Cryptol0gy Bot: Advanced

Automatic Cryptocurrency
Trading Bot

Advanced Data Analytics

Algorithms (32513)

Abhishek Dangi (12736625)

 Aim 2
Objectives 2
Expected Outcomes 2

Background 3

Project Scenario 4
Project Significance 4
Project Innovation 5
Action Plan 6
Research and training Phase: 6
Model Deployment 7
Deployment of the framework 9
Certification of Benefits and pricing the product 9
Timelines 10

Project Inputs 10
Budget 10
Infrastructure 10
Salaries 10
Totals 11
Personnel 11

References 11

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Aim
The underlying aim of this project is to design an Automated Transaction System that can
execute real time orders on a cryptocurrency exchange using trading strategies created with
the help of AI and Machine learning.

Objectives
The main objectives that needs to be completed in order to achieve the aim of the project are
presented below:

➢ Set up a server with high processing power and time series database to handle large

data which will be used for execution, technical analysis and back testing of the trades.

➢ Design and implement real time full duplex framework that can interact with

Cryptocurrency exchange API’s to send or receive transactional data in real time.

➢ Design, implement and train various AI and machine learning models on the server that

can provide price action signals based on various technical and fundamental analysis of
cryptocurrencies.

➢ Create a web-based platform that enables clients to interact and configure the trading

bot.

Expected Outcomes
Upon completion Crypt0logy Bot will offer its clients a web based automated trading platform.
Cryptology Bot will offer its users two different tiers of automation and feature level ranging
from Hybrid to Fully automatic trading. On this platform the clients will be able to connect their
personal cryptocurrency exchange account to our trading server using their preferred trading
exchange’s API. The platform will be able to monitor various trading indicators such as volume,
Bollinger bands, RSI and MACD of the trading data coming from exchanges.

Under the hood the trading bot will have latest and back tested deep learning data analysis
models that will use various AI and Machine learning algorithms on these trading indicators and
will predict the price action of the respective cryptocurrency. Using this price action signal the

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bot will than automatically execute an order for buying or selling of that cryptocurrency using
the clients account on the exchange.

From day one the platform will be ready to serve up to 1000 clients. All clients would be able to
choose their respective exchanges, cryptocurrencies and their order and risk limits. The trading
bot will work 24/7, 365 days and will execute and manage trades automatically on clients
behalf.

Background
Cryptocurrencies are the virtual or digital assets of the latest distributed ledger technology
blockchain. Each blockchain has its own cryptographic digital token generally termed
cryptocurrency which is used for carrying out secure and immutable transactions on the
blockchain. For instance, Bitcoin blockchain has BTC and Ethereum blockchain has ETH as their
digital tokens. The transactions made by these cryptocurrencies are verified and stored in the
blockchain using cryptography.

Since the beginning of these virtual assets the cryptocurrencies are being used as means of
exchange of goods, services and other forms economic entities such as traditional money.
Unlike traditional money these virtual assets doesn’t have any intrinsic value and as such the
value of the respective cryptocurrency is determined by the perception of users and as well as
supply and demand.

Since cryptocurrencies had traits similar to that of forex commodities such oils, metals and
share. Some new businesses started in the form of web platforms to facilitate the trade of
cryptocurrencies. These businesses are called cryptocurrency exchanges. Currently there are
more than 150 different exchanges that operate 24/7, 365 days allowing users all around the
world to trade cryptocurrencies for traditional fiats like dollar, Euros etc. as well as other
cryptocurrencies. The value of these cryptocurrencies have shown high volatility in the past and
hence millions of people have entered the crypto space to make their portfolios.

The everchanging price movement of these cryptocurrencies have left masses of traders
frustrated due to losses of both funds and time. Auspiciously, the development of automated

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trading systems like cryptol0gy Bot can assist the traders in making and passive income from
crypto space while freeing up time for their day to day jobs.

