Algorithmic trading systems - in fact, this is a program that replaces a person - a trader. She, according to a certain algorithm with a certain strategy, opens and closes transactions on the exchange. Instead of manually entering each transaction into the exchange, the trading bot can access the data from the user's exchange account and automatically place transactions. The process is controlled by computers, which provides a level of speed and accuracy that is impossible for people. The strategies that these bots implement are capable of anything: from trading to creating custom indexing strategies to advanced real-time arbitrage on exchanges. The possibilities are almost endless. Each trading bot usually implements a trading strategy based on algorithms created by the application developer.
Cryptocurrency trading bots work by gaining access to exchange data for the user. Each user can provide access to his account to the trading bot by providing him with an API public key and an API secret key (AKA secret key). These two pieces of information are used to inform the exchange that you have permission to access your exchange account.
APIs allow applications or services outside the exchange to access data or functions within the exchange. Using these APIs, trading robots can request the latest market data, place trades for the user or collect information about the amount of funds in the user's account. Access to a user account is granted only when the user explicitly provides API keys for the application. Access can be revoked at any time by deleting the API keys on the exchange, providing a safe way to always control who or what can access your exchange account.
The main goal of trading bots is to automate actions that are too complex, time-consuming or difficult for people to perform manually. The complexity of these tasks ranges from the automation of one trading strategy for one trading pair to the intelligent routing of transactions between any assets for a diverse portfolio. Without constant efforts, some bots can allow users to implement a complete portfolio management strategy, saving a huge amount of time. Instead of requiring you to be constantly online to manually place trades and adjust your portfolio, bots can take control of your strategy
The cryptocurrency space is flooded with countless trading bots. Some have a dubious reputation, lack a quality infrastructure, or simply do not work.
However, this is a very interesting and promising direction, the main feature is that by no means all algorithmic systems cope well with both up and down trading, therefore, very often when the market is bearish, these systems do not cope.
When choosing, you should pay attention to:
- how much the project is holding on the market,
- how many people use his services,
- are there names of leaders in social networks,
- how the user support system works (there is an active Telegram or Discord community where the team is online and answers questions. How many channels of communication with the team, the support service answers questions quickly and actually works to solve the problem).
- you also need to find a forum where this project of the algorithmic system is presented and read user reviews (it would be better if these were not fake accounts, but real users who could be asked a question.
- team reputation (In which companies the participants worked, how long the team has been working on the bot, source of funding for the startup, country of registration, technical capabilities of the founding team).
- Does the bot we are evaluating implement the strategy that we want to automate?
- cost - should be adequate.
Conclusion: in general, if you have a trading bot, setting that you will receive only profit - you will immediately sell it for a lot of money to a large company, or you will earn it yourself. OR NOT?
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