Market-Making Bot: How to Choose, Customize, and Set-Up

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Crypto trading bots are technologies that allow crypto traders to customize a trading medium where their trading strategies are executed automatically at any time of the day. This technology has become popular in the cryptocurrency market and is dubbed “market-making bots”.



Market-making is the act of buying and selling of digital assets to make a profit from the disparity between the bid and offer prices.

Market-making is usually carried out by banks, brokerages, hedge funds, and other proprietary trading entities. However, crypto trading bots are beginning to facilitate increasing numbers of market-making orders, which is a clear indication that the use of this technology is on the rise.

How to Choose a Market-Making Bot

When it comes to choosing a crypto trading bot that can carry out market-making tasks, there are some key features you need to look out for which includes a sound reputation, adequate security of the bot, possession of quality features, adequate customizability, and affordable pricing.

How to Customize a Market-Making Bot

Even though the customization and set up process differs across market-making bots, the steps listed below will assist the user in navigating their market-making bot regardless of the software being used.

1- You need to sign up: Once the user has selected their preferred trading software to build their bot, the user will be required to register and then log on to the platform.

2- Select your currency pair: The user will be required to choose a digital currency pair for which they desire the bot to market-make.

3- Decide on the level of aggressiveness: In the market making context, aggressiveness is the mid-price level the user might prefer their bot to trade.

4- Implement risk management measures: Normally, the trading bot software comes with some risk management criteria, like stop-loss limits and other automatic mechanisms that guarantee the protection of the user in situations of sudden and steep price drops and spikes.

5- Run backtests: a lot of crypto trading bots provide testing options for the user to try out their trading strategies with previous historical prices.

6- Live testing: whether or not the trading bot comes with a backtesting option, the user will still need to try out their strategy in live market conditions to see how their strategy fares.

7- Capitalize the bot: once the user is satisfied with the bot’s performance, there is a need to capitalize on the software to begin the profit-making venture.

8- Go live: obviously, the next thing the user will need to do is to launch the bot software.

9- Monitor the not: Finally, the user has to monitor the performance of the bot. Even after the backtesting process, the user is still expected to observe the bot’s operations to decide whether it needs tweaking or not.


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