Are you interested in knowing how to build a crypto trading bot? The crypto market is always on fire. Bitcoin is increasing in price by $1000 every few days. If you miss the train now, it may become much more costly and you may have to settle for lesser satoshis.
Now with the US elections coming to a close, the Crypto on fire effect is raging high. If you want to involve yourself and make money from Crypto, then just doing manual trades is not the way to go. You need to make a smart strategy with heavy backtesting on your crypto trading bot.
The cryptocurrency market allows you to make a lot of money. If you want to make more money, you may also launch software in the market for free. Making the software available for others will help you gain exposure and, eventually, more money. A lot of companies over the years have made money in the same manner.
What is crypto trading bot?
Unlike general trading, crypto trading is volatile and addictive. The bitcoin prices can drop and grow significantly over the day. In general trading, the investors need to wait the entire day for such fluctuations. But, in crypto trading, such changes can occur within seconds, thereby leading you to earn more money.
Trading bots are used by companies to ensure better trading. Trading bots are software programs that are responsible for financial exchanges. These bots keep a check on the fluctuations and levels, thereby determining a program accordingly.
What are the different cryptocurrency trading strategies?
If you know how to build a crypto trading bot, things will become pretty easy for you. The crypto trading bots work per the trading algorithm to solve the complex mathematical formulas and ease trading.
Here are some of the prominent bot trading strategies
This is one of the simplest trading strategies in which the bot reacts depending on the direct market changes. Trend following does not check for complex algorithms such as predictive analysis.
With the arbitrage model, the crypto bot checks for price differences across different cryptocurrency exchanges worldwide. The prices of cryptocurrencies worldwide vary significantly since there is no centralized system to calculate a fixed price for cryptocurrency.
Some countries’ fiat currency value may have a higher value for a cryptocurrency than other countries’ fiat currencies. The trading bots take advantage of these variations to trigger trades when market potentials are met.
Following the marketing making strategy, the cryptocurrency traders can trace across high volumes of the currency and profit accordingly. However, since the cryptocurrency market is volatile, the traders will need to depend on bots to find the best trade for themselves.
How to build a crypto trading bot?
Now that you have basic knowledge of the cryptocurrency trade market, you should also know how to build a crypto trading bot to make more money.
How to download existing open source Bitcoin trading bot?
If you are still trying to figure out the crypto trading bot building process, know that there are several ways. You can search the internet to download an existing open-source Bitcoin trading bot because they are affordable. You will not need to spend any money or time, but a little technical knowledge can help you get the best platform.
Such Bitcoin trading bot models are available all over the internet. Once you download it, make sure to customize it with new features and fix the previously existing issues, if any. However, it may become tough to customize the model since it has already been set in a particular way.
Setting Up API for crypto exchanges
The next key is to set up the API for crypto exchanges before you begin coding. The API platform will allow you to choose the exchange in which you want to trace. One of the best things about implementing API in your bot is that almost all the cryptocurrency exchanges accept API for their currency data.
There are several API platforms. Hence, you must look out only for the best to get maximum results.
Make sure to have a complete crypto trading bot final checklist
Once you have made the bot, make sure that it fits all your criteria.
As discussed earlier, there are different models for cryptocurrency trading. Hence, it is necessary that you choose from a platform accordingly that suits all your requirements. Before selecting a model, know that the complex models will need more time to be developed thoroughly.
The architecture of the crypto trading bot will have an essential role in its functions. Algorithmic trading is huge, and if done the right way, one can even make a profit of billions of dollars.
However, the data needs to be entered clearly to ensure the algorithm is easily interpreted. But, if you want to get into complex trading procedures, you will also have to keep in mind the market inefficiencies.
It is extremely necessary to check for the basic steps before putting out the crypto trading bot in the market for testing. Once the testing is conducted thoroughly, and everything is clear of issues, make sure to launch the bot in the market. However, you should keep a check on the bot performance.
How to make a trading bot with Python?
If you want to know how to build a crypto trading bot on Python, make sure to follow this guide.
Install Python for Trading Bots
Make sure to install the most recent version of Python to build a crypto trading bot from scratch. You can download the system and run it across the system and install it in a virtual environment.
Financial Data for Trading Bots
A lot of trading platform bots have their own APIs. While some make commission-free trading simple and easy, others may have complex features. It entirely depends on you how you want to build a crypto trading bot on Python. Import the packages and update security with two-factor authentication.
Decide the buy/sell Code of the trading platform. This helps the bot to make decisions. Different factors may affect the model, but the bot’s base functionality stays the same over time.
- Make sure to use GDAX private API keys once you have created the account. The private API keys help to build the bot with more functions. The private key can be generated in the settings section of your GDAX account.
- Make sure to generate current prices. You can make modifications depending on the output required. Make sure to filter out the orders so that you get full information about the order.
- Now that you have an account and can make changes, you should know the codes for placing and selling orders on the crypto trading bot.
What are the risks while writing a personal crypto-trading bot?
Even when you have proper and thorough knowledge of the crypto trading bots, you should be a little careful while writing one on your own.
A crypto-trading bot that is built all by yourself may have security and reliability issues. If you are new to the cryptocurrency trading market, you need to understand how it works. The market is often unregulated, and prices can fluctuate on a massive scale, which is why one may either make a huge profit or a huge loss. Hence, if you aren’t sure about the trade levels, do not invest in it.
Takeaway – How to build a crypto trading bot
The right trading bot can play an essential role in boosting your trade strategies. Most of these crypto trading bots are smart, so they can ensure that you make more money.
Now that you know how to build a crypto trading bot, make sure to thoroughly include all security and reliability concerns. Small changes can eventually bring about tremendous results. Hence, make sure to do your own research before plunging into the arena of bringing changes.
I am a data analyst by profession who loves to crunch numbers at daytime and come home wondering how my passive income numbers for the day look like. I believe in being rich rather than looking rich. Follow me for Cryptocurrency, FIRE, Personal Finance, Credit Cards and Digital Nomad updates