Trade bot how does it work

Cryptocurrency trading bots

5 stars based on 59 reviews

I'm Sebastian Dobrincuand I'm a software engineer currently working as a freelancer. I'm also an avid product maker who loves building side businesses and crazy projects. I initially built Stock Trading Bot as a personal research project. I was testing the waters to see if modern machine learning approaches can be used to predict and automate selling and buying of assets in today's stock market, at a much more efficient rate.

Currently I am the sole user. I'm planning to continue working on it with the goal of scaling the bot as much as possible. The idea popped up pretty randomly. I was getting ready to board a flight to SFO and decided to download some podcasts. I felt like trying something new, so I picked a few of the most popular ones from the Finance category. The host brought up the topic of liquidity, which boils down to 3 measures: Essentially when liquidity is high, investors can successfully trade a larger order close to the current price and within a short time span.

Once they began debating whether or not high frequency trading was improving the market by providing liquidity, I switched to the Notes app on my phone and started furiously typing some of the main ideas. Prior to this project, my experience with finance in general was pretty limited. I had a solid understanding of the fundamentals of trading but not much beyond that. The first one is probably the best piece on finance I've ever read.

It literally answers all those questions any curious person who has ever made a trade might ask. On the other hand, John Hull's book gave me a fantastic introduction on mathematical finance from an applied point of view.

I highly recommend both if you are just getting started with trading. I believe we've reached a peak in the field of AI. We now have both powerful machines and enough data to process. With this in mind, my inner engineer got excited at the possibilities of tackling the market with today's advancement in technology.

Besides that, I have an addiction for creating fascinating projects and this was no exception. The huge advantage is that you are not necessarily starting with a handicap against the big trading firms. That's because when it comes to stock trading, even microseconds could make trades go wrong — such as your bot falling victim trade bot how does it work a faster bot's bait offer.

And guess who owns the faster servers and bots? With cryptocurrencies however, these small time increments are not nearly as important. Although I believe it's the golden age to be in the Bitcoin market because it's imperfectI quickly abandoned the idea maybe too quickly?

Without boring you with technical details any longer, the solid trading APIs were mostly based on REST, which is not fast enough for what I was aiming for.

For proprietary reasons I will abstain from publicly discussing a lot of details trade bot how does it work the technical implementation. Although I get many requests to open-source the project, I believe that disclosing deep details of the models or prediction approach would hurt the advantages that this solutions has over the other existing bots.

However, for anyone willing to learn more about that, I would be more than happy to discuss in private, to some extent. Long story short, I ultimately ended up going for the stock market, but not into high frequency trading in its real meaning. My bot holds a single position from seconds to minutes sometimes even hourswhich makes it more of an automated trader than a high frequency trader.

The reason behind this is that being an individual trader makes it extremely hard to compete with the big guys, as you're lacking perks such as very powerful hardware, advance trained software, and great locations for your servers. The closer to the stock exchange you are, the faster you receive the information. Large investment servers are literally paying millions to get their servers a few trade bot how does it work closer to the trade bot how does it work.

Their limitation is 3 requests per second, and this was more than enough for my new strategy. Getting solid historical financial data isn't cheap, and with so many people hitting the providers to scrape and download data, I don't blame them for limiting the offered information.

Intrinio is a good provider for real-time stock quotes at very inexpensive prices. However, getting access to more in-depth data would always yield better results. I built the first prototype in a little under a month. I was working late hours, trying to find time around my daily job as a freelancer.

At this point the bot wasn't very smart. It took me trade bot how does it work 2 more weeks to feed it with data until my error rate was satisfactory, and another 2 weeks to test it before putting it in production.

Summed up, the technical implementation of the current version took about 4 months, with some more improvements along the way. Since I publicly announced itI've been receiving dozens of offers from trading companies. At the moment the system gives me an edge over other traders.

If I sold it, I'd be giving this advantage to other traders and, subsequently, losing my lead. Although I do not exclude a future buyout, I am presently focusing on improving the product and trying to scale it. One of the things that I plan on doing soon is increasing the capital and therefore putting the bot through more trading volume.

There are tons of improvements I have in mind, especially on adjusting the position-holding time span, as well as solutions to make it more lightweight, facilitating larger volumes. I wasted way too much time trying to apply high frequency trading in Bitcoin. At first the idea sounded great, but I was soon facing a lot of technical issues trying to scale the amount of requests.

