Paired with the right intelligence, crypto bot trading is very effective. This video shows how to optimize your auto trading using liquidity to reduce slippage.

Bot trading helps remove emotion, replacing it with a systematic approach. It also is the true test of your strategy as you should have no human interference.

However, you may find that sometimes your actual trade results don’t match the raw results of the model or algorithm you’re following. Generally, the reason for this is “order slippage.”

*Links referenced*

Related post: https://crypto-ml.com/optimize-crypto-bot-trading-liquidity/
Trade history: https://crypto-ml.com/trade-history/
Exchanges by trade volume: https://coinmarketcap.com/rankings/exchanges/
Exchanges by liquidity: https://coinmarketcap.com/rankings/exchanges/liquidity/
Binance pair liquidity: https://coinmarketcap.com/exchanges/binance/#markets
Coinbase Pro pair liquidity: https://coinmarketcap.com/exchanges/coinbase-pro/#markets

Notes-

*Large spreads (low liquidity)*

The fewer people trading something, the less likely you are to get the price you want. You see this on exchanges by looking at the difference between the bid and ask prices (the spread). Spreads are wider with:

1. Unpopular exchanges
2. Unpopular trading pairs

*How to optimize your crypto trading bot order execution*

Now that we understand the problem and some of the root causes, here are solutions.

*1. Choose an exchange with excellent liquidity*

The first step is to pick the right exchange. You need to do this based on many factors, including trust, reporting, track record, transparency, and more.

Crypto is fairly unregulated, so there are sketchy exchanges out there and people have lost their money. Be cautious.

Crypto-ML Auto Trade works with Coinbase Pro and Binance. This provides worldwide coverage with two of the best names in the business.

Once you have a shortlist of trustworthy exchanges, look at volume numbers to determine liquidity. Coinmarketcap provides the best data to do this: https://coinmarketcap.com/rankings/exchanges/

As we can see here, Binance ranks #6 in terms of trade volume over the last 30 days at $28 trillion.

Coinbase Pro ranks further down at $4 trillion.

Based on this metric, Binance does about 7 times the trading volume of Coinbase Pro.

Coinmarketcap also has created its own Liquidity value. This is because it does not trust reported data from exchanges.

Looking at its Liquidity measure:

- Binance comes in #3 at $54 billion.
- Coinbase Pro comes in #6 at $16 billion.

They are both in the top 10. By this measure, Binance is about 3 times more liquid than Coinbase Pro.

Strictly speaking, more trades are happening at Binance but both exchanges perform well.

*2. Choose the most liquid trading pair*

Now that you have an exchange, it’s time to pick your trading pair. Just like with the last decision, there are more factors to consider than just liquidity.

You should choose an asset to trade that you believe will be moving in the direction you want. You should understand it and have a good feel for its history, news, and movements.

But assuming everything is equal between, say, Bitcoin and Litecoin–which should you auto trade?

Liquidity is the answer.

As you can see, BTC/USDT trades at a massively higher volume than any other pair. There’s about 43x the volume of BTC/USDC. That is great to know.

With all else being equal, we can now recommend your crypto trading bot should work on BTC/USDT in order to minimize slippage.

We have a similar story here. One pair accounts for a huge proportion of the trading. At Coinbase Pro, BTC/USD is the pair to trade. It gets about 14 times the volume of BTC/USDC.

*Conclusion*

To optimize your auto trading, there are several key variables you can manage. By taking these steps, you will see better, more consistent results. Your actual performance will more closely match your model or algorithm’s recommendations.

Want to check out Crypto-ML? We have free accounts and free 30-day trials on any of our paid accounts. Check out Crypto-ML pricing and plans here: https://crypto-ml.com/pricing/

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Balancer is a decentralized exchange (DEX) that mainly provides two services, decentralized trading and liquidity pool. LBP (Liquidity Bootstrapping Pools) is a liquidity pool on Balancer that allows items to issue tokens through it.

Thus unlike a standard pool, with a Balancer LBP there are two ways the price can change: there’s a constant downward pressure on the price from the variable weightings, but this price will be bumped up every time someone makes a trade.

Please watch the video to find out more!

Timestamps:
00:00 - Intro
00:30 - What is an LBP?
01:38 - Price movement in an LBP
03:24 - Pool weightings explained
04:01 - Upcoming illuvium token sale on Balancer
04:44 - Preparing for an LBP
05:15 - LBP Tips and Strategies
07:40 - Final comments & Outro

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