How to Create a Crypto Trading Bot

"Time = cryptocurrency" in the category of new axioms, when there is a task at hand, and the right solution is instantly formed in response. Lost opportunity, unrealized potential, missed profitable transaction - this is what a trading cryptobot insures against. Automating the processes of selling and buying cryptocurrency requires combining knowledge in several fields - programming, selecting a stack of tools and insight into the processes taking place in the crypto universe. Client managers and crypto asset owners are constantly monitoring triggers, looking to profit long or short distances.

The leaders of the crypto market include the US and Canada, the UK and Germany, France and Russia, India, China and Japan, Brazil and the UAE. Precisely they have concentrated most of the participants of the global crypto market thanks to their industrialized economies. For this reason, while launching a crypto trading bot for a specific location, a proven IT team works out the rules taking into account the regulatory framework of each of these countries. For instance, you can sell and buy crypto in the Russian Federation, but it is forbidden to pay for services and goods. In the US and Canada, cryptocurrencies are screened for anti-money laundering, so it is necessary to track the source of receipt (wallets, addresses, countries).

Theoretical justification of cryptobot functionality and operation

Reacting immediately to landmark events of crypto exchanges, searching for potentially explosive cryptocurrencies and meme tokens, with a growth prospect of 4000-10000% in a year - issues that traders put on the list of important when looking for a company that knows how to create a trading bot, deploy, test and launch. Backtesting, making multiple transactions, analytical evaluation of financial strategy, emphasizing financial anomalies and quickly forming sound conclusions without emotions - this is a short list of advanced crypto trading bot features. On the other hand, you can create a meme coin and create a bot to manipulate the market. But remember that this is illegal.

The first steps of the strategy include theoretical elaboration:

• on identifying countries and crypto trading platforms, clarifying and detailing their rules (trading pairs, input and output of cryptocurrency with fiat, CTA standards and KYC requirements);
• specifying the stop loss point, take profit limit, based on the winrate for the previous trading period (week, month, quarter or year);
• choosing a programming language such as simple Python with Pandas and NumPy libraries, universal and simple cross-platform JavaScript, complex but proven object-oriented C+, C# and C++ or Perl, high-performance Rust and Golang;
• clarification of the API of the cryptocurrency exchange on the possibilities of integrating cryptobots into trading operations (on Binance and Coinbase Pro it can be done).

The key feature of programming is to receive information about trading changes in real time and send requests with a certain frequency (once an hour or 3 hours, per day). In terms of importance, it is similar to the decision to buy or sell cryptocurrency. In order to check the work of the algorithm, testing is carried out in an artificial environment, on the basis of past or real data, but with small amounts. The IT team's experience and expertise are essential here.

Lifehacks for scanning and correction

You make a deployment by introducing small assets and evaluating the results of backtesting. Visually, it can be compared to the biological choice of a pair by an eagle, when she drops her feather repeatedly and sees whether her chosen one brings back the feather in one piece each time. This is the same with a crypto-bot: before authorizing operations for large amounts, start small, starting with $5-$10, making sure that the decision-making processes are safe and stable.

During the first stages it is necessary to control the work, prescribing suddenly arising conditions and, if it is necessary, immediately switch from the robot's mode of operation to manual. Permanent updating of the functionality with libraries will maintain the speed of cryptobot operation. You should coordinate the API of the cryptocurrency exchange script and your own, use a secure server. It is essential to hide keys: they should not be on the network or in the code.

What determines the price of a sales bot

The more complicated the task and technical task to create a trading bot, the more expensive the cost. An ordinary cryptobot for several pairs of cryptocurrencies, fixing exchange rate changes at a certain customizable point, for common and accepted BTC and ETH, USDT with BNB, SOL and XRP, TON and others (within 50-100 units) with different types of notification (emergency, fast, time) will cost $10-20 thousand.

If the indicator set is larger and includes AI metrics, a hundred or two parameters, key criteria scanning and their comparison for order execution, the price of a crypto-bot reaches $40-$50 thousand. The more tasks performed per second of time, then the price is higher: for 50 operations per minute - lower, at 1000 for the same time - 2-3 times higher. You can take as an example platforms with built-in crypto trading bots - 3Commas and Bitsgap, Gunbot and convenient Cryptohopper. The choice should be thoughtful: for example, HaasBot reviews are not impressive - the speed is low, operations sometimes have to be performed manually.

