This guide will show you how to code your crypto trading bot. This is a great way to automate your trading and make profits while you sleep! We will walk you through the process step-by-step, and by the end of this guide, you will know everything you need to create your crypto trading bot.
Let’s get started.
What is a Crypto Trading Bot?
A cryptocurrency trading bot is a computer program that automatically buys and sells cryptocurrencies on an exchange. Trading bots are designed to take advantage of the arbitrage opportunities that arise due to the constantly changing prices of cryptocurrencies. There are several different trading bots, but the two most popular are market-making bots and arbitrage bots.
Steps to Code Crypto Trading Bot
- Define Programming Language
The first step is to decide which programming language you want to use for your bot. Suppose you’re not sure which language to choose. In that case, our recommendation is Python since it’s relatively easy to learn, and many libraries can help with the development process. As a beginner, if you’re looking for a good crypto trading bot, we suggest you choose KuCoin.
KuCoin crypto exchange has been gaining popularity lately due to its low fees,a wide range of altcoins, and strong security. It’s also one of the few exchanges that allow you to trade directly with fiat currency (USD, EUR, etc.).
- Define APIs
To code a crypto trading bot, you will first need to define the APIs (Application Programming Interfaces) you would like your bot to use. An API allows two applications to communicate with each other and exchange data. In this case, you will need an API that allows your crypto trading bot to speak with a crypto exchange to place orders.
- Set up Infrastructure
To code a crypto trading bot, you must set up the infrastructure. This includes setting up an account with a cryptocurrency exchange and getting a wallet to store your digital assets. Once you have these setups, you can start coding your bot. There are many different exchanges, so it is essential to do your research before choosing one.
You may want to consider the fees associated with the exchange, the security of the platform, and the currencies available for trade.
- Choose a Trading Bot Strategy
It is vital to choose a trading strategy for your bot is vital before coding it. There are many different types of trading strategies that you can use, so make sure to do your research and pick one that best suits your needs. Some popular strategies include:
- Scalping
- Momentum trading
- Mean reversion
- Arbitrage
- Onboard Developers
The most crucial step is to onboard your developers. You will need to provide them with your exchanges’ API keys. Depending on the exchange, you may also need to generate an API key for each individual developer. Make sure to give each developer their own set of keys so they can work independently. Next, you will need to install the relevant software dependencies.
Using Crypto Trading Bot: The Key Benefits!
Under this section, we have mentioned some of the pros that you will get when you utilize the bot for trading-related work.
- The Performance
Using a crypt bot for trading cryptocurrency assets is considered to be pretty performance-oriented. You don’t have to worry about any human error or delays. When the bot gets to work on the proper algorithm and receives correct data, it will indeed trade assets with no issues and increase your chances of getting a profit.
- Much Fast than People
Experts say that the cryptocurrency realm is pretty unstable. This is because it can increase to 25% within a few minutes and then crash instantly. If you’re doing it manually, you might miss their chances of making a profit because it takes some time. This is where the crypto trading bot comes in. When you take the help of bots, you will not miss the chance to make a good profit.
- Pre-set Objectives
The majority of the investors lose a lot of their profits because of several factors, and some of them include emotion-based decisions. But when you use crypto bots, you can easily set up objectives and lessen human interaction.
The Bottom Line
Coding a crypto trading bot is a great way to automate your trading strategy and take emotion out of the equation. This ultimate guide addresses the essential steps to code a simple yet effective crypto trading bot in Python.