Unleash the Bots: Introducing the Exchange API for Algorithmic Trading

5 min read • October 31, 2022

Introduction

Trading in cryptocurrency as with many things has undergone several changes over the years. Initially, markets worked utilizing brokers or other third parties. Nowadays, these third parties have evolved from using human power to being in the hands of bots. As opposed to their human counterparts, these tools can be programmed to fit the needs of their owners at that particular time. Once programmed, their discernment of the market as well as the decisions they make will be entirely automatic.

In addition to this, their very nature is such that they do not have many limits. They can be applicable across all exchanges while working for just about anyone interested in crypto regardless of their strategy or outlook. Having said that, finding or building the right bot demands that some knowledge concerning them is taken in, hence the following.

Trading Automatically

New innovations brought forward the field of finance and a need for convenience is now a key focus in the market. As a result, many experts in the field realized that the future was going to be automated to allow users the ability to not be dialed in at all times.

Through the use of the aforementioned bots that are programmed to perform specific solutions, positions are bought and sold. Similarly, bids can be placed and requests can be made in a way that follows the set strategy.

This style of trading often lends itself to markets that carry relatively little volatility such as forex and stocks. However, over the last five years, it has found itself in the realm of cryptocurrency and it appears to be at home there.

Engaging in this form of trading requires that users create their primary channel to operate. The best way to do this is the trading bot, which functions at the behest of its owner.

Trading Bots 2022

As seen above, trading bots are the prime tool used to engage in automated trading across all markets. Some solutions are even powered by artificial intelligence, these creations can be thought of as software that is guided by a predetermined price to make further decisions concerning the area in the market.

There are a few types of trading bots:

- the free ones

- paid solutions

- premium offers

They both operate in about the same way and those new to this type of trading may even go for the latter. Most traders, however, want to pay for their bots because their builders are fairly established and trusted for the most part.

The uses of bots go beyond simply making profits on the behalf of a trader and entering the realm of education. Those new to the world of trading, especially with crypto, will find all this to be informative. Their use also helps boost the portfolios of all who are involved and this mainly has to do with the fact that the successful use of bots in a volatile space is very impressive.

Building a Quality Trading Bot

It should come as no surprise that not every trader is well-versed in the area of programming and this is why they often commission bots with established companies. That said, those looking to enter the field and have an interest in the actual building of these tools ought to know that creating bots requires the following steps:

Selecting the Programming Language

This step sets the stage as it allows the base of the bot to be written. Among the most common languages are the likes of Python, JavaScript, and React.

Sorting Out the APIs

This is a key stage as it allows you to access a variety of exchanges long before the bot is coded. For example, one of the most popular companies that provide APIs solutions is Finage.

Form Accounts Based on Exchanges You Intend to Use

This is a fairly simple step that requires you to follow the mundane process of creating an account. However, each exchange has unique ways in which accounts are created, which means that the mundane could become time-consuming based on the number of platforms you want to include.

Find the Right Bot Trading Fashion

Automated or not, trading bots can operate in a myriad of ways to better assist traders. The three most common and easiest to access are the Arbitrage and market-making varieties.

Figure Out the Bot's Makeup

This is the crucial stage that ensures that the proper data reading algorithms are put in place to ensure that the bots run efficiently. It is imperative that all fronts of the algorithm, especially its mathematics and data-analyzing capabilities, are as flawless as possible. This is because tiny miscalculations can result in severe losses.

Coding

With everything put in place, the process of coding can begin. Unsurprisingly, this is the part of the process that takes the most time due to how delicate it is. The best way to go about it is to have a streamlined team to better organize the process.

Initial Testing

With the building process over, you can go forward with actual testing. Two aspects, in particular, have to be tested and they are the data fluctuation and behavioral points.

Launching

This can only occur after testing has revealed any kinks that can be ironed out. The best way to go about it is to have reasonable expectations because public perception is as volatile as the crypto market.

Final Thoughts

The average trader can't build their bots and because of where the financial world is headed, they will soon become a necessity. As such it would be in the best interest of any trader to at the very least, hire professionals that can better assist you.

Because of how lucrative the crypto market can be, various companies offering bot-building services are bound to pop up. This means that trying to pick the right company will get more difficult as time advances. However, the time it takes to find it will pale in comparison to the advantages and profit.

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