How to Create a Crypto Trading Bot: Comprehensive Guide for Development | ProCoders

Bots are everywhere nowadays, including customer support and, as it turns out, crypto trading.

Building such a bot seems very difficult. That is until you find our step-by-step guide! We at ProCoders have had experience creating trading bots and we’re here to share our experience.

You can use this guide even without having any programming knowledge! We’ll cover:

• what a trading bot is

• what are the benefits of using one

• crypto trading market overview

• how bots work

• types of bots

• how to create one for yourself, and more!

So, let’s start?

What is a Crypto-Trading Bot?

A crypto-trading bot is exactly what it sounds like. It’s a program that automates trading, meaning it takes all the steps on your behalf.

It has embedded algorithms that analyze the market and trades depending on the situation. Maximum wins, minimum losses, and the best time for every step.

Benefits of Automated Trading

Automated trading wins over the manual one in several ways:

• Speed and Efficiency: Trading bots work faster and better than humans. This is an advantage when you need to respond to fast-moving markets and trade 24/7 without breaks.

• Accuracy and Reduced Errors: Bots work with pre-defined rules. This means they won’t buy or sell emotionally as we do.

• Strategy Optimization: Trading bots learn by going back to historical data and analyzing it.

• Time-Saving: Automation frees up your time, making it possible to work on the rest of your strategy.

• Increased Productivity: Bots enable the simultaneous trading of multiple markets and strategies, maximizing opportunities.

Additionally, traders can backtest their strategies on historical data, identifying potential flaws and optimizing their approach. Automated trading also saves traders significant time and effort, allowing them to focus on other important aspects of their trading strategy, and increasing productivity by enabling the trading of multiple markets and strategies simultaneously.

Cryptocurrency Trading Bots Market Overview

The global cryptocurrency trading bot market is definitely in its growth phase. Traders demand better tools to help them with their strategies. The demand also grows due to the rise of decentralized finance (DeFi) and non-fungible tokens (NFTs). In response to that, the adoption of digital assets increases as well.

The whole nurturing environment is there!

In a report by Business Research Insights, they write about the market value of USD 36.5 billion in 2023. Moreover, the projection for 2032 is USD 135.7 billion! That 14% CAGR is no joke.

Some of the major players in this market are:

• 3Commas

• Cryptohopper

• Gunbot

• HaasOnline

As of 2024, we at ProCoders see the market as a promising opportunity for traders, investors, and developers alike.

How Do Crypto Trading Bots Work?

Before building something, you have to know how it works. Here is a brief look at the algorithms of crypto trading bots:

1. First, the bot gathers data. The sources include market indicators, historical price data, news, and social media sentiment.

2. The bot then analyzes this data to see patterns and make predictions about the market’s direction.

3. As it sees a trading opportunity, it automatically executes the trade (buying or selling cryptocurrency).

Note: You can configure your bot to trade in a specific situation. This includes market conditions, price movements, or trading volume.

4. If needed, your bot can also manage your portfolio. Based on the data it has, it automatically rebalances your holdings based on pre-set parameters. These can be target percentages of different coins or tokens, for example.

This step-by-step is for general understanding. There are hundreds of bots, from fully automated to somewhat manual. So, each algorithm is different.

How to Build a Crypto Trading Bot: Existing Open-source Trading Bots

Trading Bot	Language	Exchanges	Strategies	Backtesting	Trading Plugins
Gekko	Node.js	15+	Multiple	Yes	Yes
Zenbot	Node.js	Multiple	Multiple	Yes	Yes
Tribeca	C++	Market	Yes	No	No
Hummingbot	Python	Multiple	Multiple	Yes	Yes

The Types of Cryptocurrency Trading Bots

The info about the types of such bots will help you figure out which kind you need.

Market-Making Bots

By putting both buy and sell orders at slightly different prices, these bots seek to capitalise on the difference between an asset’s buy and sale prices. The difference between the bid and ask price is where the bot looks to benefit.

Arbitrage Bots

These bots work with price variations. They sell when assets become more expensive and buy when they become cheaper. They aim to profit from the price difference, with minimal risk.

Trend-Following Bots

These bots look for trends. They purchase low and sell high by spotting trends. To recognize those trends, they rely on technical analysis and indicators.

Scalping Bots 

Their function is to quickly execute several trades at once in an effort to profit marginally from each transaction. They seek to make money off of little price changes that occur inside a trading range.

Sentiment Analysis Bots 

Have the ability to analyze news, social media, and other sources to gauge market sentiment and make trades accordingly. They aim to predict market movements based on the overall sentiment of the community.

Portfolio Management Bots

These bots have rebalancing capabilities. They help manage portfolios based on the needs of the user. As a result, they help you maintain a desired allocation or to reduce risk.

