The application of artificial intelligence (AI) can be seen in many industries today. And of one of the many industries is blockchain and crypto. AI crypto trading bots can help investors time the crypto peaks and falls to an extent. Crypto traders can use AI-powered trading bots to navigate market volatility.
You can get optimal trading outcomes with AI crypto trading bots, as they monitor crypto markets 24/7.
How Do AI Crypto Trading Bots work?
AI crypto trading bots are programs or codes that are designed to execute crypto trades automatically. These computer programs buy and sell crypto tokens at optimal times for their users. Investors have a wide range of assets to track and can benefit from these automated programs.
Users can make crypto trades 24/7 from anywhere using AI crypto trading bots. These bots are agile enough to take advantage of crypto price fluctuations.
There are different types of AI crypto trading bots. Some of these are mentioned below.
Grid trading bot: This AI trading bot allows users to trade crypto within a specified range. This crypto trading bot enables you to buy low and sell high. All that crypto users need to do is input their trading range.
Dollar-cost averaging (DCA) bot: This bot uses an investment strategy of laddering buys and selling them at the most optimal time. It reduces the average holding cost by using more investment funds to buy after each dip in the crypto market.
Rebalancing AI trading bot: You can choose this trading bot if you are optimistic about multiple crypto tokens. Crypto investors willing to hold their assets to gain value appreciation usually choose this bot to achieve desired trading results.
How do I Build a Crypto Trading Bot?
This article will show steps to integrate artificial intelligence (AI) and machine learning (ML) to create an AI crypto trading bot.
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Project Planning
You require meticulous planning to successfully build a crypto trading bot. You need to define requirements such as how to use AI and ML to differentiate your bot. You will also need to select data sets for training the trading algorithm. Other factors are designing the system, development, testing, and deployment.
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Choose an IT Infrastructure Solution
Users need to choose the right IT infrastructure solution based on their project requirements. You can use a managed cloud service provider like AWS, which will take care of most of the IT infrastructure management. If you plan to make a web application, Javascript could be a good choice to code the front end. You can also use open-source frameworks such as React.js and Angular for coding the front end.
Node.js is a popular open-source runtime environment to code the back end of your web app. Users can use the popular Python programming language to code their AI and ML software.
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Work With the Right People
You will probably need a team of designers, developers, and testers to build an AI crypto trading bot. So choosing the right team is vital to successfully executing this project.
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Prepare Data for Training and Testing the Crypto AI Trading Bot
There are a few steps to prepare data to train and test your crypto trading bot.
- Collect data: You need to collect data from multiple relevant sources. This data should include trade and market data, and data from the top exchanges.
- Analyze data to create profiles: You should examine the collected data to look for trends, incorrect and missing data points, and quality issues to stop biases in their system.
- Input variables and feature engineering: Your algorithm should be able to understand imported data better by identifying patterns in the data set. You will need to perform feature engineering on your trading bot to see patterns in the data.
- Document every step to have a repeatable process: Documenting data preparation tasks can help in developing your bot, as you will need to repeat these tasks frequently.
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Implement a robust security solution
Users need security when trading in crypto. You have to look at a few factors when creating an AI trading bot. You should not rely on passwords alone; multi-factor authentication can make the system more secure. You should also integrate features like digital signatures and encryption. You can also incorporate features like authentication into secure APIs.
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Review and test your AI trading bot
Ideally, you should find bugs early in the development cycle. You can undertake backtesting before and during bot development to ensure the correct crypto trading model. Alternatively, you can hire experienced developers to test your bot for weaknesses. You can deploy and use AI trading bot once the testing phase is over.
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Conclusion
AI trading bots work well as long as you configure them correctly. It is necessary to rigorously test your crypto trading bot to guarantee that it will make profits. AI crypto trading bots have proven useful for increasing trade profitability and efficiency. These AI bots improve crypto trading speeds and eliminate human errors. A well-trained trading bot can track crypto markets efficiently and help you take advantage of the crypto market’s volatility.
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Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.