Scalping, momentum and cross-platform trading, forecasts

You can pay attention to the arbitrage bot, but it requires a different trading approach. On the other hand, scalping can provide more predictable returns. Determining what decision to make when launching such a bot is not easy. Mastering the scalping technique is one of those series when it is convenient to peck a seed and be satisfied: the minimal difference in multiple trades gives you the opportunity to earn average amounts. Scalping is safe, low risk threshold makes it the best option for beginner traders. Evaluating trend changes - falling and rising, changing bearish and bullish movements - is a more risky, but also many times profitable way of trading. It is the same with the impulse, when you can start buying on the growth of the rate and sell on the peak. Using this method is also suitable for scanning memcoins.

Crypto exchange rate comparison and buying an asset on one exchange and selling it on another exchange with a higher price tag is a decent cross-platform solution. If the trading volume is significant and the owner is a creator of a crypto exchange, the bot will automatically benefit by evaluating crypto assets that have a low-volatility rate. Quality cryptocurrency portfolio assembly is convenient when engaging the Scrum method within Agile, when tasks are reviewed and discussed in the backlog, sprints are iterated according to iterations and jointly approved. DevOps tools and Trello application are convenient embeddable web-based tools for development control.

There are also bots that estimate how world events will affect the possible change in the rate: remember how BTC from a rate of $64.4 thousand in November 2021 fell for a year to $17 thousand and then in the fall of 2023 began to grow from $27 thousand to $71 thousand. Supposedly, if the owners of crypto trading bots knew about the expected fall of BTC, they sold off assets in 2021 to buy back in 2023 and get a 4-fold profit. However, you have to be careful with Web3 protocols anyway. Casual leaking of a repository with keys or buying a ready-made bot with open and malicious code can be the reason for deprivation of crypto-assets in a few minutes.

Statistics and forecasts in trading bot

Algorithms for creating a cryptobot are numerous, but the basis should be statistics and probabilistic events. Let's use the example of three cryptocurrencies with a growing trend to consider how we can assume scenarios of future rate development - both from an optimistic and positive perspective, and from a negative one, with the possibility that the rate may fall to a minimum. Such indicators can be built into a crypto-bot for in-depth evaluation of future exchange rate changes in financial assets.

Ideally it will be if the trading bot can provide a chart with a trend line for the selected period - for the month or quarter, year and from the listing date. Multiple cryptocurrencies which are important for a trader will be compared to show the dynamics. Here we can see that BTC and Ethereum have the same growth trend, despite sharp exchange rate fluctuations. Solana has a trend with an increasing tendency, as the start occurred 4 years later.

Exponential trend estimation always reflects the current trend and outlook accurately. The average, the difference between the minimum and maximum, and the value of σ determine which way the movement is going, so they are built into advanced crypto trading bots.

Breakdown of cryptocurrency rate fluctuations with a forecast

Date	Maximum unit price:
	BTC	Ethereum	Solana
01.03.2017	1330	58,99	-
01.08.2017	4765	390,1	-
01.12.2017	19870	863	-
01.12.2018	4316	158,27	-
01.12.2019	7702	152,33	-
01.12.2020	29298	757,11	2,21
01.03.2021	61795	1945,4	24,4
01.10.2021	66976	4458,3	218,94
01.03.2022	48199	3481,23	129,55
01.06.2022	31969	1971,22	46,1
01.12.2022	18351	1348,43	14,94
01.08.2023	30168	1879,32	25,28
01.01.2024	48923	2712,88	116,92
01.03.2024	73740	4091,28	209,92
20.05.2024	71485	3679,47	188,229
30.06.2024	61755	3399,41	141,463
Statistical analysis
Indicators	BTC	Ethereum	Solana
Average	36290,1	1959,2	101,6
Standard error	6434,1	378,1	24,8
Median	31068,5	1912,36	116,92
Standard deviation	25736,238	1512,544	82,37997
Sample dispersion	662353940	2287789,3	6786,4594
Excess	-1,516723	-1,379369	-1,700433
Asymmetry	0,093222	0,2551424	0,1990976
Interval	72410	4399,31	216,73
Minimum	1330	58,99	2,21
Maximum	73740	4458,3	218,94
Account	16	16	11
Reliability level(95.0%)	13713,873	805,9778	55,343617
The best and the worst cryptocurrency rate predictions
Variation coefficient, %	141,0	129,5	123,4
Average – 1σ	10553,9	446,6	19,3
Average + 1σ	62026,4	3471,7	184,0
Average – 3σ	-40918,6	-2578,5	-145,5
Average + 3σ	113498,8	6496,8	348,8
Cv, %	141,0	129,5	123,4

