What I've learned after 3 years building an algo trading bot

[mrkfdr]

Writing a state of the art code is the easiest part.
After Looking at the waves of the stock market at the first time with Zero knowledge in trading, stocks or finance, said to myself "I can write a code that will buy here, sell there and make a profit on the way. I'm not a trader and no way I'm sitting in front of graphs all day clicking buy and sell buttons."
That was easy to say being a software engineer who built numerous high performing platforms filling roles from programmer to CTO most of my life.

DYOR
The vast majority of the influencer's, podcaster's, youtuber's, tweeter's siglangroups and other shamans claiming to show you how to make money, don't know shit.
To distinguish between them you will have to listen to lot of them in order to understand what topic you should learn and understand the bits and bites of. it's an essential part of learning and there are no shortcuts.
The real people who influence this market, don't talk about it on the web but you can read their action in the exchange during drastic market changes.

Bitcoin,the most volatile market.
Once you ride this horse, others are easy to handle.
Focusing on one market to understand everything from A to Z is important. Once one has the full knowledge, it's easy to implement it on different markets.
TA's are nice but it's analyzing history. They can predict nothing. All they can tell you is what happens till this moment.
Neural Networks (AI) is subjected to what you teach the machine. if you teach historical data the output is useless.

There are tons of data out there, the ability to analyse and cross reference it in real time and decide on an action is the key part of this whole automated system, an advantage only a machine can do and it's all about data progressing.
What is the right data to make decisions upon? DYOR.

Manage losses is the only thing matters.
Bots make money all the time, but they also loose. How much they loose is up to your risk management strategy.
The key is not loosing more then earning over pre defined period of time.
To set up a profitable good risk management strategy you have to have a good understanding of the entire eco system.
You can make 90% win rate and then with one open position during a drastic market change , you can loose more then you made.
There is no such thing as not loosing a position once in a while. no matter how good your analysis is.
It's all about balancing the portfolio and not about a single position.

It never stops
-The Good.
Bot is acts like 'The Terminator'. Doesn't feel pity, remorse, fear and never stops till it's pre programmed plan complete.
Qualities like these are hard for traders to master.
-The Bad
Even the best designed autonomous car crashes sometimes on some unpredictable scenarios.
Good risk management will keep you running after recovery.

Development and learning never ends.
programming, security, databases, cloud, VPS, statistics, signal analysis, algorithms, real time processing, finance, investment, funds management, regulations, accounting, risk management, legal are just part of the topics one has to master.

ROI
Invested three years of living and gave up three years of income as CTO.

Was a he'll of a ride, one of the best, definitely do it again.

[1715428814]

1715428814

[1715428814]

1715428814

[1715428814]

1715428814

[1715428814]

1715428814

[crwth]

It must have been a great ride because coding something like that would be quite hard. And as you mentioned, "state of the art code" would be a fantastic feat because you can sell it, and if there's something special to it, it can bring you even more money. With all the things you've learned, I think most people would have different views, and there would even be more diversity in beliefs, so DYOR is one of the essential things you have covered, IMO.

[dothebeats]

Your insight on neural networks and historical data is on-point. I've watched a video wherein they tried to train an AI to trade and hopefully profit off of the bot. Turns out, using historical data on highly volatile markets as a reference for the bot will only end up in shambles, as it will always try to find and match certain patterns that it has recognized on the historical data and try to correlate it with the present, which for the most part does not really makes sense. I'm amazed with how trading bot creators, especially those which are mostly profitable, create their bots in such a way that it will ignore past trends and try to make sense of what's in front of it. I'm a coder myself but I'm on the lighter side of coding and I only do it for fun. If I were given a chance to study again, perhaps it will be AIs, machine learning, neural networks, and the deeper side of comsci just to try and 'understand' how you guys do it.

[Thekool1s]

Your insight on neural networks and historical data is on-point. I've watched a video wherein they tried to train an AI to trade and hopefully profit off of the bot. Turns out, using historical data on highly volatile markets as a reference for the bot will only end up in shambles, as it will always try to find and match certain patterns that it has recognized on the historical data and try to correlate it with the present, which for the most part does not really makes sense. I'm amazed with how trading bot creators, especially those which are mostly profitable, create their bots in such a way that it will ignore past trends and try to make sense of what's in front of it. I'm a coder myself but I'm on the lighter side of coding and I only do it for fun. If I were given a chance to study again, perhaps it will be AIs, machine learning, neural networks, and the deeper side of comsci just to try and 'understand' how you guys do it.