Trading bots in the crypto space are still a rare phenomenon and the latest state of the art
automated trading systems are presented below:

➢ Haasbot: Haasbot is an intelligent trading bot designed for trading professionals in the

crypto space. This system offers the clients three main trading features: Normal trade,
Arbitrage and Maximum orders. Haasbot is connected to the cryptocurrency exchanges
using REST API (Representational State Transfer)

➢ Gunbot: Gunbot is an automated strategy trading bot with trading strategies such as

Supergun, Bollinger band, Gain, PingPong, step gain and 1000 Trades. Same as Haasbot
Gunbot also interacts with the exchanges using REST API.

Project Scenario
Project Significance
The significance of this project lies with in 6 different aspects leading to efficient cryptocurrency
trading. These different aspects presented below not only helps any trader to maintain precise
trading but also helps the trader to achieve much needed discipline needed for consistency.

● Minimizes Emotions: Having your emotions in check can help the trader in sticking to

the plan. The automated trading bot trades on the clients behalf solely based on the
trading strategies derived from technical and Fundamental analysis. Thus helping the
traders in typical situations such as FOMO (Fear of Missing Out) and “pull the trigger”

● Ability to back test: Probably the most significance use case of the trading bot would be

that the clients will be able to back test their chosen strategies on historical market
data. This will enable the traders to get an idea of different loss and profit tolerance
scenarios that they can achieve using the various strategies of Cryptol0gy Bot and hence
choose the best strategy according to their need and portfolio. For instance trader can
get the rough estimation of average profit percentage of all trades per unit of risk.

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 ● Preserves Discipline: Discipline of any trader probably takes a hit when emotional

factors comes into play. Hence fear of taking a loss can blind the ability of a trader to
make the right choices. Using out automatic trading bot this type of scenarios can be
overcome in once.

● Achieves Consistency: The biggest test confronted by any trader is to strategize the

trade and trade the strategy. Even if the trader has a perfectly working strategy, sticking
to the strategy becomes a tedious task. But in the case of our trading bot it will always
keep the trade according to strategy whatever the scenario is, even if the strategy starts
to fail the trader bot will use its advanced AI Algorithms to overcome the situation and
overcome the consistency.

● Improved order entry speed: Since the Bot is directly linked to the client’s exchange

API, the bot can execute and manage the trade in real time. Hence when a high profit
strategy comes into play the bot will be able to get the trade faster than a normal trader
logs in into the exchange.

● Diversifies Trading: Cryptol0gy Bot will enable the clients to trade with multiple

cryptocurrency and multiple exchanges simultaneously. By diversifying the user would

be able to spread the risk over to huge number of trades as opposed to fewer number
of trades that trader might execute manually. Further the clients will be able to choose
which cryptocurrencies they want in their portfolios using simple cryptology Bot filters.

Project Innovation
The foremost innovation behind the project is the automation level itself. Upon completion
Cryptology Bot will be an AI and machine learning fuelled Automatic trading system that will be
able to execute and manage trades on clients behalf using fundamental as well as technical
analysis. The Data analysis algorithms will be trained by trading industries experts who will train
the model with their most profitable trading strategies. On launch the trading bot will be
connected to world’s top 5 leading cryptocurrency exchanges: Coinbase, Binance, Bittrex,
bitfinex and Bitmex. These exchanges are chosen partly because of their popularity and low

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fees and mainly because they offer third party WebSocket integration. Although, Most of the
state-of-the-art systems in automated trading space use REST API’s but REST API has a severe
restriction when being used for a real time trading system. REST API are based on HTTP
requests from the server and when the request is completed the overhead is closed and only
opens when new request is made. This integration between exchange and our server can cause
performance issue that is the reason we have opted to use the WebSocket API integration for
real time full duplex connectivity. This integration will allow increase the trading engines
performance and enable the trading bot to execute real time high frequency trading orders
according to preferred strategy.

Action Plan
In order to achieve the AIM of the project we need a plan of action which will achieve all the
objectives of the project in a systematic order. The project will be carried out in Four crucial
stages, each stage will have an output as a result and will need some input from the previous
stage. As with every Project the starting point of the project will be to hire the necessary people
from various disciplines that will carry out their respective tasks to achieve project completion.

