A Step-By-Step Guide to Building a Trading Bot In Any Programming Language in 2022
Step 1: Decide on a Tool
The first step in this training is to choose a language to work with. It is entirely up to you to make this decision.
Some languages, such as Python, may be useful if you want to later develop your bot to include Machine Learning, but the most important thing is that you choose a language that you're familiar with.
Step 2: Select a Battlefield
The choosing of the exchange is an often-forgotten phase in trading bot tutorials.
You must have access to an exchange where you may trade assets in order for a trading bot to work. It's just as crucial to know how to program as it is to know how to write code.
So, for this phase, you must pick what assets you will trade (for example, stocks, currencies, and cryptocurrencies) and where you will trade them.
In terms of the asset, I definitely recommend cryptocurrency. The reason for this isn't because I'm a proponent of blockchain/crypto (full disclosure), but because cryptocurrency markets are open 24 hours a day, seven days a week.
Most "conventional" assets are only available to trade at specific periods, and typically just on weekdays. Stock markets, for example, are open Monday through Friday from 9 a.m. to 4 p.m. and do not function on weekends. FOREX (foreign currency exchange) markets are open 24 hours a day, but they are normally closed on weekends.
As a result, having your bot working 24 hours a day, seven days a week, as crypto markets allow, is easier and more pleasant. Furthermore, cryptocurrencies are notorious for being extremely volatile, which means that you can lose a lot of money, but they're also a terrific method to learn and test trading strategies.
Let's go over the two conditions for selecting an exchange for your trading bot now that we've covered the asset class. After you've met the first two criteria, you might want to think about the exchange's costs, whether it's well-rated or well-known, and how excellent the API documentation is.
Last but not least, I would suggest looking at the exchange's daily volume of trading. Exchanges with low volumes tend to lag behind in price swings and make it more difficult to fill limited orders (more on this terminology later).
If you decide to invest in cryptocurrencies, here's a handy list of the main exchanges, their volumes, and other relevant information to assist you to make your decision.
Step 3: Pick a Base
If the exchange is the battleground, you'll need a base from which to dispatch your troops. And I'm sorry, but I'm out of analogies.
A server is what I'm referring to. To send requests to the exchange's API, you'll need a server.
You can obviously operate the server from your own PC for testing purposes. Your PC, on the other hand, is not a suitable solution if you want your bot to run continuously. As a result, I have two recommendations:
As a server, use a Raspberry Pi (Cooler)
Make use of a cloud service provider (Better)
I think operating a bot from your Pi is a great idea, and you should give it a shot if it appeals to you.
Step 4: Building the Bot!
We've arrived at the exciting part. Before you get to this stage, make sure you've done the following:
To utilize an exchange, you must first register and be accepted.
On the exchange, API usage is enabled, and you have an API key.
Have you decided how your bot will be hosted?
Is that clear? Let's get this party started.
The Most Basic of Bots
My goal is to get you from zero to the bot as quickly as possible. As a result, I'll show you how to create a basic trading bot, which you can then grow and modify to meet your specific needs.
There will be a few limitations to this bot:
Only one of two states will be available to the bot: BUY or SELL. It will not put numerous purchase or sell orders at different price points in a row. If the last operation was a sale, the next one will be a purchase.
Fixed purchasing and selling thresholds will be used. A more intelligent bot might be able to adjust the thresholds based on numerous signs, but our bot's approach and thresholds will be manually defined.
Only one currency pair, such as BTC/USD, will be traded.
Constraints, on the other hand, have advantages. Keeping the bot simple makes it easy to build and maintain, as well as allowing us to launch it quickly.
Step 5: Polishing the Bot
Our bot's fundamental architecture is complete, but there are likely a few things we should consider adding.
When I first constructed a version of this bot, I found that having constant logging of the bot's operations, both to the terminal and to a separate log file was critical.
I'd keep track of everything in a log like this:
Our bot's main purpose should be to buy at a low cost and sell at a profit. However, two thresholds, UPWARD TREND THRESHOLD and STOP LOSS THRESHOLD, seem to contradict this notion.
These levels are designed to indicate when we should sell at a loss or buy at a gain. The notion is that we strive to spot trends that aren't part of the overall strategy but could be destructive or advantageous to us, prompting us to take action.
However, the structure I used above is fairly restricted. A price snapshot that isn't moving isn't indicative of a pattern.
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