IMO you shouldn't be amazed at all, most of the retail bots are pure garbage. They are just a bunch of ifs and else statements that utilize the same ol' useless Indicators and shipped as AI. The issue is these "bots" are merely "tuned" to the "most profitable" settings they have found through brute forcing through historical data. If MACD does this and RSI does this and the 50 MA crosses this and the next candle is bullish trigger buys. The issue is everyone looks at the market through a certain lens which is through indicators if you are a neophyte and through volume profiles/Delta and VWAPs on the "Professional" side of things. The biggest issue is that both of these lenses are broken in themselves.

So no matter how good of a programmer you are, you are going to have to write or train your model with what this lens tells you. The only real advantage a bot will have over a human, in this case, would be of ability to run round the clock, it will be able to execute more trades than a human but won't change the outcome in the long run, if the lens is busted. What this industry needs is a new lens / a new perspective which will be able to counter what everyone else is doing. Wyckoff referred to it as the composite man/Operator. If you ask me personally I believe it is the case, the Composite man is the FED (Central Banks). People are made to believe that they can push the price around of their respective currencies by buying and selling while the commodity they are trading isn't owned by them. The currencies are the commodities of the Central Banks, they can set the price to whatever level they want. Just like Apple sets the price of iPhones, the Central bank can set the price of their product to whatever level they like. IMO whoever can track their footprints can beat the market.

[palle11]

I like you saying that bots make money but also losses but the amount of loss is what is determined by risk management. Yes many traders that are using bots throw caution away and they trade with high risk with believing that bots don't fail but the reality is they fail just like they profit, so what is the point? Bots are not perfect and are not easy to create. I believe in dyor and trading limited options so that you are in control of your trade decision.

[GreatArkansas]

(...)

IMO you shouldn't be amazed at all, most of the retail bots are pure garbage. They are just a bunch of ifs and else statements that utilize the same ol' useless Indicators and shipped as AI. The issue is these "bots" are merely "tuned" to the "most profitable" settings they have found through brute forcing through historical data.
(....)

Maybe the one you are mentioning about garbage bots or normal ifs and else statements are those script kiddies bots that are available online.
You forgot that there are some entities or big traders that have bot some different purposes and those bots are not ordinary, some of them already have machine learning (AI) integrated which over time, collects data or learn from past price actions and more accurate somehow or more precise but I believe it's still not 100% accurate all the time.

[pawanjain]

Wow, 3 years is definitely a good amount of time. It seems like you must have worked really hard on this bot.
But what happened eventually ? Is the bot ready for action or are you still working on it.
If it is ready then can you please post the trades or some info on it's ROI.
May be if it's giving decent profits then you can sell your bot to others and gain additional income for yourself.

[mrkfdr]

Wow, 3 years is definitely a good amount of time. It seems like you must have worked really hard on this bot.
But what happened eventually ? Is the bot ready for action or are you still working on it.
If it is ready then can you please post the trades or some info on it's ROI.
May be if it's giving decent profits then you can sell your bot to others and gain additional income for yourself.

The bot is proof of work and in production mode for more then a year now, meaning running 24/7 on real money. Makes monthly profit on the portfolio no mater what the price or trend is.
My focus was on creating a constant weekly, monthly profit over time, while the bot is totally autonomous, and it has to show has to show consistency of profit over time, Achieved both goals.

Gave some thought  on developing a user interface for it but at this time, i'm not into supporting hundreds or thousands of customers. maybe in the next phase - an autonomous user support..
 

[mrkfdr]

(...)

IMO you shouldn't be amazed at all, most of the retail bots are pure garbage. They are just a bunch of ifs and else statements that utilize the same ol' useless Indicators and shipped as AI. The issue is these "bots" are merely "tuned" to the "most profitable" settings they have found through brute forcing through historical data.
(....)

Maybe the one you are mentioning about garbage bots or normal ifs and else statements are those script kiddies bots that are available online.
You forgot that there are some entities or big traders that have bot some different purposes and those bots are not ordinary, some of them already have machine learning (AI) integrated which over time, collects data or learn from past price actions and more accurate somehow or more precise but I believe it's still not 100% accurate all the time.

