Building a Crypto Trading Bot

Many specialists did not see it coming, however cryptocurrencies come right back into the news. Even though there is a sensible belief the cryptocurrency boom is coming to its end, the Bitcoin speed is climbing again following the substantial fall at the end of 2018. Thus, mining and trading Bitcoin and its alternatives — altcoins — stay a”gold rush” of the digital age, bringing more enthusiasts to take part in investing as well as constructing crypto trading bots.

Very similar to gold prospectors, cryptocurrency entrepreneurs require high quality equipment and dependable instruments to be able to buy and market digital money. In this respect, the most frequently asked questions within this circumstance are:”what is a crypto trading bot?” , “what are the best bots for Bitcoin trading?” , and “how can I make my own cryptocurrency trading bot?”

Lucky for you, this report has the answers: a brief summary of the first two topics, and a comprehensive overview of the latter one. Take patience and read carefully to understand how to make a lucrative crypto trading bot.

DIGITAL CURRENCY: REAL DEAL OR ZILCH?

This article excludes the peculiarities of mining, like the choice and installation of equipment and suggestions on increasing the operation of your farm. Instead, it focuses on trading cryptocurrency using its own inherent volatility to earn profits with the help of a Forex Currency trading bot.

Considering the hype which surrounds digital money in the past few years, you should have discovered at least about Bitcoin. When you have completed some study, there’s a fantastic probability that you’re also knowledgeable about its alternatives: Etherium, Litecoin, Ripple, Stellar, Verge, and several others. Digital money became so hot that even Facebook has launched a brand new cryptocurrency, Libra, within the ambitious plan to make its own financial system.

The actual beauty of cryptocurrencies is you do not have to be a technical expert so as to purchase and put them up for sale. Even if most of those blockchains, hashing algorithms, and mining channels sound like voodoo magic to most people, you can still receive a digital wallet and take part in buying and selling electronic cash on cryptocurrency exchanges, such as Binance, Coinbase, Kraken, and many others. The achievement of trading will be mostly determined by your financial skills and expertise, not personal knowledge.

What makes cryptocurrencies an appealing trading asset is their volatility. Their prices often differ greatly, permitting traders to employ different approaches and purchase electronic cash when the price drops, and sell if the price is at its peak. The trading strategies can involve both long and short transactions, creating an investment portfolio, market trend analysis, and other tasks normal for trading valuables, like products, stocks, contracts, etc..

INVESTOR’S LITTLE HELPER: MOST IMPORTANT PERKS OF A CRYPTO TRADING BOT

To work, online trading and investment need significant knowledge, experience, and time. For this reason, traders can resort to using collections of technical computer directions, called robots, if they lack respective qualities or don’t have spare time. In contrast to some aspects of use, like online gambling, as an instance, bots are lawful in a variety of spheres of online trading, such as cryptocurrency investment. These applications perform transactions in an automatic manner, together with predefined parameters, and require little or no user intervention after the initial installation and setup.

Main benefits


The times when robots were inferior to men in each facet are gone. Nowadays, computer programs are feeling particularly comfortable in places that need strategic thinking and information analysis, like online trading. Improved machine learning, hardware inventions, and improved data processing and storage technologies enable artificial intelligence to evolve considerably, exceeding the capabilities of an average human. Listed below are the main advantages of using a trading bot in a crypto asset marketplace:

Bots are available 24/7 and also don’t ask for food, or holidays.
They are directed by logic and calculations. Thus, emotions don’t have an impact on their performance, and they do not make rash choices.
They can be customized and outfitted with several strategies that cover various situations.
They could analyze market trends and analyze the probability of succeeding in newly created strategies faster and more efficiently, when compared with individual calculations.
They can perform routine tedious tasks mechanically, such as rebalancing your advantage portfolio, thus saving some time.
They could place a high number of bids or orders considerably faster than a person can perform manually.
Thinking about the benefits mentioned previously, you might be certain that computer software outperform people, especially those people who aren’t proficient in online asset trading. Thus, e-currency trading robots will be particularly valuable for novice investors who wish to check their abilities from bitcoin along with altcoin trading.