Research and training Phase:

The First Phase of the project is about gathering a distinct summary of the technical
requirements that will be needed to accomplish the project. In project management footings,
the main objective of this phase is to explore and understand as much as possible the field of
cryptocurrency trading on online exchanges. The goal of this will be to achieve the necessary
knowledge about exchanges and the API’s they have implemented at their platforms. This
knowledge will be crucial in order to connect the cryptol0gy bot server system to online
exchange. For this task at least 6 individuals of IT discipline with good programming knowledge
will be required. This group of individuals will also create an outline of the server hardware that
will be required by the cryptology bot in this phase.

Furthermore, a team of 3 highly experienced High frequency traders as SME’s (Subject Matter
Experts) with knowledge and hands on experience in cryptocurrency trading needs to be hired.
Along with them a team of 6 data scientists with AI and Machine learning Acquaintance will be
required to perform a thorough research on State-of-the-art linear regression, AI and Machine

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learning algorithms. These individuals will be working in a 3-man teams consisting of 2 data
scientists partnered with 1 SME. These output of this research in future phases will be used for
analysing the various market indicators in order obtain various high profit trading strategies.
Along with the research the SME’s will also be tasked to train the Data Scientists so that they
can get on track on the crypto space in no time. This will help the Data team individuals to
develop a clearer view of the problem at hand. In this phase the teams will also define a model
strategy of three layers.

The research and training phase will be carried out for 2 months. The expected output of this
stage will be a showcase of adequate amount of knowledge about the tools, techniques and
problems present in the domain along with a clearer solution to them.

Model Deployment
Model Deployment will start as early as 9 th week of the project cycle. The Starting of the model
deployment begins with the research output of the IT team. The IT team will now split into 2
subgroups of three individual each the task handed to the first team will be the deployment of
the server with necessary specifications. After setting up the server this team will now begin the
exchange connection process one by one for each of the five planned cryptocurrency
exchanges. As mentioned earlier the exchanges will be linked to the server using WebSocket
API for 24/7 full duplex connection mode.

One the other hand the SME’s and Data Scientists and remaining IT team members will begin to
work on the design and implementation of trading bot. In this phase the teams will made as
follows 2 data scientists,1 SME and 1 IT software engineer. In model deployment phase each
team work on a layer already acknowledged in the research phase of the project. The structure
of the layers will be as follows:

● The engine layer: This layer will be the central layer of the Automatic trading system.

This part of the code designed by the team will incorporate order status, market data,
open trade etc. this layer will also be able to synthesize and send all the security and
trade execution and management data to the exchange using the WebSocket API. This
part of the program will be used for generating quotes and apply various strategies. In

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 the background this layer will be in constant search for strategies when they present
themselves using machine learning algorithms such as linear regression. This layer will
be trained by the SME’s in such way that when the RSI or MACD or StepGain or any
other indicator aligns with the previously discovered strategy. The bot will automatically
execute an order aligned with the strategy.

● The Adapter Layer: The engine layer would be unknown about the individual

characteristics of each exchange. Hence the adapter layer will assist the engine layer in
carrying out the bidding. This layer would house various trading strategy made using AI
and Machine learning based of Arbitrage and market making. The adapter layer will also
house all the states conveyed by the gateway layer.

● The Gateway Layer: Each exchange houses their own API for connection within the

exchanges website. This connection with the API is held with 4 different interfaces:
o IOrderEntryGateway: Manages updates to the orders and send and abandon
orders.
o IPositionGateway: Extracts real time trade position data
o IMarketDataGateway: Handles market and orderbook Updates
o IExchangeDetailGateway: Description of Exchange fees and naming structure
The code will be programmed in different languages. Majority of the code will be typescript
followed by HTTP and JavaScript for user interface. The connection between JavaScript
and Typescript will be made using Socket.Io and AngularJS.
The Server will interact each exchange using WebSocket API maintain a real time connection for
executing and managing the trades. Further the exchange will be connected to the
server using REST API’s for full reports of the Exchange trades. This data will be stored in
MangoDB created by the IT team. The data coming from this way will be processed in
the engine layer for possible trading strategy and back testing.

Generally speaking the model Creation is going to take somewhere around 7 months. From 1 st
month the design and testing of the model will take place. This process is estimated to be
completed by the 5th month of the project phase. Then 2 months will be utilized for testing and

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training and back testing of the model. Somewhere around 6 IT experts, 3 SME’s and 6 data
scientists along with a project manager will be involved in this phase of the project.

