With the extensive time you will invest just to trade crypto, it is good to create your trading bot. Not only will it do a better job studying the algorithm and trends, but it will also save you time so you can do other money-making schemes with crypto. So, without further ado, here is how to make a cryptocurrency trading bot. Let’s hop right into it.
How Cryptocurrency Trading Got Popular?
One of the reasons that crypto trading is so profitable is because Bitcoin, the original cryptocurrency, is very volatile. With this, the price fluctuates up and down within a single day. Thus, profitable traders can look for patterns and predict when the coin’s price will go up. They can buy before then and sell the coin when the price is about to fall. This technique now leads to huge profits. It is clear that with the correct trading decisions, a person can gain lumps of money. But also, they can make that money disappear quickly. So, only invest what you afford to lose.
Plus, several processes and products let traders be profitable and more agile – especially those who have come in from the traditional trading scene. This comes margin trading, which includes leveraging. Trading in cryptocurrency has been getting popular lately. This happened as traders have realized that there is a ton of money made when trading. And then, it has even started spilling out into traditional institutional trading settings.
Why You Should Invest In Trading Bots?
Because of trading’s fame and profitability, many cryptocurrency trading bots are developed to make the process a little easier and less energy-intensive.
Trading takes quite a lot of attention and focus. It can also be time-consuming and require a mastery of the skill to be incredibly successful. There is unending learning that goes into trading, and to start with, it would be a good move to invest with a trading bot.
Steps To Making A Cryptocurrency Trading Bot
1. Choose what programming language you will use.
2. The holding of your APIs
Before you start coding, you also have to get hold of the APIs that let your bot access the exchanges you want your trade bot to work on. What’s best is that all of the main cryptocurrency exchanges provide APIs to access their currency data.
API links for leading currency exchanges:
3. Have accounts with all your trading exchanges
Account creation is a fairly easy task. Please don’t forget that each exchange has different procedures for having new accounts. Some platforms would require personal data to be approved and vetted, while others let anonymous trading. Vetting takes up more time, so consider this when project planning.
4. Choose a bot trading model
You can select between Trend following, Arbitrage, Market Making, or others. Remember that more complex trading models will need more development time.
Your trading bot’s architecture will have significant effects as to how it works and performs. The idea of how a bot operates is choosing the algorithms it will perform to interpret data. Algorithmic trading of cryptocurrency is a gigantic industry that gains billions of dollars yearly in profits.
For any algorithm, the foundation model must be stable. If it is not, the bot may either be unreliable or lose money. Part of the process is defining the data type you want to interpret. For more advanced trading models, your bot must be able to find such things as market inefficiencies. With this, analyzing historical trends must be a part of its programming.
6. Creation of your trading bot
Once you have defined your bot’s architecture, you can start coding. Typically, this will be the most timewasting part of the process. If you have a developer’s team working on the bot, it is crucial to ensure project management and communications procedures in place.
You can begin by opening a group chat on Slack or other apps, where every member can talk to one another. Hold regular meetings to ensure every member knows the project’s progress and what problems have been encountered.
7. Test your trade bot
Remember that your bot’s testing has two core functions. First, it is to ensure that your bot functions as it should and can cope with the data fluctuations thrown at it. You should evaluate all the factors modeling errors such as ‘overfitting‘ and risk vs. reward.
The second is for fine-tuning your trade bot’s performance. Don’t forget that performance is optimizing its prospected behavior.
By increasing the risk that the bot considers, for example, you increase the chance of higher returns but decrease your bot’s effectiveness to respond to high levels of price fluctuation, etc.
8. Deployment of your crypto trade bot
Once you have cleared out any issues, you are now ready to set your new trading bot loose on the markets. While you might imagine making instant bucks, remember that no exchange in history has ever been launched without experiencing any issues or problems.
A great trading bot is evolving through time. The more you put into the bot’s development, the more you will gain. Constant monitoring of your bot’s performance is suggested, at least for the first few months. After that, you can now be confident to let your bot get on with it without much need for supervision. Click here to know more about making a cryptocurrency bot!
See? You won’t need to be an expert programmer to make a cryptocurrency trading bot. As long as you can invest your time and study thoroughly, your new bot can lessen the time you spend on screen crunching numbers. Trade now!