Machine Learning is not magic,
The data you teach the machine will be the output of his learning:
good data in -> good data out
garbage in -> garbage out

there is no such thing as garbage in -> good data out

There are too many cases in the software industry where AI (prefer to call it neural network) is used as a marketing buzz-world just to show that someone uses the latest technology. 

The real  interesting topic here is the difference between the Baeysian method of learning and the classical scientific learning.

[Silberman]

Wow, 3 years is definitely a good amount of time. It seems like you must have worked really hard on this bot.
But what happened eventually ? Is the bot ready for action or are you still working on it.
If it is ready then can you please post the trades or some info on it's ROI.
May be if it's giving decent profits then you can sell your bot to others and gain additional income for yourself.

Once you work hard  in order to find a way to make profits out of the markets it is going to be very difficult to share it with anyone even if you charge money for it, the OP took 3 years in order to create this bot, so selling it is probably not a good idea right now even if it is really profitable, probably the best option for the OP is to profit from his bot and to keep improving it for years or even a decade and only once he has enough capital to create a business around the bot he may try to do so.

[Thekool1s]

You forgot that there are some entities or big traders that have bot some different purposes and those bots are not ordinary, some of them already have machine learning (AI) integrated which over time, collects data or learn from past price actions and more accurate somehow or more precise but I believe it's still not 100% accurate all the time.

I assume you are either referring to Quants or HFT (High-Frequency Trades) bots... HFTs are computer programs designed to fill in large amounts of orders, they aren't "trade" bots, and they aren't used to make money in that sense, Quants on the other hand are mathematical models like VWAPs based on Deviations. Again the job of the Quants isn't to hit those buy and sell buttons. Quant is a fancy term for "math", for creating statistical models. Once a model has shown profitability it's coded out just like any other bot. There is just too much misinformation about this industry... The 3rd types of bots that come to mind are a sub-category of HFTs and are used to fill large orders but for the firms and obfuscate large positions again nothing to do with the decision-making, the parameters are set by humans.

Also, I don't think the OP has anything great up his sleeve. It's a sales pitch nothing more, and a pretty lousy one. No one masters this market in 3 years especially if one has 0 knowledge about the market. What OP is pitching is equivalent to saying, I'm a great programmer but I haven't studied biology or gone to med school but I can program a robot to perform a complex heart surgery cuz I have "filled roles from programmer to CTO most of my life". As if any of those two have any relationship.

[GeorgeJohn]

Wow, 3 years is definitely a good amount of time. It seems like you must have worked really hard on this bot.
But what happened eventually ? Is the bot ready for action or are you still working on it.
If it is ready then can you please post the trades or some info on it's ROI.
May be if it's giving decent profits then you can sell your bot to others and gain additional income for yourself.

Once you work hard  in order to find a way to make profits out of the markets it is going to be very difficult to share it with anyone even if you charge money for it, the OP took 3 years in order to create this bot, so selling it is probably not a good idea right now even if it is really profitable, probably the best option for the OP is to profit from his bot and to keep improving it for years or even a decade and only once he has enough capital to create a business around the bot he may try to do so.

You are right because he will like to secure the information for personal use only, or before the information is been dispense or circulates maybe their will be an option of selling the methods of making profit if it happens to work properly, this is from my own perspective

[pawanjain]

Wow, 3 years is definitely a good amount of time. It seems like you must have worked really hard on this bot.
But what happened eventually ? Is the bot ready for action or are you still working on it.
If it is ready then can you please post the trades or some info on it's ROI.
May be if it's giving decent profits then you can sell your bot to others and gain additional income for yourself.

The bot is proof of work and in production mode for more then a year now, meaning running 24/7 on real money. Makes monthly profit on the portfolio no mater what the price or trend is.
My focus was on creating a constant weekly, monthly profit over time, while the bot is totally autonomous, and it has to show has to show consistency of profit over time, Achieved both goals.

Gave some thought  on developing a user interface for it but at this time, i'm not into supporting hundreds or thousands of customers. maybe in the next phase - an autonomous user support..
 

