Design of Algorithmic Cryptocurrency Trading Bot
I have discussed the development of a cryptocurrency trading bot with python on my Medium.com blog previously, such as through the creation of a Binance Bot and creating an Advanced Cryptocurrency Trading Bot with CCXT to trade all coins on any and all exchanges.
Creating the functionality within Python is one portion of a bot (the tactics), but the strategy behind the bot/software must now be discussed. An outline of the strategy behind a crypto trading bot is available below:
Initialization of the crypto bot is paramount to create the initial conditions of the trading bot, such as:
- Determine Exchanges & Currency Pairs available to trade
- Determine Balance on all Accounts
A ‘HODLbot’ style diversification, consisting of the portfolio comprising 50% Bitcoin, 5% of next 8 coins by market cap, and 10x 1% micro-cap coin entry positions. NOTE: Test potrfolios will be used if Balances = 0.
Track Portfolio Performance
- Daily Rebalancing
- Hourly/Daily Profit-Loss Reporting will be output to PDF
Active Trading Strategy
A Constant loop (connected via websocket/API) will:
- Protect Capital Invested
- Swing & Momentum Trading
- Triangular Arbitrage (Between Currency/Exchanges)
- Social Signal Analysis
- Machine Learning/AI — Reinforced Learning based upon profitable strategies
Ultimately these functionality will be extended to a GUI to facilitate trading.