However, I am not yet convinced that it's impossible to achieve true HFT with cryptocurrencies, so it might be something I come back to in the future. After drifting away from the idea of HFT due to the technical limitations, I looked into a more analytical approach in automated trading. Most trade bot how does it work those concepts couldn't be applied in the Bitcoin market, as trade bot how does it work highly unpredictable, making it hard to shape the models around it.

That's when I decided to stick to the stock market. Another big mistake in the beginning was relying too heavily on models. Instead of trying different approaches in analyzing the data I had, I relied solely on the models for identifying profitable patterns without investing time into other more direct solutions.

Models are only simple real world abstractions, and my common trade bot how does it work has saved me more than once. Now this is not by any means a reliable metric, and there are many factors that affect it. The bot has not been tested enough to guarantee that this isn't just a fluke it might as well be.

Large investment trade bot how does it work companies would do anything to achieve those statistics, and I'm sure I won't keep up that amount of success in upcoming trades.

The success so far was also greatly impacted by the favorable market conditions, chosen stocks, and the fact that the bot was running intermittently.

I learned this the painful way. Not too long ago the market went pretty crazy, and I'd be lying if I said that I wasn't expecting some major crashes of the trade bot how does it work I was trading.

Although my stop-loss saved me from some brutal losses, had I not stepped in at the right time, the bot would've ruined all the profit from the past months. That event really got me thinking, and I decided to stop it running for a few days until I fixed that loophole. This was also a great learning experience for me, and I believe that trade bot how does it work going through those ups and downs, I would've never managed to get the algorithm to where it is today.

I have no regrets losing time on Bitcoin, as it gave me a deeper understanding of how cryptocurrency trading works, which might prove useful some day. Probably my biggest single advantage is being a starry-eyed young dreamer. To some extent, this allows me to believe enough to put effort into ideas in that others wouldn't.

That's what motivated me to persevere in trade bot how does it work those "backdoors" in the market. While many people believe individual traders don't stand much of a chance against the well-equipped companies, I am here to prove that with the right implementation there still is plenty of space in the market. Another immensely helpful resource were the public research papers available online. In fact, I got tremendous help from papers published back in I often found that most of them are easily overlooked, although they contain super useful analyses.

Being a workaholic has also contributed a fair amount to this success. I have no issue whatsoever working hours per day. With time, I developed a very productive and consistent lifestyle, managing to get rid of most distractions.

This allowed me time to invest in polishing and researching the different trade bot how does it work for this project. If you've worked your butt off to build something and give up on launching it, no one will care about it. We live in a very capitalist society where people will judge you based on real results. No one cares about your initiative and the reasons why you didn't launch. As Sam Altman says, nothing will excuse you for not having a great product. However, not having anything is certainly worse than that.

Don't make it perfect from the first version. Test the market first, gather tons of feedback and constantly iterate over your idea. Although this is not necessarily a customer-focused product yet? Side projects allow you to experiment on crazy ideas without being labeled as crazy.

And definitely go for the craziest idea you have in mind. That's how most of the successful companies started talk Facebook, Uber, AirBnb. Every problem has a solution. You just have to be creative enough to trade bot how does it work it.

I am currently available for freelance work. You should join the Indie Hackers trade bot how does it work We're a few thousand founders helping each other build profitable businesses and side projects.

Come share what you're working on and get feedback from your peers. Not ready to get started on your product yet?

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32 comments

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In depth explanation of what I believe is the actual trading bot in BitConnect and why it might not be a scam after all. I have recently learned of BitConnect like many others. By looking into other cryptos that offered alternative and innovative ideas.

Ever since then, I have been almost obsessed with trying to understand its incredible returns and find out if this is a typical Ponzi Scheme. I've been reading loads of information on forums and sites and watching tons of videos on the subject. I have come to believe that I think I finally understand how BitConnect functions.

And this is my attempt to explain it. I have encountered many different reasons why people believe BitConnect is a Ponzi Scheme. Because of this, I will be mainly addressing the arguments on this article. I also address some other arguments that were not included in his article but that I found, appeared quite often in Forums, Videos and Comment Sections around the web. The money is made with a cryptocurrency trading bot they have created.

And I believe this is exactly what is doing. Unfortunately, while claiming that BitConnect is not innovative enough, he does not mention other promises. Some that came true and some that are still to happen. The only thing this claim actually proves is that they did not hire some individual with good grasp of the English language to write their website content. Too good to be true returns. So far BitConnect has been producing these returns.

So a too good to be true return is only a truthful claim the moment that those returns are not met, just because they are too good to be true does not mean they are not true.

