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How To Make a Crypto Trading Bot: Experience-Based Tutorial
16 min.

Trading bots have changed the way we look at digital currency, and now it’s your turn to get in on the fun. ProCoders will show you how to build a crypto trading bot in this tutorial, even if you have no prior programming knowledge. 

It’s time to take control of your trading game and stop missing out on potential profits. With our step-by-step guide, you’ll have all the tools you need to build your own trading bot and stay ahead of the game. Don’t let your fear of investing hold you back any longer – the potential losses from missed opportunities far outweigh the cost of a trading bot. 

What is a Crypto-Trading Bot?

A crypto-trading bot is an automated software program that executes trades on behalf of the user based on pre-defined strategies or market conditions. It utilizes algorithms to monitor market trends and make trades at the most advantageous time, with the aim of maximizing profits and minimizing losses. 

cryptocurrency trading bot

Benefits of Automated Trading

Automated trading offers several benefits over manual trading. Trading bots can operate much faster and more efficiently than manual trading, allowing traders to take advantage of fast-moving markets and trade 24/7 without the need for breaks or rest. With pre-defined rules and conditions, trading bots are less prone to making mistakes or emotional decisions, increasing accuracy and reducing the risk of errors. 

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.

Exchange arbitrage for bots

Exchange arbitrage is a trading strategy that has gained popularity in the cryptocurrency world, and it involves taking advantage of price differences of a particular cryptocurrency on various exchanges. This strategy entails purchasing a cryptocurrency on an exchange where the price is lower and selling it on another exchange where the price is higher, earning a profit from the price discrepancy. This trading strategy is especially appealing to bots as it demands a high level of speed and precision to execute trades at the perfect moment.

Using cryptocurrency trading bots can be an excellent way to capitalize on exchange arbitrage. These bots can scan various exchanges for price disparities, allowing traders to identify opportunities quickly and take advantage of them in real time. The bots can then execute arbitrage trades automatically, without the need for human intervention. This allows traders to earn a profit from exchange arbitrage without having to monitor multiple exchanges constantly. As a result, this approach can significantly enhance trading efficiency and profitability for both experienced traders and newcomers to the world of cryptocurrency trading.

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Cryptocurrency Trading Bots Market Overview

The global cryptocurrency trading bots market is expected to grow at a compound annual growth rate of over 22% from 2021 to 2028, driven by the increasing adoption of digital assets and the need for efficient trading tools. Additionally, the rise of decentralized finance (DeFi) and non-fungible tokens (NFTs) has further boosted the demand for trading bots. Some of the major players in this market include 3Commas, Cryptohopper, Gunbot, and HaasOnline. Overall, the cryptocurrency trading bots market presents a promising opportunity for traders, investors, and developers alike.

How Do Crypto Trading Bots Work?

Crypto trading bots are automated computer programs that use various algorithms to analyze the market, execute trades, and manage portfolios in the world of cryptocurrency. Here is how they work:

  • Data Collection: The bot gathers data from various sources, including market indicators, historical price data, news, and social media sentiment.
  • Analysis: The bot then analyzes this data to identify patterns and make informed predictions about the direction of the market.
  • Trading: Once the bot has identified a favourable trading opportunity, it automatically executes the trade, either by buying or selling cryptocurrency. Trading bots can be configured to execute trades based on a variety of different criteria, such as specific market conditions, price movements, or trading volume.
  • Portfolio Management: The bot can also manage your cryptocurrency portfolio by automatically rebalancing your holdings based on pre-set parameters, such as target percentages of different coins or tokens.

Some trading bots are designed to be fully automated, meaning they require minimal input from the user, while others offer more flexibility and require users to set specific parameters and rules for trading. So, let’s find out more about different types of bots!

Existing open-source trading bots

Trading BotLanguageExchangesStrategiesBacktestingTrading Plugins
GekkoNode.js15+MultipleYesYes
ZenbotNode.jsMultipleMultipleYesYes
TribecaC++MarketYesNoNo
HummingbotPythonMultipleMultipleYesYes

The Types of Cryptocurrency Trading Bots

Cryptocurrency trading bots can be used to execute trades according to predetermined strategies, such as market-making, arbitrage, trend-following, and more. Understanding the different types of cryptocurrency trading bots can help you choose the best bot for your trading needs.

