A trading robot that trades for you on exchanges

Trading on exchanges

Trading on exchanges has always been relevant. So, different exchanges are aimed at different areas of activity. There are several types of exchanges: commodity exchanges, stock exchanges, currency exchanges, and relatively recently emerging cryptocurrency exchanges. And there are people whose type of income is based just on trading them. They are called traders from the word trading - that is, trading in English.

Someone does this professionally, knows all the nuances and subtleties of this work, and someone sometimes comes even without basic skills in order to try themselves in this profession.

Beginners who do not know how to work with analysis tools and are simply trying to buy currencies at a low price and sell at a high price are not always successful in this business.

Although after a certain time you already begin to understand that many actions turn out to be so simple, but monotonous that they can be performed for you by a simple robot program (a kind of bot for trading on exchanges). What does a trading bot have to do with what to trade. Therefore, it is suitable for all types of exchanges. Let's take a closer look.

What are trading robots?

In the computer world, a  robot (or bot) is a program that  is designed to perform certain programmed actions.

Everything is simple here, they are created with the aim of saving a person from routine, monotonous and boring mechanical work. It turns out that trading robots are needed to perform mechanical trading according to the specified parameters.

The simplest and most primitive trading bots for the exchange, of which the majority, buy currency, securities (well, or it doesn't matter what, depends on the type of activity of the exchange you work on) when the exchange rate falls and sell when it grows.

However, this is not all, there are more advanced trading robots. They use a number of additional parameters and place orders only if the parameters you specified match. Let's give an example to make it clearer.

The bot can be programmed so that it analyzes the price chart for the last N days and starts buying if the chart displays a drop in the rate within, for example, 5-10%, but ignore the buy if the drop exceeds 20%. But there are also bots that take into account more detailed indicators.

Now there are 2 types of robots - trading and arbitrage. Let's take a closer look at what they are?

Trading robots  are those that trade within the same exchange. They receive income from buying at a low price and selling at a higher price.

What then is index arbitrage ? These are essentially the same trading bots, but they only trade within several exchanges. Only income is calculated here as a result of buying on an exchange, where the rate is lower, and then selling on another exchange, where the rate is higher.

How do trading bots work?

Let's take a closer look, how does it all work? Robots on exchanges always act according to their strategy.

A bot strategy for trading on exchanges  is a set of parameters that a bot follows when trading. In advanced bots, they can be manually configured in detail by the owner, then it turns out that the bot's strategy is nothing more than a trader's strategy integrated into the program.

However, this only applies to professional bots, but simpler bots have not so many customizable parameters, therefore, the strategy can be influenced not so much. Based on this, we can conclude that the more adjustable parameters, the more profit such a bot can bring to a professional trader.

But there is also a downside to the coin: for beginners in the world of trading, a large number of parameters and their detailed setting can confuse an inexperienced trader, and he will set such parameters at which his further trading will be good, if not very profitable, or even in general, one lesion. That is why for beginners in trading when buying an advanced bot, strategies are usually offered with all the parameters set.

Is a trading bot good or bad?

The most frequently asked question that interests many people is:  can they be banned for such a bot?

There is such a stereotype in the virtual space that bots are always bad.

But in the case of exchanges, the situation is slightly different. Exchange owners are just interested in automated trading, since the more transactions bots perform, the better for them. A commission is charged for operations, and the commission is the earnings of the exchange owners. This is why trading bots are allowed on most exchanges. However, just in case, you should clarify this issue with those support of the exchange you use.

Where can I download a trading robot?

Let's look at the options, where and how can you buy a trading bot for the exchange?

You can write yourself if you have programming skills

You can buy ready-made or order from programmers to write an individual robot for trading

Well, the easiest option is to find a free robot somewhere on the Internet and download it

Let's analyze each item in more detail

If you decide to do it yourself

If you decide to write a trading bot yourself, then usually they are written for the exchanges on which you plan to work. A desirable condition for this is that such an exchange must have its own trading API.

What is API? Application Programming Interface (API) is a whole set of information about the current state of trades, as well as a set of functions that allows you to join trades according to specified parameters. These complexes are provided by the exchange itself. You can write a trading bot without an API, but it will take more time due to the fact that you yourself have to write the above.

However, do not think that this is such a difficult task. The API is available on many exchanges. Arbitration bots are written, of course, with parameters specified for several exchanges you intend to work with.

If you decide to buy

Today, trading bots for exchanges are a relatively common commodity. They can be purchased from both development companies and individuals. Companies usually offer bots of different classes (from simple to complex) and at different times. For example, you can buy an "economy" package that will include a simple bot with a monthly subscription.

You can also buy a "deluxe" package, which will include a bot with a bunch of detailed settings for untimely use, and in addition, several ready-made strategies will be attached. Of course, there will be intermediate variants of offers for trading bots. Here, each company has its own proposals.

Private traders are simply engaged in the creation of one trading robot or several at once, describing the trading strategy embedded in the bot with an analysis of its parameters and offering such a bot for a fixed price.

All of the above, of course, can be ordered with your individual needs (setting for a certain exchange, some of your additional parameters, etc.). Of course, such a custom bot will cost significantly more.

If you decide to download

On the Internet, you can find a huge number of ready-made bots for certain exchanges, as well as blanks.

However, it is almost impossible to predict how much such open source programs are safe and how they work. How do you know that this is not a virus, or that the program, even if it works, will not transfer your money to third parties?

Now let's see what the advantages and disadvantages of such bots are?

Advantages of trading bots

Are bots a panacea? Why are they so often talked about? Are they really that effective? Often many people who are interested in the topic of trading on exchanges ask such questions. Indeed, there are not so few advantages:

Saves you time.