The variation coefficient (123.4-141 %) shows a high probability of any event - both decline and growth of the exchange rate, which is typical for both cryptocurrencies and memcoins. The positive forecast (mean + 3σ) confirms that BTC can grow to $113.5k, ETH - to $6.5k, SOL - $349. Such functionality in a cryptobot is an analyst and economist in one person, working 24/7. The mathematical model of a trading bot with predictive analytics is its "heart" that determines the success of the chosen strategy.

The theory of probability in cryptobot

In fact, cryptohoppers are starting to enter the cryptocurrency market: Quantum AI with quantum computing and Stoic AI, which has a hybrid ecosystem and several levels of risk, are proof of that. Cryptobots with built-in formulas for calculating the possibility of events based on probability theory and quote independence can be considered top flight. The formulas are embedded in the functionality (native code is written) or the AI is taught the rules of analyzing the probability theory. Suppose a trader learned about the creation of a cryptocurrency a few months ago and decided to invest.

It looks at how the exchange rate has changed over the last 100 days. Suppose that cryptocurrency A had 20 days of growth during this period, B - 40 days, C - 60 days. But A's rate increase was $5 per day, B's was 3, and C's was 1. The goal is to find out what is the probability that all three cryptocurrencies will grow, only A, B and C, B alone and other combinations. The analysis is done in several ways, step by step:

• dividing the number of days of growth by the total duration of the period - get A 0.2; B 0.4; C 0.6;
• dividing the amount of growth in the rate of each cryptocurrency to the total amount of assets - it comes out that A = 100/280 = 0.357; B = 120/280 = 0.429; C = 60/280 = 0.214;
• summarizing the allowable amount of investment based on growth and probability of profit as a ratio: P (A) + P (B) + P (C) = 0.357 + 0.429 + 0.214.

If it becomes a question then, what is the probability of cryptocurrency growth (one or more, the formulas of probability of development of independent events come to the rescue:

P (AVS)=P (A)×(P (C)×P (C)=0.357 ×0.429 ×0.214= 0.0328

It implies that the probability of earning income from the growth of all three cryptocurrencies, based on their profitability, does not exceed ~3.3%. For each cryptocurrency or pair according to the formula of the probability multiplication theorem we get:

Р (А) = 0,357 × 0,571 х 0,786=0,1602 (16,02 %)

Р (А, В) = 0,357×0,429×0,786= 0,120378 (12,04 %)

Р (А, С) = 0,357×0,571×0,214= 0,0436 (4,36 %)

Р (В, С) = 0,643×0,429×0,214 = 0,059 (5,9 %)

Р(В) = 0,643 х 0,429 х 0,786 = 0,2168 (21,68 %)

Р (С) = 0,643×0,571×0,214 = 0,07857 (7,86 %)

Conclusion: It is better to invest up to 45% of investments in cryptocurrency B, up to 36% - in crypto A and within 20% - in option C. This is one of the options for calculation, as you can use Bayes formula, addition and multiplication theorem of independent values and others.

Market-making nuances and application of AI functionality

Proper writing of the technical specification for the desired purpose clearly highlights the weaknesses and strengths of the functionality. Imagine a market-making model is chosen to simultaneously profit on the difference between sales and purchases. The LTC buy rate is $75,403, the sell rate is $75,577: a bot with market-making functionality will buy large volumes at a 5-10% discount, accumulating assets (possibly using more leverage). Pip-sensitive orders will then be placed to sell.

This is an example of a short trade, with a bot price in the range of $10-20 thousand, when more attention is paid to order-taking. For the long strategy, with the use of order-making, it is necessary to observe the rate of certain cryptocurrencies and buy or sell in order to balance the market and to prevent the growth of volatility. Besides the dealing spread, the bot owner will get additional preferences from the exchange.