Do you need to choose one kind of trading bot?

We at ProCoders don’t think so. You can have a bot with several features that are combined in one successful strategy.

Features of a Crypto Trading Bots to Provide Extra Service

Here’s what features it takes to build crypto trading bot.

Market Data Analysis 

The ability to analyze and interpret market data helps a trading bot make better decisions.

This process may include:

• technical analysis tools (charting)

• access to real-time market data and news.

Real-time Alerts 

Real-time alerts can:

• keep you informed of market movements

• signal when to make trades

You can customize the alerts and receive them as SMS, email, or even push notifications on your phone.

Customizable Trading Parameters

These help you personalize your bot by choosing trading parameters, such as:

• adjust trade sizes

• set stop-loss and take-profit orders

• define trading intervals

Risk Management Tools 

Risk management tools can help you limit losses and lock in profits. The crypto markets are highly volatile, so tools like stop-loss and take-profit will help you minimize risks.

Trade Tracking and Analysis 

The bot can detect patterns, evaluate performance, and improve methods by keeping track of and analyzing past trades. Here are some features in this group:

• creating reports

• examining trade history

• contrasting outcomes with benchmarks

Backtesting

Backtesting allows you to test trading strategies against historical data. The reports of such tests will show you insights into the performance of your strategy.

Multiple Exchange Support

Being able to trade across multiple exchanges can increase the liquidity of a trading bot’s portfolio. Besides, this helps traders capture the best prices across a range of markets.

Key Challenges in Trade Bot Creation

Creating your own trading bot comes with challenges, of course. But we at ProCoders hope that knowing about them will help you prepare better!

Technical complexity when you build your own crypto trading bot

Usually, to develop crypto trading bots, you need a deep understanding of programming languages, APIs, data structures, and other technical concepts.

But you can overcome this challenge before it shows itself. The answer is partnering with a software development company.

And ProCoders, by the way, just turns out to be such a company with 10 years of experience and over 120 developers on board!

Market volatility

The cryptocurrency markets are notoriously volatile. So, choosing one strategy, setting up a bot, and making money every day is probably not an option.

Your trading bot should be adaptable and quick to react to changes in market conditions.

Security risks

Trading bots often require access to users’ exchange accounts. This sentence alone sounds like a security threat.

That is unless you make your trading bot well-protected with security protocols.

Data management

Your bot must be able to collect and manage vast amounts of data in real time. Some of the info includes:

• market data

• news feeds

• social media

Working with such amounts of data may become a challenge. Implement scalable cloud infrastructure, integrate advanced data processing tools, and use APIs to collect and filter relevant data.

Regulatory compliance

Cryptocurrency trading is subject to a complex regulatory system. Creating a bot that remains compliant with all relevant laws and regulations can be challenging.

Integrate a legal API or hire a compliance consultant to stay updated on laws and regulations.

User adoption

Even the best-designed trading bot can’t become successful unless it is adopted by users. You need to attract traders who will build a community of people willing to use the bot and provide feedback for further improvement.

Focus on user-friendly design, launch targeted marketing campaigns, and create feedback loops to attract and retain engaged users.

How successful are crypto trading bots?

Although their effectiveness is not guaranteed, cryptocurrency trading bots can be useful.

Their performance depends on:

• the state of the markets

• the bot’s settings

• its strategy

You need to continuously monitor the bot and be ready to interfere when needed.

Why is it so hard for crypto trading bots to make a reliable profit?

We’ve already mentioned some reasons like a volatile market and regulatory challenges, but there’s more:

• Limited historical data. Cryptocurrency markets aren’t as old as traditional ones. So, historical data can be limited.

• Machine Learning: Some advanced bots use machine learning algorithms to analyze market trends and make predictions about future price movements. To build such bots, you may need to use machine learning libraries such as TensorFlow, Scikit-learn, and Keras.

• Competition: More traders and institutions enter the crypto market. So, the competition for profitable trades increases. This can make it more challenging for trading bots to find and capitalize on profitable opportunities.

The Tech Stack You Need to Create a Trading Bot, ProCoders Approved!

Technology	Purpose	Examples
Programming Language	Writing the bot’s logic and functionality	Python, JavaScript, Ruby
APIs	Accessing exchange data, placing orders, and managing trades	Coinbase Pro API, Binance API, BitMEX API
Data Structures	Analyzing market data and making decisions	Time series data, candlestick charts, order books
Machine Learning	Analyzing trends and predicting price movements	TensorFlow, Scikit-learn, Keras
Cloud Computing	Providing computing power and scalability for running the bot	Amazon Web Services (AWS), Google Cloud Platform (GCP)

How Much Does It Cost to Create Your Own Crypto Trading Bot?

