How OrbitSoft automated cryptocurrency exchange trading with a bot

Traders profit on exchanges from exchange rate difference

Traders are active participants on exchanges. They monitor exchange rates, and conduct buy and sell transactions to make a profit.

Objective: to create an algorithm for trading on cryptocurrency exchanges

In 2017, an American company approached OrbitSoft to develop a bot for cryptocurrency transactions. The task was to automate the buying and selling of cryptocurrencies on an exchange for profit.

  • Constantly monitor the market to buy currency at a favorable price
  • Submit orders to buy and sell
  • Transfer money to different exchanges where the desired cryptocurrency is traded
  • Collect analytics on transactions, and forecast price changes
  • Send reports to the customer regarding transactions

Solution: development of an algorithm for transactions, data analysis, and reporting

OrbitSoft provided the customer with a complete solution that automatically buys and sells cryptocurrencies on different exchanges using an API. The system consists of 3 modules:

The system uses a strategy of arbitrage and triangulation

Exchange arbitrage — consecutive trades that generate income from price differences on different exchanges.

Compares not only exchange rates, but also exchange commissions for transactions

The exchange commission must be deducted from the profit on the trades. It can range from 1 to 15% of the profit. The bot takes into account the amount of these commissions when calculating the efficiency of a transaction.

Receives data and calculates spreads within and between exchanges

On a regular basis, the bot requests tables of orders from exchanges for specified pairs and then performs analysis. The results are stored in the database and are available for display on a chart.

Receives data and calculates spreads within and between exchanges

On a regular basis, the bot requests tables of orders from exchanges for specified pairs and then performs analysis. The results are stored in the database and are available for display on a chart.

  • kraken.com
  • bittrex.com
  • bitfinex.com
  • binance.com
  • poloniex.com
  • hitbtc.com
  • livecoin.net
  • dsx.uk
  • bitstamp.net
  • gatecoin.com
  • bitmex.com
  • xbtce.com
  • cryptopia.co.nz

Predicts the likely price and analyzes available volumes of currency

To perform an arbitrage strategy, a trader determines the market prices for a given volume of cryptocurrency. The algorithm predicts the price based on order analysis. It takes into account hidden orders, and stop-loss and take-profit orders. It analyzes buy and sell offers in the order book, and the available volume of currency.

Can simultaneously place, cancel, and check the status of orders on an exchange

The bot works with the following types of orders: market, limit, fill, or kill. The a priori order of the market type is used. If it is not found or not supported, the bot applies fill or kill or limit.

  • kraken.com
  • bittrex.com
  • poloniex.com
  • hitbtc.com
  • livecoin.net
  • dsx.uk
  • xbtce.com

Solves problems with cancellation, or failure to place an order

The following problems may arise during the bidding and execution process:

Presents analysis and reporting in a convenient, clear form

The bot shows spreads and order bases in the form of a clear graph.

The chart can show the spreads on exchanges, and between exchanges, as well as order books with analytics for the period, sorted by transaction volume
Examples of reports on progress and execution of orders on an exchange

Conditions and restrictions of the algorithm

The proposed solution is effective under the following conditions:

  • Volume of the spread between exchanges as a percentage exceeds the total commission on transactions
  • Convergence and divergence of spreads within an acceptable time frame
  • Necessary volume of trading on exchanges to conduct transactions and execute orders at specified intervals of time
  • Exchange rate difference between currency pairs exceeds the commission for transactions with orders on the exchange
  • Required number of currency pairs on the exchange
  • Necessary volume of trades on exchanges for carrying out operations of execution of orders in the given intervals of time

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