If you have ever tried to exchange large amounts of crypto you may know that the task is not so easy to accomplish.
The cryptocurrency exchange market is participated by real people and automated bots, and it is literally filled with pitfalls that can easily lead to slippage and hence to a large monetary loss.
In this article, we are going to review 3 scenarios in which a large amount of crypto is exchanged, we also describe our solution to help you do this automatically at the BestRate.
Scenario #1. Quick exchange, but not at the best exchange rate.
Log in to your account on your preferred exchange platform, check the column of prices and make new orders to buy bitcoins starting from the lowest exchange rate. Market participants will see that you are buying everything and accordingly they will raise their selling price.
Eventually, your order will be fulfilled, but the average purchase price will be very high.
Scenario #2. You set your preferred buy price, but your order is not fulfilled.
Set up the desired exchange rate for the whole sum and wait until it will be sold.
Exchange platforms are crowded with human traders and bots, they will be constantly beating your offer at lower prices. Thus, your order will be shifted down the order book and will never be fulfilled.
Scenario #3. You get the best exchange rate, but with a ton of manual work.
You change price and quantity manually for every single trade to get the best exchange rate.
This will help you make the most profitable set of trades, but you’ll literally curse the cryptocurrency during this process due to the amount of manual work you will have to accomplish.
BestRate.org offers a better solution
If you want to exchange a large sum at the best exchange rate without tons of tiresome manual work, our solution can help you. We have developed our own bots that execute the 3rd use case above automatically and save you from a lot of manual work.
Here’s how our bot works:
- First, it checks that the trading volume on a given platform and makes sure that the order doesn’t exceed 10% of this volume.
- Then the bot places a new order on the platform. It checks the exchange rates offered in the column with “sell orders” and makes a new best offer. Note that our bot doesn’t accept the rate offered by the sellers which is a priori lower. It stands on the side of a buyer and helps you get a better rate, so you will eventually get a more profitable exchange than the one described in the 1st scenario.
- Our bot checks the price every 5 seconds and re-makes the order according to its internal scenarios. For example, if somebody offers a better rate, the bot cancels the offer and makes a new one with a better price. Thus, your order will be constantly on top till the whole sum will be exchanged. Note that we don’t disclose the full mechanism of our bot, this is only a small example.
Check the video above that shows our algorithm at work exchanging 108 ETH to BTC. This scenario works best for ICOs that have raised funds in ETH and now want to exchange it to BTC as ETH significantly decreased in value over the last few months.
We use the following simple tactical algorithms to accomplish the orders:
- Smart Order Routing (SOR) – finding the best liquidity available at the moment based on multiple criteria: speed, available liquidity, cost, reliability.
- Iceberg – show only small portion of the order to minimize the Market Impact.
- PEG -this algorithm automatically changes the order price depending on the current market price up to the specified limit.
More complex algorithms for really huge amounts that require much time to accomplish the transaction and provide with the fair price:
- TWAP – time-weighted average price.
This algorithm conducts the order in a specified period of time with automatic liquidity search. While trading TWAP, we also use SOR tactics to source the best liquidity globally and at the right moment.
- VWAP – volume-weighted average price.
The order is accomplished with accordance to the current activity at a given moment of time. This algorithm is more complex since it requires gathering statistics.
3. “Multi-regional VWAP”, or VWAP-like strategy of execution pace balanced.
4. Long-term liquidity seeking
Main advantages of BestRate trading bots
- Convenience. You don’t need to place, cancel and monitor your orders manually. Moreover, you are well protected from your own trading mistakes.
- Speed. According to a Wall Street ex-trader, and our beta tester, the manual process may take several days and even weeks. Our bots make an exchange in a matter of a few minutes.
- Best exchange rate. The main benefit that our algorithm gives you is that it puts your order on top and ensures the best exchange rate is achieved.
Moreover, as we constantly develop our products, we are going to add cool features to our trading bots as well, thus, making large deals transparent, efficient and safe. Stay tuned!
If you want to exchange a large amount of crypto at the best rate, drop us a line to [email protected] and we will be happy to help you.