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 take advantage of price differences between different exchanges, buying assets where they are cheaper and selling where they are more expensive. They aim to profit from the price difference, with minimal risk.

Trend-Following Bots

They aim to purchase low and sell high or sell high and buy low in order to profit by spotting trends. In order to recognise trends and place trades, 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 can help investors manage their cryptocurrency portfolios, rebalancing assets to maintain a desired allocation or to reduce risk.

At ProCoders, we recommend considering that some trading bots may incorporate multiple strategies, and there may be variations or combinations of the above strategies. Keep in mind that the effectiveness of any trading bot will depend on a variety of factors, including the quality of its algorithms and the market conditions in which it is operating. 

Therefore, it is crucial to test and optimize your trading bot regularly to ensure it is meeting your specific trading goals and adapting to changing market conditions. We also suggest keeping up-to-date with the latest developments in the field of automated trading and regularly refining your bot’s strategies to stay ahead of the competition.

crypto trading bot

Features of a Crypto Trading Bots to Provide Extra Service

In addition to the basic feature of executing trades according to predetermined strategies, a crypto trading bot can offer extra services that can enhance its usefulness to users, which are:

Market Data Analysis: 

The ability to analyze and interpret market data can help a trading bot make more informed trading decisions. This feature may include technical analysis tools, such as charting, as well as access to real-time market data and news.

Real-time Alerts: 

Real-time alerts can keep traders informed of market movements and signal when to make trades. These alerts can be customized to meet the needs of individual traders and can be delivered via email, SMS, or push notifications.

Customizable Trading Parameters: 

Customizable trading parameters can allow users to tailor the bot’s trading strategies to their specific needs. This feature may include the ability to adjust trade sizes, set stop-loss and take-profit orders, and define trading intervals.

Risk Management Tools: 

Risk management tools, such as stop-loss and take-profit orders, can help users limit losses and lock in profits. These tools can be used to manage risk and control exposure to the highly volatile cryptocurrency markets.

Trade Tracking and Analysis: 

The bot can detect patterns, evaluate performance, and improve methods by keeping track of and analyzing past trades. Tools for creating reports, examining trade history, and contrasting outcomes with benchmarks may also be included in this feature.

Backtesting

Backtesting allows users to test trading strategies against historical data to evaluate performance and refine trading parameters. This feature can help users optimize their strategies and improve their chances of success.

Multiple Exchange Support: 

Being able to trade across multiple exchanges can increase the liquidity of a trading bot’s portfolio and help users capture the best prices across a range of markets.

Overall, these extra features can help traders make more informed decisions, manage risk more effectively, and increase their chances of success in the highly competitive and volatile cryptocurrency markets.

Crypto trading bot development can be a complex and challenging task, requiring a deep understanding of programming languages, data structures, and financial markets. Let’s explore some of the key challenges you may face when you build your own crypto trading bot:

Technical complexity:

To develop crypto trading bots, you need a deep understanding of programming languages, APIs, data structures, and other technical concepts. It can be challenging to write a crypto trading bot that is reliable, efficient, and capable of executing trades quickly and accurately. 

However, working with an outstaffing company like ProCoders can help alleviate this challenge. ProCoders has a team of experienced developers with a deep understanding of the technical landscape of cryptocurrency, who are dedicated to your project and focused on delivering high-quality results. 

Market volatility:

The cryptocurrency markets are notoriously volatile, which can make it difficult to create strategies that are effective in all market conditions. The bot must be able to adapt to changing market conditions and adjust its trading parameters accordingly.

Security risks:

Since trading bots often require access to users’ exchange accounts, there is a risk of security breaches, hacks, and other forms of cyber attacks. It is important to take measures to ensure the security and privacy of user data and to implement robust security protocols to protect against threats.

Data management:

The bot must be able to collect and manage vast amounts of data in real time, including market data, news feeds, social media, and other sources of information. Managing this data efficiently and accurately can be a significant challenge.

Regulatory compliance:

Cryptocurrency trading is subject to a complex and evolving regulatory landscape, and it can be challenging to ensure that the bot remains compliant with all relevant laws and regulations.

User adoption:

Even the best-designed trading bot will not be successful unless it is adopted by users. It can be challenging to attract users and build a community of users who are willing to use the bot and provide feedback for further improvement.