In order to sit and follow the course, traders need to spend too much of their time on it. On peak days, you can generally sit for 15 hours. Agree, few people want to work so hard and engage in monotonous work for such a long period of time. The bot will either completely rid you of this, or partially. Basically, a good bot can run 24/7.

Scope of work

You can work with a trading bot for cryptocurrency, and for securities, and for much more, as well as work on different exchanges. Physically, there is no way a person can grasp work of this magnitude manually. However, for a trading bot, this is not a problem, a bot can. Even if your bot is adapted for a certain exchange, and you need to work on several at once, then nothing prevents you from running several bots at the same time.

Work speed.

While you think, remember the formulas and calculate the proportions, it will take some time (of course, if you are a beginner, then you will need even more time for this). In this regard, the robot has more advantages, since all these formulas are already laid down in it, and it managed to calculate, write out a buy or sell order and conclude a deal much faster than a human. Consequently, the bot will have more total work.

Availability of strategies.

A programmable bot may turn out to be "smarter" than an inexperienced beginner trader, since it can not only save him from significant financial losses, but also bring a profit that a beginner could hardly have received on his own at first.

The robot lacks a human factor.

Trading bots are very precisely written programs that execute the strategy specified in them. They are not wrong. But a person can always calculate something wrong, set, overlook, or, say, add an extra zero in the order and thereby deprive himself of profit.

Impartiality and emotionlessness.

Trading bots have no senses. They don't bother trying to make the right decision from one extreme to the other. They also don’t waste time on doubts, they don’t get nervous looking at the course (unlike people).

It would seem that it could not be better! But in reality, experienced traders rarely deal with bots. Newbies, by the way, are also in no hurry to put them. Why is this happening? Let's take a look at the other side of the coin.

Disadvantages of trading bots

Bots also have disadvantages. Let's take a closer look at them.

An experienced trader is always more accurate in predicting the situation.  The volatility is high, and you can make money on it within an hour if you make a profitable deal “on time”. But how will the bot behave if it is not an hour, but a day? Here bots are inferior to humans. An experienced trader will have time to calculate and determine the course of their actions. Thus, having made an informed decision, a person will receive more profit than a bot, which by the end of the day will always act in the same way, as laid down in the program.

Even the "coolest" trading bot with a lot of customizable parameters and functions is capable of working and acting only in typical situations. But it is precisely such abnormal situations that bring traders big profits (but sometimes losses). Even the most complex bots are not able to carry out such a complex analysis, evaluate each case separately and make a bunch of different nuances that bring the main profit to an experienced trader. It turns out that there is nothing to say about simple bots.

There are also some pitfalls that the bot owner may encounter. Let's figure it out. One of them is the commission. More often than not, exchanges charge a commission for each trade, which may be the result of paying a decent amount. To do this, do not forget to take into account the size of the commission in the strategy of your bot.

It is also worth considering that bots are just regular programs. And all programs, as we know, have such problems as crashes, freezes, crashes, etc. As usually happens at the most inopportune moments.

Don't forget about security issues.  A decent number of bots are walking around the network, which:

Transfer of all your funds to third parties

They can transfer all earned profit not to the owner of the bot, but to a third party (the creator of the bot)

Again, your funds are transferred, but not immediately

They work until a certain moment. For example, as soon as the N-th amount of money has accumulated on your account, the program stops working, and the money is transferred to a third party

They steal from you unnoticed

They act less noticeably and transfer an invisible part of the profit to an outside party

Identity theft

Steals your personal data (name, card numbers, etc.) and account data (login and password), and then transfers them to third parties

Program crashes

They trade in the wrong way and perform other incomprehensible actions

It turns out that you can trust bots in terms of reliability only if you yourself wrote it from scratch, or ordered it to be written by some trusted person.

However, there is also a catch. To write a good bot, you need to be not only a good programmer, but also a good trader.

Are trading bots suitable for newbies?

After reading, you probably thought that a beginner just needs a trading bot to make money. Is it so?

Usually, newcomers to exchanges make a lot of mistakes. Over time, patterns are noticed. A person begins to learn from his mistakes, delves into the essence of what is happening, reads the relevant literature. All this in the long term makes him a good and experienced trader who can increase his income.

However, if you initially rely on the bot, then you will not have any motivation to self-develop in the direction of trading. The robot will start trading for you and perform the actions inherent in it. It turns out that you will not have any growth, enhancement of skills, and in fact you will not even be able to be called a trader.

Before making a decision: “Do you need a bot or not?”, You need to think and calculate everything to the smallest detail. From the profit you will have to cross out:

• commissions for using exchanges;

• electricity costs (after all, most likely you will use the bot to the maximum 24/7);

• and the most important thing is the cost of the bot itself.

Following from all this, you need to think about the amount of your investments. Even a good bot will not pay off very soon if you invest a small amount of money in it (there is no point in acquiring a good, expensive bot if you do not have enough funds left to invest). But with a good investment, a reliable bot will pay off and bring you the proper profit.

The problem arises of where to find a good and most importantly reliable bot? This task is not at all trivial. There are a lot of scammers now. Therefore, you will either have to write a bot from scratch yourself, or entrust its writing to a trusted person.

Well, to the end, we will give you some good advice. Even the best and most reliable trading bot will bring you good profit, but only with the condition of periodically reviewing strategies and reconfiguring the program itself. This, in turn, leads to the need to understand trading yourself and understand what the bot is doing. And if you figure it out yourself, then it will be more profitable to trade independently. Therefore, in order to make the right decision for you, re-read all the pros and cons of trading bots and make a conclusion.