How can you define crypto trading bots? These are an automated program that automatically buy and sells cryptocurrencies based on timing for profit making. This is only achieved by keen observation of the market trends while getting the necessary insights to make the right calls using predetermined strategies that are coded into the bots. Based on your style, traders can choose the volume, order, price and the timing of the trades being handled. Discussed here are four of the most important stages involved in building crypto bot blocks today.
Back testing
It is considered wrong to make any trades with the newly made Uniswap bot without doing any form of back testing on them. Try to be as realistic as possible in your back testing and that can be achieved by considering latency, slippage and the trading fee involved in the same. In order to gain access to high quality data, check out the exchange APIs for clues. There are also options like CCXT libraries you can use in the interfacing of multiple exchanges today. This is especially necessary before you dive into the strategy implementation stage.
Strategy implementation
It is tough to ascertain which strategy best suits your bot as there are multiple options to check out. Here few things are expected of you including the calculation and the logic to be used by your bot. these two factors are necessary in determining the ‘when’ and the ‘what’ to trade on the platform in which it will be used in. Once a strategy has been developed, back testing is the next relevant stage to ascertain how it will perform in the real world today. This also means you must do your research to understand some of the strategies that one can use for the same.
Execution
In this stage, you must have back tested your strategy to ascertain how it will play out. Your next task is executing this strategy in real time world. What happens in this stage is the conversion of logic into API request which the exchange platform can comprehend. For demonstration, some bots allow you to simulate real trading activities but using fake money in order to measure the success rate of the same when applied to real life. After this stage, most people already know whether they are on the right track with the development of their trading bots.
Job scheduler
In this stage you must have your hard coded strategies ready with you before you proceed to test how they would work in the real world. With answer you are looking for in mind, automate the process to make it exceptionable and easy to execute. An automatic system or job scheduler will then have to be set in order to guarantee the automatic execution of the various strategies that are coded into your bot technology for crypto currency trading today. The job schedulers for different bots differ based on developer needs and the strategies being used in the same.
