Full Crypto Trading Bot in Python
With the popularity of cryptocurrencies in the financial world, investors are exploring new ways to incorporate advanced technology in their trading strategy to make a handsome profit.
Due to online learning tools, it has become easy for the self-learners to benefit from the advanced tools and technology. When it comes to crypto technology, a trading bot is the most popular one among all. A trading bot removes the hassle of portfolio construction as there is a quick need to execute, devise, and maintain a good trading strategy in this volatile crypto market.
Why Trading Bots?
Trading bots have been available since the 2000s, and they were first introduced in forex trading. Trading bots are the automated trading system that maintains a considerable volume of assets worldwide.
Trading bots are usually software programs that use artificial intelligence and machine learning to execute cryptocurrency trades according to predefined algorithms.
These bots help in generating risk-adjusted returns. There are two reasons why using bots is excellent. Firstly, bots can make the entire system more straightforward and easy. They can also take care of different factors like index construction, portfolio diversification, rebalancing, etc. However, it would help if you remembered that you need to take care of the basics and keep track of the trading bots’ cryptocurrencies.
Secondly, trading bots are used to do automating functions that are time-consuming, repetitive, and complicated. A trading bot can efficiently complete repetitive tasks like finishing hourly rebalances and executing a trade at the right time. It also automates the strategies not to miss your profit share when you are not available.
There are two main kinds of trading bots: for trading and the other is for arbitrage. Crypto bots for trading mainly focus on a simple strategy: buying currencies at a lower price and selling it at a higher price. On the other hand, arbitrage bots trade in different exchanges, buying currency from an exchange where the price is lower and selling it on another exchange where the price is a little higher.
How Do Crypto Trading Bots Work?
A crypto bot works on a pre-set strategy that the trader manually sets. If the strategy is less configurable, there are fewer chances of influencing the strategy. The crypto bot’s biggest benefit is that if more advanced settings are set, the bot can bring huge profit to an experienced trader. However, if a trader is inexperienced, the presence of many parameters may confuse him, which may cause him to lose his money. So, for the beginners, the ideal crypto bots are the ones that already have set parameters and strategies like stock market strategies, strategies specially designed for a specific currency, etc.
How to Create Crypto Trading Bot in Python?
There are two main ways through which you can get a crypto trading bot which are:
- Coding – Crypto robots are made to work on the crypto exchanges that a trader wishes to trade on, and for that, one of the biggest conditions is that the exchange should have a trading API (Application Programming Interface). API is a set of information about the current trade which lets users participate in trading on specific parameters. However, that doesn’t mean that it’s impossible to construct a bot in python without API but developing it will take a lot longer without API.
- Purchase – It’s easy to buy bots from the developer if you don’t know how to code. Some companies offer bots of different classes at varying prices. You can save money and get a simple bot for one month, or you can get a trading bot with multiple strategies that you can use untimely. If you want, you can also get it customized, but of course, the price of such crypto trading bots is higher.
Is It Helpful?
Many people doubt if crypto trading bots are beneficial or not. However, using bots for crypto trading has its pros and cons. Here are the advantages:
- Time-saving – Making a profitable trade takes time which can also include 10-15 hours. However, robots can help you save time as they can work for 24 hours without needing a break.
- Speed – Trading bots can do all the necessary calculations in no time and can place buy/sell orders quickly.
- Accuracy – Humans can make errors in calculations, but a trading bot cannot. The calculations done by a crypto trading bot are accurate, which increases your chance of making a profit.
In addition to benefits, there are some disadvantages as well which are:
- Commissions – A crypto trading bot, if not configured well, can cut down the profits. The best way is to start trading on the exchanges with positive maker fees and earn commissions while placing orders.
- Black swan event – It can become almost impossible to trade if there is any problem with the bot’s connection like API and internet blackout. When such things happen during huge volatility, there can be big losses. It is important to get a bot that can work 24/7 with no API connection and crypto exchange issues.
Takeaways for Your Python Trading Bot
Being a beginner in trading, you can make a lot of mistakes while learning to trade. But with experience, you can learn the patterns and become a good player. To make things simple, you can invest in a good trading bot that can complete the trivial task for you. However, finding a good trading bot is also not easy; you can make mistakes before you find such a good program.
Finally, you should also remember that a crypto trading bot can only bring profit if the strategies are reconfigured and reviewed periodically, which means you need to understand how it works and what it does.
For crypto trading like said here in complete stormgain review, you need few skills to make everything work. If you can get through all that and find the right bot for you, then it can be rewarding for you, given your bot has pre-set strategies that work. The best part of a trading bot is that it can do the things that exchanges won’t allow you to do. Bots can be easily programmed to do things like accumulation and arbitrage. There is no limit in crypto trading if you can find the right bot for you.