TradingBot series — 5 reasons to build your own trading bot

In this post, we introduce where a trading bot should be better than a human and why you might want to build one yourself

Reason 1 — A systematic strategy

However, the systematic approach needed to develop trading bots is very helpful in making consistent profits:

  1. Identify and code up indicators and promising algorithms
  2. Backtest the strategies scientifically across multiple markets, time periods and market cycles
  3. Set the bot paper trading and then move to live trading once it has proven itself and the bugs have been ironed out
  4. Tweak, make improvements and repeat

This gives bots a great advantage —imposing a systematic cycle and scientific approach.

Reason 2 — Scan more assets

This is a skill that bots need to take advantage of in order to create consistent profits. It allows the bot trader to be more discerning in which trades you take. The bot allows you to look across a much wider set of assets to find the most attractive needles in this much larger haystack of assets.

Reason 3— Unemotional

On the other hand a bot is completely unemotional and systematic. The human work is the interesting bit of identifying profitable algorithms, backtesting them, paper testing them and then letting the bot run. Unemotional traders are usually better traders.

Reason 4 — Run 24/7

In contrast, the bot can sit in the cloud and grind away day and night, collecting the market data, setting orders and managing positions.

Reason 5 — a full workout as a coding project

  • Interacting with exchange APIs and Telegram APIs
  • Front-end development for your bot’s web app
  • Database design and structuring
  • Code refactoring — vital to avoid the bot codebase becoming spaghetti
  • Testing
  • Security — you really need to secure your API keys
  • Deployment in the cloud
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Photo by Japheth Mast on Unsplash

The Trading Bot Series covers our project, building a complete trading bot using Python, exchange APIs, Backtrader and Telegram

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Insurance meets tech meets music. #insurtech

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