And yes, I am aware of the fact that ponzi schemes work until they stop working. But I'm only mentioning this because this is not a valid proof or at least not yet that BitConnect is a ponzi scheme. They don't ask for BCC, their own currency, they ask for Bitcoin!

Because their currency will become worthless as soon as they close down the site, but Bitcoin will still be valuable. Because their currency will become worthless as soon as they close down the site? The claim that their currency will become worthless as soon as they close down the site is not true. The currency will become worthless as soon as people stop using it. People can still mine and use the currency if they close the site tomorrow.

The wallet is out there for any to use, and miners are still mining the bcc. Either through PoW or PoS. The only thing that will be worthless if they shut down the site tomorrow is all those returns on investment and the great majority of bcc's in existence.

That is, if they don't trade them on some other Exchange. You buy BitConnect with your Bitcoin from their exchange, with other Bitconnect holders. This is very important to realize. Anyone can trade BitConnect for BitCoins and vice versa. The developers do not have exclusivity like this article seems to suggest. The market is volatile, price goes up and down according to demand. Just look at BitConnect's trading history. The interest is paid in Bitcoin.

And this is the most important part of it all. So important I will repeat it again slowly:. I believe this is almost correct. Another very important clue. This helps to bring a ton of people to the site. It's a snowball effect: The funds of new users are used to pay the old users.

Almost everything is correct here. Their marketing strategy functions exactly as stated, except for one thing. To claim the funds of new users are used to pay old users is just speculation. There is no actual proof this is what is happening. They also have a ton of Bitcoin to sell, but at this point it's worth a lot less than the total amount of BCC they have.

They then disappear with all of the money. Again these are unfounded claims but at the same time they pretty much explain exatcly what potentially could make this system work but fails to realize that. Are ICO's a big ponzy scheme? What if the bots, are actually doing their job. According to BitConnect's website. This is what the TradingBot does: The Bitcoin Price Volatility Software calculates interest in real-time for you, so you can monitor profit at any time.

Increased volatility means there is greater uncertainty on the returns of your investment. Again, let's pay attention to what it says: Nothing else nothing less. And to give people credit, it pretty much, says nothing at all. If this was lost in translation, or if it is deliberately meant to mean nothing is unknown. Probably the latter I suspect. The interesting part is what they claim in another part of the site: Again we are back at the trading bot.

Now if this trading bot exists. How could it be that we don't see it trading on major exchanges. This is another claim as an argument why BitConnect is a scam. What if the thing that keeps BitConnect relatively stable while other coins are fluctuating like crazy, is the actual Trading Bot? The great majority of people flock into BitConnect because of the promises of great returns.

Thegrinder actually explained quite well, how the system works when he said. Who do you think is probably buying your Bitcoin when you trade it to bcc on their exchange? Who is taking your bcc after you lend it for profit based on fiat? And while doing it, sharing a small amount of it's profits with the rest of us?

That is a fold increase in its value in less than 8 months. This tells me 2 things. Either we are talking about massive whales involved in BCC. And these guys are not lending their money back to the bot for insane returns.

Or another option, which I think is more likely, is that these are all the bot's bcc. If these are the bot's, the only reason I can imagine they are sitting in wallets with only 5 transactions in each, with each transaction happening 1 month from each other is because these accounts are staking the coins.

Obviously these are not all the coins the bot potentially has, after all it would not be able to perform its daily trades if it kept all its coins locked in 7 wallets. If we take just the 1st address, the one that contains 1,, bcc.

In one month that one address will generate in today's bcc value proximately 6 million dollars in PoS. But it does not end there.

Remember our good old friend, the compound interest. Well, staking also works that way. But the bot knows it can stake those coins for a minimum of 4 months, cause that is the minimum time it will hold your coins for. Well at the end of those for months the bot will have generated a total of , new bcc. That is a Now let's not forget that this is just staking gains. Only that the bot now knows for a fact that, that initial investment will be locked in the system for at least 4 months.

The bot never promised you your 20, bcc back. It promised your 10, fiat dollars back. Which if locked for 4 months would be worth around a mere 2, bcc by the time it had to return your initial investment. What about the daily returns you might ask.

Well, there are 3 options you can do with those daily returns. BitConnect loves when you do that. That way the money is just parked there while the bot makes more money with your initial bcc. Trade to bcc You are forced to do this option if you want any other options. Well, guess who is more likely to be selling these bcc to you?

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