Functionality


As you can see from the above benefits, trading bots may make your financial activities a lot simpler. But to guarantee optimum efficacy, they have to do numerous functions, both fundamental and advanced. The fundamental functionality of crypto trading pc programs generally comprises:

Strategy executing and dynamic changing. The core feature of a crypto trading bot would be to implement a selected strategy and, obviously, be in a position to change it dynamically if the selected algorithm performs insufficiently.
Market monitoring and background maintaining . These two related functions enable collecting market information and storing it for subsequent recovery, reference, and analysis. This information is vital for creating new algorithms and improving old ones. Furthermore, this functionality entails presenting data reports from the kind of charts or graphs.
Backtesting. That is a required feature if you would like to check a new approach by mimicking its outcome using past data obtained from tracking markets. A backtest usually takes into consideration market prices, latency, and also other elements that have a direct impact on trades.
“Sandbox” mode for simulation. This is a practice module that comprises a customized surroundings. Due to the particular computer simulation, traders can gain practical skills in real-life market conditions without risking their own money.
Transaction data logging, archiving, and recovery . This function keeps the history of all of the transactions done by the trading bot. Thus, customers can track their past financial action and recall when a particular transaction happened.
Notifications. User convenience is the focus of this function which could possibly be accomplished in various manners depending on customers’ preferences and custom conditions. Traders may receive notifications on their email addresses, via popular messenger apps, or in the form of SMS messages. This way, they may be informed when the bot performs a successful transaction, or when the price of a tracked currency reaches a threshold value preset by the user.
Scheduler. This simple functionality allows the bot to operate autonomously and only during preset periods defined by the user. If necessary, the bot may wake up the device to start running and send it to sleep mode or turn off the power when the timer expires.
Besides, there are optional requirements aimed to improve user experience. For example, an intuitive UI is desirable in order to enhance customers’ interaction with the trading bot. A well-designed interface will help novice traders get used to the program more quickly and comfortably, and provide experienced users with all the needed advanced functions in their fingertips.

Security is yet another highly demanded feature, as the security of transactions and accounts concerns each online dealer, regardless of the marketplace. Considering that a trading bot includes access to a cryptocurrency pockets, many safety steps, for example multi-factor authentication, are crucial.

Moreover, a crypto trading bot must support distinct currencies and currencies , preferably several most well-known ones. Of course, you might utilize or construct a bitcoin trading bot, however, such limitation to a single currency is not always warranted. But, focusing solely on bitcoins may reduce development time and costs, which will be discussed later.

Risks


To be entirely honest with you, certain dangers related to using bots for trading crypto resources have to be mentioned. Usually, each investor faces the dangers of losing cash, and many commendable online trading platforms will be legally required to warn about possible losses.

Another potential hazard lies in false guarantees from unscrupulous bot programmers. Every trading system that claims to make you wealthy in a heartbeat is obviously a scam. Even legitimate bots with operating strategies cannot guarantee constant profits as they may fail to accommodate market changes, irregular price fluctuations, and other negative conditions not foreseen with their own calculations.

Some programs allegedly created for automatic cryptocurrency trading have been fakes. As an instance, many sites provide visitors to buy or even freely download crypto trading bots for tablets, nevertheless there’s no known fact of functioning automatic applications for trading electronic currency on Android or iOS. In best-case situations, those fake programs only imitate trading, in extreme cases, they contain malicious code to hijack your accounts, digital wallets, and other electronic assets and individual information.

Using common sense and experience is a good beginning of preventing dangers. You have to realize that there aren’t any universal strategies effective at preventing losses entirely. For this reason, you cannot utilize robots as a sovereign supply of consistent passive income, less a method to get wealthy in a short moment.

The best means of employing a cryptocurrency trading bot is because a multipurpose tool to deal with routine operations automatically, perform transactions whenever you are active, and test and use new strategies that can outperform other traders, both individuals, and machines, even on distinct markets. So, to work with a bot with maximum efficiency, you need to do a great deal of pruning and customization. A much better solution is constructing a custom made trading bot, tailored specifically for your needs.

MONEY MAKING MONEY: HOW TO INVEST IN BUILDING YOUR OWN TRADING BOT

If you plan to be a full-fledged market manufacturer and choose specialist cryptocurrency trading, you will need to put money into a specialized automatic trading program. Though many customers choose free or paid bots out of third-party programmers, or perhaps open minded jobs from Github, the results of their action could be unpredictable, and their performance questionable.

To be able to utilize computer algorithms for trading cryptocurrencies with maximum efficiency, you need a custom made solution. It entails significant expenditures, but consider them as investments in high quality equipment that is crucial for successful job, and will gradually pay the expenses.

How many resources does it take to develop


Your time is precious, so let’s not beat around the bush: there is no fixed cost for building a crypto trading bot. There are also many variables — variables that directly influence the quantity of time, money, and experts necessary for the development. Therefore, you need to carefully choose the desirable characteristics even before you discover a fantastic group of developers who know how to create a trading bot.

Let’s record five variables that define the source costs of Creating a more cryptocurrency trading bot:

A number of employed functions. There is a direct proportionality: much more features require more time, people, and money. The general functions of a bot are recorded in a few of the last segments, so feel free to update them and think about their necessity for your specific case. For instance, you may exclude accounts, a scheduler, and promote tracking from performance so as to save funds.