User adoption of a Crypto Trading Bots

How successful are crypto trading bots?

Although their effectiveness is not guaranteed, cryptocurrency trading bots can be useful tools for managing portfolios and placing well-informed deals. The performance of a trading bot is influenced by a number of variables, such as the state of the markets, the bot’s settings, and its strategy. The bot must be continuously monitored and adjusted to maintain optimal performance, and traders must be ready to step in if the bot is not operating as intended.

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

There are several reasons why it can be challenging for crypto trading bots to make a reliable profit:

  • Market volatility: Crypto markets are highly volatile, and prices can change rapidly in response to news, market developments, and other factors. This makes it difficult for bots to predict market movements and make profitable trades.
  • Limited historical data: Cryptocurrencies are a relatively new asset class, and historical data is limited compared to traditional markets. This makes it more challenging for bots to identify and analyze market trends and patterns.
  • Complex algorithms: Developing effective algorithms requires significant technical expertise, and the complexity of crypto markets can make it challenging to develop reliable algorithms that can consistently generate profitable trades.
  • Competition: As more traders and institutions enter the crypto market, competition for profitable trades increases. This can make it more challenging for trading bots to identify and capitalize on profitable opportunities.
  • Regulatory uncertainty: The regulatory environment for cryptocurrencies is still evolving, and changes in regulations or policies can have a significant impact on market conditions and strategies.

Making a crypto trading bot requires a diverse set of technical skills, as well as an understanding of the complexities of the cryptocurrency markets. Here are some of the technologies you may need to use:

  • Programming Language: Depending on the complexity of the bot, you may need to use one or more programming languages. Some common languages used for building trading bots include Python, JavaScript, and Ruby. Python is a popular choice due to its readability and a large selection of libraries for data analysis and machine learning.
  • APIs: Many cryptocurrency exchanges provide APIs for developers to build their own trading bots. These APIs allow bots to access data on the exchange, place orders and manage trades. Some popular APIs for cryptocurrency exchanges include Coinbase Pro API, Binance API, and BitMEX API.
  • Data Structures: To analyze market data and make decisions, you may need to use data structures such as time series data, candlestick charts, and order books.
  • 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.
  • Cloud Computing: Running a bot can require significant computing resources. Cloud platforms such as Amazon Web Services (AWS) or Google Cloud Platform (GCP) can provide the necessary computing power and scalability.

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

The cost to create a crypto trading bot can vary depending on several factors such as the complexity of the bot, the development time, and the programming language used. Here are some of the major costs you can expect to incur when you code a crypto trading bot:

ProCoders’ Discovery Phase service could be particularly helpful in mitigating the cost of writing a crypto trading bot by providing a clear roadmap for the project. During the research and estimation phases, ProCoders can help you identify the most suitable technologies for the bot’s features and scalability, and evaluate the difficulty of the tasks to determine the level of engineering skill needed. This can help ensure that the project is feasible and that the necessary resources are allocated appropriately, which can ultimately save costs. 

trading bot for crypto

Additionally, the discovery phase can help ensure that the project is properly scoped and that development tasks are organized and executed efficiently. With development costs starting at $15,000+, we can provide clients with a basic understanding of the cost range. However, the final cost will depend on several factors, including the size and experience of the development team, the complexity of the bot, and the time required for the development. 

By creating a clear and developed roadmap,ProCoders can help minimize the risk of unexpected costs and project delays, which can be particularly important when working on a complex and rapidly evolving project like a crypto trading bot.

With development costs starting from $15,000+, we can provide clients with a basic understanding of the cost range. However, the final cost will depend on several factors, including the size and experience of the development team, the complexity of the bot, and the time required for the development. 

Cost CategoryEstimated Cost RangeFactors 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 monthCloud provider, resources needed
Data Feeds and Market DataAPI Access: $100 – $5,000+ per month <br> Exchange Access: $0 – $100+ per monthData 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 Build a Crypto Trading Bot From Scratch

Crypto trading bot programming from scratch can be a challenging and time-consuming process, If you are interested in a step-by-step crypto trading bot tutorial, our team can guide you through the entire process of how to program a crypto trading bot from scratch! so you can set up a crypto trading bot that is tailored to your specific trading strategy and goals.

