What You Need to Know About Trading Cryptocurrency Algorithmically
Crypto algorithmic trading is a passive crypto trading strategy that involves using bots. Under this system of trading cryptocurrencies, the trader leverages specific computer programs designed to adhere to fixed rules/algorithms and automatically take up profitable trading positions. Every trading strategy involves determining what to purchase when to buy or sell it, and how much to pay. This approach to trading allows traders to predefine their rules surrounding these parameters and take advantage of market swings to make quick profits on autopilot. The trading software or trading bot carries out transactions on behalf of the user, buying, selling, or holding cryptocurrency based on the pre-programmed computer instructions. By removing the "human factor," traders can still make trades and profit round the clock without needing to rest or getting emotionally invested. How to Create a Crypto Trading Algorithm Different methods are available for creating a crypto trading bot. You can either go it alone, by getting access to an open-source crypto bot that is immediately usable after downloading and installing it. This helps keep costs and development time to a minimum and only requires a small amount of technical knowledge, which is needed. Another way to approach this is to start from square one, by putting together a strong team of developers, and then begin to work on the code. Whichever step you choose to create your customized crypto trading algorithm, it is important to note the following steps: The programming language to be deployedAccess to all the exchanges you want your bot to work onBuild the type of crypto trading bot you want to make use ofDetermine the architecture and use-case of the crypto trading botTesting and deployment process Best Tools for Crypto Algorithmic Trading Some of the top crypto platforms offering bot trading services include: 3CommasBitsgapCryptoHopperPionexShrimpy.ioTradeSanta These platforms offer different perks, trading fees, and other benefits for their services. Traders should always do their research before trading or using the services of any platform.
Asked 4 months ago
High Frequency Trading Crypto Explained
What Is High Frequency Trading Crypto? High frequency trading (HFT) is a trading approach that capitalizes on small market price differences and inefficiencies to make a profit. The more unstable a market is, the bigger the profits. In the past, HFT has been primarily used in the stock market and the forex market—specifically, in markets and assets where there's a lot of volatility and big price differences every day. In recent years, many have seen the volatility of the crypto market, so it's no surprise that people have been thinking of a way to implement HFT in digital currency too. How Does High Frequency Trading Crypto Work? As a trading style, HFT is primarily done with the help of computers, as humans cannot perform at the same speed and accuracy. With the use of advanced algorithms and supercomputers in a low-latency environment, there have been days where HFT has generated over 800,000 profitable trades in less than 24 hours. This is how HFT works as a trading style in general, and it works the same with crypto. Crypto is a volatile market where oscillations of 5-10% in a day are not uncommon. So, there is a lot of room for profit as long as one gets access to reliable algorithms and a good trading environment. Is High Frequency Trading Profitable? Yes, high frequency trading can be profitable, though it's not easy to pull off. HFT requires a good trading algorithm to detect and use even the smallest market discrepancies. You also need to have incredibly fast access to the server of crypto prices. So, to summarize, HFT can definitely be profitable, but it's not easy to do consistently.
Asked 4 months ago
What Is Slippage in Crypto?
If you've been interested in trading, you've probably heard of slippage. In simple terms, slippage is the expected price of an asset at the time you place the order and the price of the asset when the order executes. Usually, slippage is defined in small percentages (e.g., +0.21%), and it has a plus or minus symbol in front of it to show how the market has moved. How Is Slippage in Crypto Caused? Slippage happens in all markets, especially in cryptocurrency. Slippage is primarily caused by latency, which you might know as ping (i.e., the time the server needs to receive your order). The bigger the latency is, the bigger the slippage will be. Usually, slippage doesn't cause any problems, but it can occasionally be problematic in a highly volatile market like crypto. Is High Slippage Good? Whether slippage is low or high, it's best if it's kept to a minimum. If you're lucky and the market goes up by the time you place the order, then you'll probably profit directly from slippage. Otherwise, it will cause you to lose money. Whether or not you've had luck on your side, slippage is best when it's non-existent. If you're trading in the crypto market, you want to aim for consistency, which slippage has a detrimental effect on. How to Stop Slippage in Crypto There is no way to eliminate slippage completely, but you can do your best to reduce it. Unless you own the server that shows the cryptocurrency market prices, you'll have some slippage. Some of the best ways to reduce slippage are by trading on a server that is geographically closer to you. Usually, the smaller the geographical distance is, the smaller your latency will be. You can also consider using a VPS (virtual private server) with lower latency than the computer you're currently using.
Asked 4 months ago
Understanding DEX Aggregators
If you've ever bought cryptocurrency, you've probably used an online crypto exchange. Depending on how it was built, exchanges are divided into two main categories: centralized exchanges (CEXs) and decentralized exchanges (DEXs). Since the price of cryptos varies from exchange to exchange, there have been ways to regulate the price and find a median value at a DEX. This is where DEX aggregators come into the picture. These aggregators are complex algorithms that take many prices and factors into account to calculate the price of crypto on a decentralized exchange. The Role of DEX Aggregators Since their inception, DEX aggregators have had one role: finding the right price for every cryptocurrency listed at a decentralized exchange. Keep in mind that there's no such thing as a "right" price, as there will always be minor differences from exchange to exchange, just like every other market. A DEX aggregator's role is to find the best value it can from many different sources and list it at a decentralized exchange. How to Build a DEX Aggregator Developing a DEX aggregator is not that complicated if you have the necessary knowledge of blockchain development. To build a DEX aggregator, you first need to do a lot of research. This means fetching all the prices from different competitors and formulating a price for the coin in question. Then, with a smart contract, the algorithms that calculate the price are placed on the blockchain and allow the aggregator to be used as a calculator for every minor and major price change in the crypto market.
Asked 4 months ago
Prediction Markets: What They Are and How They Are Utilized
With rising instability all around the world and overall fear being widespread, people are looking for ways to stabilize their money or try to predict the way the market is headed. This is where prediction markets come in - prediction markets are collections of votes from people who speculate the market's future based on events, like lifestyle changes, political events, company sales, armed conflicts, etc. What Is a Prediction Market? Prediction markets are exchange-traded markets, and their primary goal is predicting the market & trading based on the outcome of future events. Even though they are quite simple in nature, prediction markets have proven to be quite effective as a tool for predicting the market. In fact, there have been multiple instances where prediction markets gave quite accurate outcomes. Thus, these markets can be used as a tool to take into consideration before opening a big position in the market. How Are Prediction Markets Utilized? Since markets represent a vast variety of thoughts and opinions from many people, their use cases are quite wide. In a prediction market, thousands of people with different values, educational backgrounds, and socioeconomic standings gather up to give their opinion. Even though the initial idea of prediction markets was for them to be utilized on the stock & forex market, they've now become an incredibly useful tool for crypto investors. Thousands of reputable crypto platforms like CoinMarketCap and Gnosis have allowed this feature for all of their users. For example, anyone who is an ETH holder can vote and submit their opinion about the future price of ETH and the direction they believe it's headed.
Asked 5 months ago
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