What You Need to Know About Trading Cryptocurrency Algorithmically

What is crypto algorithmic trading? How to create a crypto trading algorithm, what are the best tools for crypto algorithmic trading?

David Akilo
By David Akilo
Marcel Deer
Edited by Marcel Deer

Published June 6, 2022.

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:

  1. The programming language to be deployed
  2. Access to all the exchanges you want your bot to work on
  3. Build the type of crypto trading bot you want to make use of
  4. Determine the architecture and use-case of the crypto trading bot
  5. Testing and deployment process

Best Tools for Crypto Algorithmic Trading

Some of the top crypto platforms offering bot trading services include:

  • 3Commas
  • Bitsgap
  • CryptoHopper
  • Pionex
  • Shrimpy.io
  • TradeSanta

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.