BestRate has developed custom solutions for trading strategies last year. Now it’s time to bring this experience for the common usage. We are announcing BestRate Crypto Trading Bots.
What is a Trading Bot?
Trading bots are computer programs that use different indicators to spot and execute trades automatically. The usage of algorithmic trading by hedge funds has been in place for years while dealing with equities, commodities, and currencies. Approximately 50-60% of the trading volume for US equity markets is via algorithmic trading. Credit Suisse data (up to 2016) indicates that high-frequency trading was responsible for 4.2 billion shares on a daily basis, accounting for 54% of all traded shares in the market, these figures should be slightly higher for 2018.
Now, these trading technologies, like TWAP, VWAP, PoV algorithms, High-Frequency Trading are being applied for cryptocurrency markets.
What does Trading Bot work?
As a sort of automated trader, a trading bot buys and sells in an automated manner typically in the short-term market. Bot trading is a technique that uses programmed software to analyze market actions including time, volumes, orders, and prices. When you perform a trade, trading bot checks the actual rates at the crypto exchange, historical data, liquidity, divides your order into small pieces and executes them in a way when you’ll be buying another crypto coin with the best price. It saves your time and operates on the speeds far beyond human possibilities working 24×7 for your needs.
What are the trading algorithms?
Trading bots execute trading algorithms or strategies. There are several types of algorithmic strategies. One of them is execution strategies that are aimed at solving the problem of buying or selling a large volume of a financial instrument (for example, stocks or cryptocurrency) with a minimum deviation of the total weighted average transaction price from the current market price. Examples of algorithms that solve this problem are TWAP and VWAP.
Using TWAP (Tie Weighted Average Price) implies the uniform execution of an order to buy or sell for a given number of iterations over a given period of time. For this, market bids are constantly being placed at prices of the best demand or supply, adjusted for a given percentage deviation. For example, the purchase of 100 thousand shares during the day may look like this (five-minute consecutive intervals are used):
VWAP (Volume weighted average price) works according to the following scheme. Trading volume is usually higher at the beginning and end of the trading session, and in its middle, it is less. To execute a large order with minimal costs, it is divided into smaller orders taking into account the time of day.
- The algorithm estimates the average trading volume at five-minute intervals.
- Within each interval, transactions are carried out for the amount of the instrument proportional to the standard volume.
The properties of this algorithm include completeness (transaction sizes are always known in advance), as well as the use of the volume of historical data to evaluate the function.
Percentage of Volume (POV)
The Percentage of Volume (POV) algorithm solves the same problem as VWAP, but using information about the trading volume on a specific current day as a benchmark. The idea is to have a constant percentage of bidding during the selected period. If you need to “trade” another stock of Q volume, and a “participation coefficient” in the auction γ, then the algorithm calculates the trading volume V traded in the period (t – ΔT, t) and executes orders for the amount of the financial instrument q = min (Q, V * γ).
V (t) = total trading volume that took place on the market at time t;
Q (t) = number of shares still to be bought / sold (Q (0) = initial quantity).
How does BestRate Crypto Trading Bot work?
BestRate Trading Bot is designed in a way when we check recent cryptocurrency pair history, liquidity, prices. In simple language, let’s imagine that there are X orders with different volumes and prices for a particular cryptocurrency pair. Our bot will automatically define the % of volumes and prices to start trading, let’s say we want to buy 10% of orders with the best prices at this particular moment. In this case, we’ll split your original order into pieces to match this amount and begin our operation. After each successful order, BestRate Crypto Trading Bot will redefine the parameters, as some sum of your order was successfully closed, and continue again and again while the total amount of requested order wouldn’t be exchanged successfully.
Why should I use it? What are the advantages of Crypto Trading Bot?
We apply known trading mechanics for the crypto market, so every crypto exchange user can easily start using them. Multiple advantages of automated crypto trading are obvious. It will save you time, while the execution of your orders will bring the maximum possible amount and will be executed at the lightning speed. You can concentrate on decision-making what you would like to buy sell or exchange, while crypto trading bot will simply automate this task for you.
How can I use it?
In fact, you can make all your trades with BestRate. The only thing you need to do is to integrate your crypto exchange or various crypto exchanges in our platform. The process of crypto exchange integration is easy and secure, as BestRate manages your crypto exchange account via API keys that don’t have withdrawal rights. You can find API keys in your crypto exchange, typically in the Account menu. This is a common practice for all crypto exchanges that provide no risks for your account. Here are a few links with the explanations of how you can do it, it’s really simple. After that, each trading operation you perform will start bringing you more resulting exchange value without any additional effort from your side.
Trading bot usage requires Trader plan(9.99$/month) with 30 days free trial. If you have any questions, please contact us at [email protected]