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++

Again, ProCoders’ Discovery Phase helps clients choose the most suitable development stack for their project by analyzing their requirements and technical needs. For coding a crypto trading bot, our team can help clients choose the development stack that is best suited for handling real-time data processing, complex algorithms, and secure data storage. 

development stack for cryptocurrency trading bot

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.

ProCoders can provide assistance to clients who want to learn how to make a crypto trading bot. We can assist with the development and testing process by providing a team of experienced developers who are skilled in writing and testing algorithms. Our team can also integrate your bot with various data sources and APIs to ensure that your bot is receiving accurate and up-to-date market data. Moreover, at ProCoders, we can add features like a user interface or notifications to make your bot more user-friendly. 

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 to ensure that it is functioning as intended and fine-tune your trading strategy based on the results
  • Monitor your bot’s performance and adjust its parameters as needed to optimize its performance
Testing Crypto Trading Bot

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

Are you ready to build a cryptocurrency trading bot that can give you the competitive edge you need to succeed in the fast-paced world of crypto? Look no further than ProCoders!

We’re an outstaffing company with a team of over 100 talented software engineers who are passionate about helping our clients achieve their goals. Our experts have worked on more than 150 startup projects, and we know what it takes to build a successful bot from scratch.

With our discovery phase, we can assess the architectural risks of your project and help you define the key players on your team. We’ll make sure that your dedicated team gets off to the right start, and we’ll be there to troubleshoot any technical challenges that arise along the way.

We can also help you choose the right development stack for your project, and our team of experts can provide independent expertise in business development, UI/UX design, mobile and web engineering, and more.

Our team of experienced developers can guide you through the entire process, from how to make a bot for trading cryptocurrency to integrating it with exchanges and data sources. Our expertise isn’t limited to just bots; we can also help you understand how to build a crypto exchange, how to develop a DeFi 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! 

FAQ
What are the best ways to monetize a crypto trading bot?

The best ways to monetize a crypto trading bot are through subscription-based models and/or by taking a percentage of profits earned from trades.

 

There are several ways to monetize a crypto trading bot, including:

 

Charging subscription fees: You can charge users a monthly or yearly fee to access your bot’s services. This is a common monetization model for many trading bots.

 

Commission-based model: You can earn a commission for every trade executed by your bot. This model is particularly suitable if your bot is consistently profitable.

 

Affiliate marketing: You can monetize your bot by promoting other cryptocurrency products or services and earning a commission for every successful referral.

 

Selling your bot: You can also sell your bot to other traders or investors. If your bot is successful and has a track record of profitable trades, it can fetch a significant sum.

 

Donations: Some users may be willing to donate to support the development of your bot, particularly if it is open-source and free to use.

 

Ultimately, the best monetization strategy will depend on the type of bot you have built, its features, and its user base. It is essential to choose a monetization model that aligns with your bot’s goals and values while providing value to your users.

How long does it take to make a trending bot like crypto?

A simple bot can be created in a few days, while a more advanced bot can take several weeks or even months. Working with an experienced development team, such as ProCoders, can help ensure that the development process is efficient and effective.

Is crypto trading bots profitable?

It’s possible for crypto trading bots to be profitable, but it ultimately depends on a variety of factors, including the bot’s trading strategy, market conditions, and the quality of the bot’s implementation. While some bots have been known to generate substantial profits, others may not perform as well and may even lead to financial losses. It’s important to conduct thorough research and testing before using a trading bot to ensure its potential profitability and to always use risk management strategies.

How to create a trading bot for Binance?

To create a trading bot for Binance, you would need to follow these general steps:

 

  1. Register for a Binance API key and secret on the Binance website.
  2. Choose a programming language and a trading bot framework to build your bot.
  3. Connect your bot to the Binance API using your API key and secret.
  4. Define your trading strategy and implement it in your bot.
  5. Test your bot using a paper trading account before using real funds.
  6. Deploy your bot on a server or cloud service to run 24/7.

However, please note that building a trading bot requires significant programming and trading knowledge, and can be complex and risky. But ProCoders can provide the development expertise you need to build a high-quality, customized trading bot for Binance. We can help you save time and reduce the risks associated with building a trading bot on your own.

Conclusion

In 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. Additionally, considering the support of an outstaffing company like ProCoders can help mitigate risks, ensure a successful development process, and provide access to a team of expert developers.

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