We won’t lie to you — there’s no unified general price. The final number depends on:

• the complexity of the bot

• the development time

• the tech stack

But we know how to find out the actual price.

ProCoders’ Discovery Phase service could be particularly helpful in finding out all the details. How?

The time, the number of developers needed, the cost, the deliverables will all be in the roadmap we create.

During the research and estimation phases, ProCoders can help you choose the most suitable technologies for the bot’s features and scalability. We’ll also evaluate the difficulty of the tasks to determine the level of engineering skill needed.

As a result, you will have a clear plan on how to approach the development, which can potentially cut costs!

That being said, here’s a breakdown of costs to build a trading bot.

Cost Category	Estimated Cost Range	Factors that can influence Cost
Development Team	$5,000 – $50,000+	Size and experience of the team, complexity of bot, development time
Cloud Hosting	$50 – $500+ per month	Cloud provider, resources needed
Data Feeds and Market Data	API Access: $100 – $5,000+ per month <br> Exchange Access: $0 – $100+ per month	Data provider, number of data points needed, Exchange, level of access needed
Security and Compliance	$1,000 – $10,000+	Scope of project, security consultant, legal and compliance fees

How to Make a Crypto Trading Bot From Scratch

Crypto trading bot programming from scratch can seem like too much stress. However, we’re here to guide you through the entire process, hopefully breaking the tension.

Step 1: Define your trading strategy and goals

• Identify the markets and trading pairs you want to focus on
• Choose the indicators and algorithms you want to use for decisions
• Define your risk management and profit-taking strategies
• Determine your investment budget and frequency

Step 2: Develop bot logic

• Develop the logic of your bot based on your strategy and goals
• Design the decision-making process of the bot to handle different market scenarios and conditions

Step 3: Choose your development stack

• Choose a programming language, a framework, and any necessary libraries or APIs based on your strategy
• Popular programming languages for building bots include Python, Node.js, and C++

Step 4: Develop and test your bot

• Write and test your algorithms and backtest your bot’s performance using historical data
• Integrate with various data sources and APIs to retrieve and process market data
• Consider adding features like a user interface or notifications to your bot
• Check out crypto developers for hire for more details about hiring experts.iring experts.

We can assist with the development and testing process by providing a team of experienced developers.

Our experts can also integrate your bot with various data sources and APIs. Thus, you’ll be always sure your bot gathers data, manages it properly, and makes the right decisions.

Step 5: Deploy your bot to a cloud server

• Choose a cloud provider like AWS, GCP, or Azure to host your bot and configure the server for security, performance, and scalability
• Ensure your bot is running 24/7 to monitor the markets and execute trades automatically

Step 6: Connect your bot to a trading exchange

• Choose an exchange that supports API integration and sign up for an API key
• Integrate your bot with the exchange’s API to access real-time market data and execute trades automatically

Step 7: Test and refine your bot

• Test your bot on a paper trading account and tweak your trading strategy based on the results.
• Monitor your bot’s performance and adjust its parameters.

What is the ProCoders’ Power in Developing a Cryptocurrency Trading Bot?

If all of this information made you think building a bot is too much work and probably isn’t worth it, stop.

We at ProCoders are here not only to inform you on the challenges and tech needs of such a project.

We’re a software development company with a team of over 100 talented software engineers. Our experts have worked on more than 150 startup projects, and we know what it takes to build a successful bot from scratch.

We can help by:

• Assessing architectural risks for your project.

• Setting up a dedicated team for a strong start.

• Troubleshooting technical challenges.

• Helping you choose the right development stack.

• Providing expertise in business development, UI/UX design, and mobile/web engineering.

• Guiding the development process, including building and integrating a cryptocurrency trading bot.

• Completing dedicated teams with the right talent.

• Offering staff augmentation to enhance your team’s capabilities.

• Providing continuous support and maintenance for your project.

Our expertise isn’t limited to just bots; we can also help you understand how to build a crypto exchange, how to create a blockchain app, and how to make a cryptocurrency token!

Don’t let your lack of experience in creating a crypto trading bot hold you back. Let ProCoders be your partner in success and help you build the cryptocurrency trading bot of your dreams!

Conclusion

Building a cryptocurrency trading bot can be a profitable and exciting venture for traders and developers alike.

The benefits of automated trading, such as reducing emotions and increasing speed and efficiency, make it an attractive option for traders.

However, challenges like market volatility, data security, and strategy optimization need to be taken into account.

By choosing the right tech stack, developing a sound trading strategy, and incorporating essential features, traders and developers can create a trading bot that meets their specific needs.

And finally, considering the support of a software development company like ProCoders can help mitigate risks, ensure a successful development process, and provide access to a team of expert developers.