Are your eyes set on the crypto market but you’re still kind of on the fence about taking the plunge to dabble with cryptocurrencies? This blog may just be your turning point. Let’s begin by debunking the long-existing theory that trading with cryptocurrency requires rocket science level technical expertise – it does not!
The truth is that the cryptocurrency market has evolved enough to make life simpler for crypto trading enthusiasts by building several easy-to-use tools and instruments. Novice, as well as seasoned crypto traders, can cash in on all that it has to offer — particularly its volatility. All that you’d probably need to trade crypto successfully is to understand volatility, put your emotions aside for a moment, and go on autopilot mode.
Going autopilot through automated trading strategies
Given that cryptocurrency prices tend to fluctuate quite a bit, crypto traders can do themselves a world of good by employing trading strategies to take advantage of price variations as well as make sense of huge volumes of data – which is where automation comes into play. To be effective all around, crypto traders can rely on automated algorithmic trading bots that carry out trades based on predefined parameters — precluding the need for traders to constantly fret and worry about manually monitoring market movements.
So, what’s the deal with crypto trading bots; how do they work?
Simply put, these are a distinct set of logical programs that guide traders with buying and selling decisions, based on preset parameters or preferences. A more technical explanation of crypto trading bots is that they are software algorithms that make use of Application Program Interfaces (APIs) to interact with major crypto exchanges. Typically, they actively monitor exchanges 24/7 to analyze market trends and automate actions to further execute trade by fulfilling a predetermined set of criteria they have been programmed with.
Crypto trading bots have proven to be useful in managing both long and short trades, building and maintaining an investment portfolio, analyzing and interpreting cryptocurrency market trends, calculating potential risks, and of course for simply executing trades.
Now that we’re clear on their function and benefits, let’s take a shot at listing the steps involved in actually building a crypto trading bot.
1. Choose a trading bot model/strategy
First up, choose the type of bot trading strategy or algorithm you will use for your trading bot. Some of the commonly used strategies include arbitraging, market making, and trend following. Factor in more development time if it involves a complex algorithm.
2. Choose supporting exchanges
Make a comprehensive list of the major exchanges you want your crypto trading bot to work with. The next step would be to gather the API keys so the bot can seamlessly work while connecting to each of them.
3. Create accounts on the listed exchanges
Once you have identified the exchanges your bot will have access to, create individual accounts on all of them in order to access their APIs. Most exchanges have a straightforward sign-up process or even allow you to trade anonymously; however, some of them require you to go through a quick information vetting process that includes an automated KYC verification as part of the steps to onboarding.
4. Zero in on the programming language
5. Determine the architecture and define the UX
This step is integral to how successful your crypto bot will be. One of the main determinants of how a bot operates is dependent on how your algorithms are designed and developed to interpret data. This also means that it’s important to clearly define the data that your algorithmic bot will need to interpret – exactly why the architecture needs to be rock solid. It’s equally important to build out a seamless user experience with appropriate design principles and a focus on user-centricity.
6. Get down to the drill; code
Here’s where we are really cutting to the chase. Coding is the cornerstone of how your trading bot functions. This is a time-intensive activity that requires the crypto bot development team to get onboard with all the expectations and work toward building it for scale, performance, and security.
7. Iron out issues by testing
Once the massive chunk of work on coding your bot is done, it is time to put it to the test. This process ensures that your bot works stably and doesn’t showcase any bugs. At this stage, you can fine-tune and optimize its performance.
8. Go live — deploy
After you’ve optimized your trading bot for improved performance, it’s all set to be deployed and launched in the market. Always a good idea at this point to double check and fix any errors or bugs that were caught during the testing phase.
Where should you head next?
The volatility of crypto markets is a good reason for traders to automate their trading strategies. If you have a trading concept that you want to automate, then building an algorithmic trading bot could help you take stock of market fluctuations and capitalize on them at the right time.
Although the steps to build an algorithmic trading bot are fairly straightforward, it demands considerable insight in making crucial decisions from both technology and UX standpoints. To optimize your design and development costs while also offering a superior crypto trading experience through robust algorithmic crypto bots, write to us at firstname.lastname@example.org and visit https://www.ionixxtech.com/crypto-bot-development get started on your crypto trading algorithmic bot development journey.