That's great but you still haven't mentioned the ROI because that's what grabs peoples attention.
It's good that you are gaining consistent profits but can you show us how much profits you are making a month.
It's hard to make money in a sideways and falling market.

[goldkingcoiner]

I dont know about you guys but I would never trust a bot to trade for me. There are just so many variables for which you cannot account for and if they should occur, your bot really will not know what to do next and might lose all or at least some of your money. Trading bots are made for convenience, not because they are actually better at trading than humans. After all, its your trading strategy just in a automated form. The convenience is not worth the risk to me.

And not all code can be seen as equal. Even if someone were to develop some amazing code which makes a lot of profit most of the time, why would anyone share/sell that to anyone? Would it not be better to keep it to yourself?

Not really a fan of trading bots, suffice to say.

[cabron]

^ Theres one bit that I tried playing around, it didnt work well for me. I profit from the beginning and then gradually losing more. The bot still follows the trend so if there is a bullrun thats when I make more money.  And will also lose when its bear. Conclusion is that, why bother using it. I'd be better doing it manually after all i'm addicted to checking crypto prices every minute.

[mrkfdr]

That's great but you still haven't mentioned the ROI because that's what grabs peoples attention.
It's good that you are gaining consistent profits but can you show us how much profits you are making a month.
It's hard to make money in a sideways and falling market.

4-6% /m

[yhiaali3]

So far, I have not found a trading robot that fulfills all my demands. There are good robots, but they lack a very important thing, which is artificial intelligence similar to human intelligence. I want a robot that thinks as humans think, meaning that it is able to take the appropriate decision in the event of market fluctuations as we humans do. I tried many robots but I didn't get a good result, I didn't try all the robots of course so I don't know if there is a real AI robot.

[AakZaki]

using bot app I think it is one of the things that do make some people to lose their money, one of my friend who use bot app complain to me that the profit is making through bot and the subscription of the app is similar and he will not advice any one to use such application for trading. So i don't know why some people is valuing the application

actually depending on the bot application used, there are some bots that do help to make the trader's job easier and there are bots that are used for full trading but have a high risk of losing. Trading bots are just for automation, but don't trust bots completely. many bots end up scamming and stealing funds from all their users, such as the fahrenheit trading bot and many trading bots that are very detrimental. it's good to learn technical analysis, trade manually using our own analysis, it will be better because we have full control for the funds we trade. Don't be fooled by the promise of big bonuses, it's just bait to get more people to use it.

[TimeTeller]

using bot app I think it is one of the things that do make some people to lose their money, one of my friend who use bot app complain to me that the profit is making through bot and the subscription of the app is similar and he will not advice any one to use such application for trading. So i don't know why some people is valuing the application

actually depending on the bot application used, there are some bots that do help to make the trader's job easier and there are bots that are used for full trading but have a high risk of losing. Trading bots are just for automation, but don't trust bots completely. many bots end up scamming and stealing funds from all their users, such as the fahrenheit trading bot and many trading bots that are very detrimental. it's good to learn technical analysis, trade manually using our own analysis, it will be better because we have full control for the funds we trade. Don't be fooled by the promise of big bonuses, it's just bait to get more people to use it.

Trading bots are good if you know how to program them right.
But if you want to learn the basics of trading first, you will trade manually.
This is also good for yourself to understand better this market.
In that manner, you can also develop your bot better.
When it comes to using other bots, be very careful as you don't know what they are programmed to.
There may be hidden commands that you are ready for. As much as possible, make your own trades, if bot is not really necessary.

[samcrypto]

So far, I have not found a trading robot that fulfills all my demands. There are good robots, but they lack a very important thing, which is artificial intelligence similar to human intelligence. I want a robot that thinks as humans think, meaning that it is able to take the appropriate decision in the event of market fluctuations as we humans do. I tried many robots but I didn't get a good result, I didn't try all the robots of course so I don't know if there is a real AI robot.

There are still bot that works good but since you have your own standard, you might find a hard time finding them. What worked with OP is that, he created his own system that can work for his own timeline and expectation, it took time before he saw some changes and it’s really good to see the result once you’ve done it. That was a great work OP, 3 years might be long to others but dealing with such numbers is not easy at all. I hope that bot can work perfectly in trading and maybe you can also have a licensed for that so other traders can also try it.