical indicators

Crypto trading bots offer a wide range of indicators, such as the moving average, RSI, and MACD. These indicators can help users analyze market trends and identify potential trading opportunities. 

How to build a crypto trading bot?: step-by-step

1. Deciding on the programming language

It's a good idea to choose a programming script that you're already familiar with while creating your bot. The most popular languages for developing crypto bots are Python, JavaScript, Perl, and C. The benefit of utilizing well-known programming languages is that you can quickly enlist the help of other developers to write or repair the code if necessary.

2. 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.

3. 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.

4. Architecture

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.

5. Creation

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.

6. Testing

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.

7. Live Deployment

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.

Benefits of crypto trading bot

1. 24/7 trading

This is one of the best benefits of a crypto trading bot. These bots operate 24 hours a day without taking breaks, unlike humans, who need rest. Crypto bots never miss any opportunities due to these features and work in any time zone or market hour.

2. Increase efficiency

Crypto trading bots increase efficiency by automating the entire trading process. These bots execute trades faster than humans, respond to market changes in real time, and make sure to never miss trading opportunities. These allow users to focus on improving strategies.

3. Emotionless trading

Most human trade depends on their emotions, such as fear and greed. These cryptobots eliminate emotion by following predefined strategies and rules.

4. Cost-effective

Developing crypto trading bots can be cost-effective in the long run. The initial cost of a crypto bot can be high, but it gives a high return on trade to overcome the cost in the long run. Additionally, these crypto bots reduce the need for manual monitoring, saving time and effort for traders.

5. Increase profit

Crypto trading bots can increase profit by automating trading, operating 24/7, using real-time market data, and using an advanced strategy. These crypto bots can identify and execute trades that miss human eyes and increase profit.

The most common crypto trading bot

1. BTCRobot 
2. Gekko
3. Zenbot
4. CryptoTrader
5. Haasbot

Conclusion

To summarize, 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 platform, which was created by specialists, including strategy selection, modification, scam prevention, and so on. Additionally, you may earn money by utilizing 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.