Supported trading platforms and currencies. You may try and pay off as many programs as you can or only a couple of chosen exchanges. Alternatively, you might concentrate on a single, most promising crypto exchange, as an instance, Binance, Bittrex, Bitstamp, Coinbase, etc.. In a similar fashion, you might choose to confine cryptocurrencies encouraged by your automatic trading program. Therefore, it will be quicker and more economical to make a bitcoin trading bot compared to a intricate application that also supports several altcoins.


A variety of preset plans and customization choices. Again, your software may be focused on a single strategy; however, it’ll have a much higher potential when it supports several types of actions with cryptocurrencies. These actions define the kind of trading bot and will be explained in more detail later in this article. Besides, a properly designed trading bot should allow creating, testing, and executing user strategies. Using this operation, a user can perform manual fine-tuning of their bot’s behavior by correcting plan parameters, conditions, and principles.


Quality-of-life developments. All these are small functions that may be easily omitted for the interest of reducing prices. They don’t have an immediate effect on the operation of this crypto bot and only improve the ease of users. As an example, these optional attributes include a telling function and a slick UI layout.
Used technology and accessibility of experts. Both of these variables are tightly interconnected, therefore it’s far better to examine them as a single unit. Present cryptocurrency trading bots are largely (but not exclusively) written in Python, PHP, or Javascript (specifically Node.js), so you will need a team of skilled developers that specialize in such technologies.
If such specialists aren’t available or too expensive where you are, it is possible to outsource the development to foreign programmers who know how to make a trading bot for cryptocurrencies. Thanks to outsourcing, you are able to save yourself a significant amount of money, since the hourly salary of applications programmers, for example, in Eastern Europe or Asia is four times less than in the USA.

Development process and technology piles


As it’s been mentioned previously, the best 3 technology for developing a more cryptocurrency bot are all Python, Javascript, and PHP. These programming languages are supported with ccxt — the very popular library for cryptocurrency trading, and this will be a valuable addition to this technology stack equally required to make a simple bitcoin trading bot or a more sophisticated automated trading software that could manage multiple kinds of monies and exchanges.

Though it is a matter of personal taste, Light IT specialists recommend using Python to get a trading bot due to the numerous benefits. Our group prioritizes this programming language and gathered substantial expertise over 10+ years of providing high-quality software solutions for various challenges.

You can use the information from a number of our posts to learn just how much it costs to develop a customized software program. Alternatively, contact usand our experts will estimate the price of your job according to your specifications, if you would like to earn a bitcoin trading bot using Python or make a multifunctional software package that supports multiple cryptocurrencies and exchanges. Our staff will even indicate the best technologies, produce a thorough plan, and gauge that the product development timeline.

TWO PATHS TO PROFIT USING YOUR CRYPTOCURRENCY TRADING BOT

After your crypto trading bot was developed and tested completely, it’s time to use it for profit. If you have the plans with demonstrated effectiveness available, a cryptocurrency wallet, and also a starting funds, you may use the cryptocurrency bot for the primary purpose: speculating on the gap between selling and buying rates.

Nonetheless, your bot can make money in another way if you would like to share it with the entire world. This strategy implies selling your software, part of its functionality, or utilizing other monetization strategies. This waya trading bot may bring two individual streams of income: from its own trading activity, and from its purchase as a marketable software product.

There are lots of methods to monetize applications, which means you can pick the plan that suits your concept. Remember your target platforms don’t include things like Android or iOS apparatus; that’s why certain strategies may be employed with limitations. Here are the most common Techniques to make money with your software product:

Paid software. This approach is the most evident: consumers pay money to get and use the program. It’s a one-time payment to find the entire performance of this software product.
Subscription plans. This approach is much more flexible, because users can pick the plan which suits them best, and do not have to be responsible for periods when the program is not utilized. Usually, subscriptions together with longer spans are more beneficial for users: for example, a subscription for a single year is significantly less expensive than twelve vouchers for one month.
Advertising at a paid or free program. Though this model really shines in cellular apps, it might also be used for crypto trading bots that include a web GUI. You might use this model individually or in conjunction with additional profit-making techniques, for additional income.
Freemium. You may use this model to maintain your software free with restricted functionality and charge users who need advanced capabilities. There may be a single fee to unlock a”Pro” or”Premium” version of the software with all features or perhaps separate rates for each additional purpose. The latter variant demands a modular arrangement of the trading system, and that means you ought to consider it in advance whilst designing your applications.


FOUR POPULAR TYPES OF CRYPTO TRADING BOTS WITH EXAMPLES

As it was already discussed in this guide, focusing is a great method to save growth resources. For this reason, consider specific constraints during the software design phase. For instance, you may restrict supported currencies to one one and develop into a bitcoin trading bot. But a more beneficial way is choosing the main strategy that could specify the kind of your trading bot.

