Development of a trading bot for trading on the Poloniex crypto exchange

The Poloniex exchange has been operating since 2014 and, according to Coinmarketcap, is included in the top 50 largest platforms for trading digital assets. It offers traders hundreds of currency pairs, low transaction fees ranging from 0 to 0.2%, as well as many convenient analytical and technical tools for efficient trading.

In this article, we will talk about how to increase the effectiveness of trading on Poloniex using bots – specialized programs for automating trading. We will also consider how exactly they work, what advantages they give to the trader and how the process of their technical development is built.

By definition, a cryptocurrency trading bot is a special program that connects to a trader’s account on a crypto exchange and independently performs the actions he needs. The main task of such a tool is to automate the work with the markets.

There are two main types of trading bots:

• Signal. They monitor the markets and inform the trader about the optimal conditions for opening or closing trades.

In addition, such bots are able to calculate the optimal lot size, manage risks and predict profits.

• Automatic. In fact, they perform the same tasks as the signal bot. The main difference is that automatic bots do not give recommendations, but open and close orders without the participation of a trader. That is, they work completely autonomously.

Using trading bots provides a trader with many benefits. Here are the main ones:

• Automation. A trader cannot work for a long time due to fatigue, emotional burnout and other reasons. At the same time, the bot is able to trade around the clock, without interruption.
• Speed ​​reaction. A bot reacts to any market changes much faster than a human, both to the appearance of a favorable situation and to exit signals. Therefore, with proper adjustment of the algorithms, it closes more profitable trades.

• Lack of emotion. Emotional burnout is often the main reason for losing a deposit. However, a bot, unlike a human, is not affected by this factor. He has no fear of loss, no desire to recoup or get more profit after a series of successes. He is guided by clear algorithms and acts strictly according to plan.
• Multitasking. The bot can work in parallel with several assets and perform several tasks at the same time. Accordingly, this significantly increases the efficiency of the trader.

Now that we have figured out what a trading bot is and how it improves the work of a trader, we can move on to the technical part. First of all, we will consider what technologies are used to develop such a tool.

Our team uses the CCXT library as the underlying technology. It is designed specifically for the development of crypto-bots, can integrate with dozens of cryptocurrency exchanges, including Poloniex, and also provides two types of API out of the box – private and public.

To work with CCXT, you can use different programming languages, which gives specialists a certain flexibility in the selection of technologies. In short, the stack might look like this:

• Backend part – PHP/Python/JavaScript languages (Node.js).
• Frontend part – standard JavaScript / HTML / CSS or reactive frameworks Vue.js / React.js.
• Mobile development — Kotlin/Java/Swift for native applications on IOS and Android, or Flutter/Dart for cross platform solutions.

When creating a bot, choosing the optimal stack plays a very important role, since performance, development speed, and product compatibility depend on it. Therefore, choosing technologies, our team always focuses on the features and needs of each specific project.

The technical implementation of a trading bot consists of several stages. Let’s consider the main ones in more detail:

• Collection of information. At the beginning of the project, the team studies the requirements, priorities, and vision of the client, and, based on the data obtained, draws up the initial technical documentation.
• Prototype. The next step is to develop a prototype. The main goal of this stage is to visualize the logic of the bot and understand exactly how it will function after the release.

As a rule, a mockup includes: interface warframes, block diagrams of the main models, a table with a description of the functionality and mathematics of the project – formulas that will be embedded in the code to perform calculations.

• Design development. Designers are working on the UI concept of the trading bot. Their task is to create a uniform, attractive and user-friendly interface. To achieve the best result, we usually offer the client several options for concepts.

• Frontend. Further, front-end developers are connected to the project, who create the client part of the bot. This stage includes layout, creation of animations, event handlers, graphs, tables and other elements that the browser can read or display on the user’s screen.
• Backend. At the back-end development stage, the server part of the trading bot is implemented, which is responsible for the safe storage and processing of data. In short, backenders write functional code, build a client-server architecture, connect the API and lay the logic of the project. To increase the efficiency of the trading bot, our team can also implement solutions based on neural network technology and AI.

• Testing. After the development is completed, the trading bot goes through several levels of testing, during which its readiness for release is determined and possible bugs are fixed.
• Technical support and development. Since the crypto industry is developing much faster than the traditional financial system, after the release of the bot, it is important to focus on its further and continuous development. To do this, we propose to connect the project to our professional technical support.

Today, there are many ready-made bots that are distributed according to the regular payment model. But in the vast majority, they do not take into account the individual needs of the trader and do not provide the necessary flexibility in setting up algorithms, and this is a big minus in professional trading. Therefore, developing your own tool always looks more preferable. Moreover, given the volatility of the crypto market, investing in the implementation of your own bot can pay off pretty quickly.

AVADA MEDIA has extensive experience in creating innovative solutions for trading and the blockchain market. For the development of such projects, we are ready to provide already formed teams of qualified specialists who will help design, implement and implement a bot that fully meets your needs.