It is worth noting that the AI development and training of financial models accelerates decision-making based on an analysis algorithm taking into account independent variables and the desired goal. This is a complex work of Data Analyst, backend programmers and partially frontend programmers. UI/UX designers are included in the project of creating a trading bot at the same time when they choose a code language, framework and deployment platform. Among the recommended frameworks are the proven Node.js, Flask and convenient Django, which are easier to update the database, do debugging and improve functionality.

Bot sniper and crypto-carpet defense

A proven team clearly justifies these parameters based on the conditions and tasks, using the right stack, cloud storage platform or local server. For this purpose, a roadmap with clear milestones and schedules, goals of each stage is worked out in advance. If aggressive, highly profitable trading is in the plans, a sniper bot (or DEX-bot) is needed to find the right targets and perform instant transactions with a connection directly to the blockchain. Unlike traditional trading bots, it differs from traditional trading bots in its narrow specialization.

Sniper bot functionality places bets and orders to outbid the price based on entry and exit conditions (HFT principle) in a fraction of a second before the end. There are many techniques in the sniper's algorithm - scalping, fixed indicators and standards, arbitrage trades on different exchanges, which are activated when a token or crypto coin reaches the desired price. Here, one must be careful that the programmed parameters do not make the trader a victim of "pulling" and " plucking hard and soft cryptocurrencies".

Training is essential in such situations: the cryptobot should be able to recognize liquidity pull, fake fundraising projects, deliberate overpricing and dumping of tokens at the peak, use of flash loans, and be able to warn the owner if the decision is triggered by FOMO. Machine learning on OneCoin and Thodex, AnubisDAO or Uranium Finance should be a safeguard for actions when investors may suffer losses.

Coping and sandwich-bot, airdrop-farming and renting

Copytrade works on the principle of copying - it is a search for successful traders and repeating their actions to get a similar result. The developers, whose team includes crypto-financiers, know how to find successful participants in the crypto market. Sandwich bot works proactively, intercepting a profitable deal. Embedding the principles of multi-chain airdrop farming into the bot promises token accumulation and future profits. A number of them are built into Telegram with ChatGPT, improving adaptability and responsiveness.

It is frequently developed to bring profit to the owner by attracting other users. Suppose a bot performs specific actions justified by an algorithm and it is used by novice traders or small cryptocurrency traders for a certain fee (commission). If the list of ETH and ARB, METIS with SOL, AVAX and other cryptocurrencies, the volume of trading per day exceeds thousands of units, then even 1% of the proceeds at a solid turnover will give a good monthly income.

Wide functionality VS narrow specialization

Byzantine stability (continuity), gas limits in smart contracts and transactions, checking for false breakdowns and implementing the Howey test if necessary are the key features of a well-thought-out multifunctional cryptobot with a price tag of $40-50 thousand. Preventing Rug attacks (decoys) and setting up MEV protocols so that the profit is maximized - this is a trading bot with a server function and meme pool analysis or the use of a private relay.

Having a built-in function to liquidate positions when a honeypot is detected is a good thing. Tools like Dextools reveal information about a token or contract, scanning it for validity. Automating the sale of orders with real-time profit and its % is strategic monitoring. You should always use a portion of assets to avoid getting caught in a drain or a rug: this is another key limitation of advanced functionality.

Due to the complicated algorithms embedded in the backend and frontend functionality, framework-based performance obliges crypto trading bot developers to equip it with huge bandwidth and options to constantly search for trading potential in all situations. Privacy, security and encryption are an unconditional part of conducting transactions. The more methods and algorithms involved in a crypto bot, the slower and more reliable the financial result with versatility of working in different conditions.

The tasks assigned to cryptocurrency trading bots are so diverse that they cannot be reduced to a single one. For comparison, an English horse can run up to 63 km/hour, an Arabian horse - a little less, 60 km/hour. A heavy horse trotting with a load of 1.5 tons will run up to 25 km in an hour, while a riding stallion will carry a maximum of 20% of its weight.

Likewise cryptobot: simple ones scan the exchange's database and alert the owner of profitable positions, play the role of sandwich pads or engage in airdrop farming. Snipers perform operations quickly and accurately, while risky, in a narrow segment of targets, defending against cryptocurrencies. Especially expensive ones, with a price of $40k and above, thoroughly analyze pairs and crypto, perform market-making tasks, make short- and long-term forecasts based on statistics and probability theory, having a low risk threshold.

Let's define tasks and goals together with Merehead team of 97 people if you need a crypto trading bot to permanently make profits without pampers and dump.