Market making robots


Market makers use the spread between the bid and ask prices to create gains. The transactions are usually brief, and the gains are miniature, so traders need to make massive amounts of transactions to increase a perceptible income. This is a very tedious task for a human but a trifle for a trading bot.

One can cite HaasBot as an example of a popular cloud-based multifunctional bot which may be used to get market-making. Specifically, it offers 16 approaches or kinds of trading activities, and also market-making is one of these. It’s quite user-friendly, provides the fully automatic functionality, supports multiple trades and forms of cryptocurrency, and contains three subscription plans that change in operation.

In case you have some experience in Node.js, try Tribeca. It’s a completely free Github project that requires certain abilities to set up but provides such perks as web client, strategy backtesting, and low-latency operation. It also supports various trades and cryptocurrency pairs.

Arbitrage bots


Arbitrage is just another action that is rather difficult to perform without computer programs. It entails buying currency in one market and selling it instantly in a different one for a higher cost. The key is finding a rewarding mismatch in costs across the whole variety of available markets and currencies, and using it fast before prices vary.

Blackbird and Triangular Arbitrage are just two Github jobs that use different approaches to arbitrage. Blackbird trades just Bitcoin, i.e. it purchases a particular amount in one market and simultaneously sells exactly the same amount in another exchange. These transactions are done independently and in parallel, hence eliminating the necessity to transfer cash between exchanges and avoiding the latency associated with such moves.

In contrast, Triangular Arbitrage operates only on Binance market but supports several currencies. The essence of its operation is still the same: finding a mismatch of prices caused by market changes and using it to sell one cryptocurrency and purchase a different one, creating a gain from the process. This system analyzes the marketplace and then displays the most lucrative arbitrage opportunities (triplets) but does not perform transactions automatically.

Portfolio automation robots


As the name implies, this kind of robot concentrates on producing and maintaining an optimal user portfolio instead of full-scale trading. Now then users need to rebalance their cryptocurrency portfolios, and it’s another example of a job for bots.

HodlBot concentrates on customizing consumer portfolios by giving automatic rebalancing to be able to reduce investment risks and increase incomes. It allows users to select and adjust rebalancing plans, selects preferred currencies, and blacklists undesirable ones. This program is free for users with less than $500 on their own account, otherwise, it costs 10 dollars per month.

Technical trading robots


Technical trading bots perform predictive analysis based on market indexes. Afterward, these forecasts of future price changes along with preset plans are utilized to make profits. Such bots can use extra info, such as expert advice from financial analysts, even as source data for their calculations.

This group of cryptocurrency trading robots is the most varied and contains many notable examples. One of these, it might be worth mentioning such strong alternatives as Cryptohopper and ProfitTrailer.

Cryptohopper is a cloud-based bot which supports different approaches, multiple currencies, and trades, and has all of the features for automatic trading, including trade simulation, backtesting, approach design, and several others. Its subscription price fluctuates from $19 to $99 per month, based on available functionality.

ProfitTrailer is an advanced cryptocurrency trading bot using a convenient GUI, easy setup, and several powerful capabilities. The program supports Windows, Linux, and macOS, also supplies a wide range of both monthly and daily subscriptions which vary from $25 to $99 per month and $449 – $1299 to get a lifetime plan.

CONCLUSIONS

To sum it up, cryptocurrency trading is about the rise again and brings numerous adventuresome investors. If you just want to test your fortune and strategy this action as betting or fleeting trend, you may play open-source trading bots. If you would like to give it a shot and check your investing skills, there are many options with reasonable subscription programs. But if you want to make cryptocurrency trading a staple of your income, then think about building a custom made trading bot for greatest safety and efficiency.

Your own trading program or platform developed by specialists provides you full control, including strategy selection, customization, scam protection, and so on. Additionally, you may obtain income from using the bot and from selling it to other enthusiasts. There are a lot of monetization models to be able to create your software both rewarding for you and appealing to its users.

Assembling a crypto trading bot involves making several critical choices. So as to improve the development costs, you have to put some restrictions and focus on your automatic trading project. Thus, you need to specify:

Type of the main function of the bot: market-maker, arbitrage, portfolio marketing, or specialized trading;
Supported exchanges and currencies: cover as many as you are able to afford or adhere into the most popular options;
Software development technologies: Python, Node.js, PHP, or even other, less conventional versions;
Monetization strategy: paid software, freemium, subscription-based, etc.;
Provided operation, including core and optional features;
and a whole lot more.
Another important principle: not skimp on safety to conserve the development budget! Electronic money has been among the chief targets of hackers, and cryptocurrency pockets are preferred due to their pseudonymous character, relatively higher dollar value popularity throughout the darknet. Thus, ensure your cryptocurrency bot and account are fastened against malicious attacks.

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