Crypto Algorithmic Bot: How to Start Algo Trading

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Many traders find algo trading a better way of trading cryptocurrency than manual methods. This is because crypto algorithmic trading bots execute trades at superfast speeds, allowing you to capitalize on opportunities quickly.

However, most algorithmic trading requires strong technical and financial knowledge as well as a sound trading strategy. In this article, we explain some ways to automate your trading strategies using crypto algorithmic trading bots.

What is algo trading in cryptocurrency?

Algorithmic trading is the use of a trading robot or algorithmic software to automate cryptocurrency trades based on a pre-determined logic. These crypto trading bots are programmed to buy and sell coins when specific signals are triggered by price action, an indicator, or whatever logic the trader may choose.

They are integrated through APIs, allowing them to receive inputs from the market and then output buy and sell commands through your exchange account.

You can program your own crypto algo trading bot if you have coding skills, but it is possible to find one integrated into your exchange account, depending on the platform.

Another option is to use a ready-made trading bot like Refonte Infini. This is a tried-and-tested trading bots marketplace where you can find and use pre-made trading algorithms for cryptocurrency. Refonte Infini can help you help you with chart analysis, strategic planning, and execution.

Ready-made crypto algo trading bots can offer three main advantages:

• They remove human emotions from your trading decisions
• These bots can open and close many trades at a rapid speed
• You can implement them almost instantly without any coding required

What you need to start crypto algo trading

Crypto algorithmic trading is exhilarating and rewarding if you have computer access, coding skills, and the financial knowledge required.

• Hardware and software:Get a PC or laptop, remote server hosting, cloud storage and a stable internet connection. You’ll also need software or a trading robot for automated trading. These bots let you execute more trades than humanly possible and in an objective format.
• Platform and data:Crypto algo trading relies heavily on market data, so you’ll want a platform integration (e.g. exchange) that offers live or historical information.
• Capital and trading strategy: The capital determines the amount of funds you’re willing to allocate to trading, while the trading strategy defines the rules and algorithms guiding buy and sell decisions.

Remember, the more financial and technical skills you have, the more prepared you will be for crypto algo trading.

In addition, you must consider the following factors before executing a crypto algo trading strategy:

• A platform that meets your requirements
• Correlation of your strategy and CTCL (CTCL is a computer-to-computer link that moves your order into the exchange, and the confirmation comes back to you)
• Reliable event management system
• Order management system

These items are critical. You’ll never make money in crypto without them. Also, have a basic risk management system in place to cushion you against potential losses.

Best crypto algo trading strategies to boost your profits

Now that you understand how to get started with crypto algo trading, you may want to know how you can level it up to increase your earnings. These strategies might help.

Market making strategy

Market making focuses on providing liquidity to the market by manipulating both the sell and buy price movements. Thus, You can benefit from this strategy by capturing the bid-ask spread. This means that if you select quotations successfully, you can buy low and sell high, regardless of the current trend direction.

Pair trading strategy

In pair trading, traders simultaneously open long and short positions in two cryptocurrency pairs to exploit their relative price movements. The growth of one asset will compensate for a drop in another, allowing you to profit from the divergence or convergence of the two assets.

Basket trading

This strategy involves grouping multiple cryptocurrencies into a portfolio or "basket" and making trading decisions based on the overall performance of the basket. As a result, the benefits of successful transactions outweigh the disadvantages of unsuccessful ones. Traders usually use a set of criteria to create one synthetic instrument, thus making it possible to meet specific risk-return objectives.

Trend-related strategies

The goal of trend algo trading is simple: detect a price reversal in the other direction as early as possible and capitalize quickly. For example, buy during uptrends (bullish) and sell short during downtrends (bearish). Traders often use technical analysis tools, trendlines and moving averages to identify trends, take profits or even stop losses.

Refonte Infini offers these technical indicators, including analysis and copy trading bots, to help you trade cryptocurrency with ease.

Key features of crypto algo trading bots

Here’s what to look for when choosing an algo trading bot for your trading strategies.

• Customization:Most automated algorithms come with a standard 50-day moving average. But you may want to adjust that to a 20-day moving average or even a 100-day average. Customization gives you the flexibility to tinker with your trading strategies.
• BacktestingSelect a program that gives you access to historical data so you can simulate your trades before committing.
• Risk management:Ensure the bot incorporates sophisticated risk management tools such as stop-loss mechanisms to protect your capital.
• Exchanges:Verify that the crypto algo bot is compatible with multiple exchanges and trading pairs to ensure access to a diverse range of assets and markets.
• Execution speed and reliability:Look for a bot that can execute trades quickly and reliably. Low latency lets you capitalize on market inefficiencies and reduce the impact of slippage
• Customer support:Consider the availability of a supportive community or reliable customer support in case you have troubleshooting issues.

Crypto algo trading FAQs

Can an algo trading bot work offline?

Your crypto trading bot needs to be connected to its API and your exchange account to run. Some algorithms can run for weeks on their own without you needing to log in to your account, but I wouldn't advise leaving your bot unattended for that long.

What crypto algo trading strategy should I choose?

Choose a crypto algo trading strategy that matches your goals, risk expectations, and market conditions. Most algo traders tend to combine both trend-following and risk management algorithms to navigate the volatile nature of the crypto market.

How much does a crypto algo trading robot cost?

The cost of a crypto algo trading bot depends on the software. Some bots offer a one-time price, while others require monthly or yearly subscriptions. Always evaluate the cost and pricing structure before choosing an algorithmic trading bot.

Get access to Refonte Infini algo trading tools when you register today.