Deployment of the framework

Once the model is finished the model is ready to be deployed, but before the model is deployed
the project team needs to finish one more crucial part of the project the web-based platform.
This web-based platform will be the middle entity that will allow the client to interact with the
automated trading system. On this platform the clients will be allowed to manage their trades
using dashboards of their profit loss insights. Further this is the platform where clients will link
their respective cryptocurrency exchanges to the trading bot using their personal account API’s.
The clients will also be able to choose which cryptocurrencies they want in the portfolio and
how much value of each cryptocurrency. The clients will also be provided with strategy back
testing space with the portal along with the options to choose their risk and order values. To
smoothly go through this phase 3 developers will work along with the experts and carry out the
development of the UI of the system.

Certification of Benefits and pricing the product

The declaration of the advantages associated with the project and the various pricing plans of
the product is a crucial phase of the project and will require one moth of the project timeline. In
this phase the all the specifications and necessary documentation will be created by the project
team.

Along with this the pricing plans will be discussed. Practically upon completion the Cryptol0gy
Bot will be able implicate two types of Automation: Hybrid and Fully Automatic. Hybrid Level
subscription of the trading bot will offer client with trade signals and some semi-automatic
trading signals based on the strategies client chooses. While the Fully automatic Version of
Cryptol0gy Bot will be able to Execute various types of Advanced trades with contingency plan
as stop losses automatically without the need of interference from the client. These two
versions of the CryptoL0gy bot will be sold on Subscription bases with theoretical Value of 6000
AUD per year for Fully automatic and 4000$ per year for Hybrid version. Apart from this pricing
a 20 % of fees will also be charged on the profits that the bot makes.

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Another crucial declaimer that needs to be added in the product at this stage is clearly letting
the potential customer know that although Cryptol0gy bot is a high profit automated trading
Bot but it cannot guarantee profit as the world of cryptocurrency is a speculative space and we
cannot promise profit in these highly volatile markets.

Timelines
As already mentioned in the objectives in the above section the project is expected to be
completed within 12 months. The project will be carried out in 4 different stages presented as
follows:

❖ Research and training Phase: 2 Months

❖ Model Deployment: 7 Months

❖ Deployment of the framework: 2 Months

❖ Certification of Benefits and pricing the product: 1 Month

Each Phase has specific task for each team. The completion of each stage will be determined by
the project manager after confirming of the required outcome of each stage.

Project Inputs
Budget
The Budget proposed for the undertaking is presented in the table below. In the table below
the main categories have been highlighted using yellow fonts. The table in itself is self-
explanatory with Contingencies included in the final total.

Category Cost/day ($A) # Days Cost ($A)

Venue

Rent 500 350 175,000

Bills 25 350 8,750

Maintenance 15 350 5,250

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Infrastructure Cost (Each) Amount

Laptops 2300 25 57,500

Servers 10000 2 20,000

Screens 330 25 8,250

Software and Licenses 1000 15 15,000

Other devices 100 20 2,000

Salaries

Project Manager 850 250 212,500

SMEs (3) 3000 250 750,000

IT Software Engineers (6) 3,600 230 828,000

IT Data Scientists (6) 4,200 230 966,000

IT Web Developpers (3) 1,800 60 108,000

IC assistants (5) 1,600 220 352,000

Certification Experts (5) 1,950 40 78,000

Allowances (SMEs and PM)

Transportation 90 40 3,600

Meals 140 40 5,600

Stationery 700 1 700

Totals 3,407,150

Contingencies (20%) 681,430

TOTALS (with contingencies) 4,088,580

Personnel
There are different jobs that must be considered for the accomplishment of this undertaking. At
first, the Project Manager will be included from the earliest starting point until the end. All the
IT staff and SME’s will join the task two weeks prior to the start of the Deployment arrange. At

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long last, IC collaborators will be designated from the third seven day stretch of the
Deployment organize onwards, while the Certification Experts will begin just in the last phase of
the venture

References
bitcoinexchangeguide, 2018. 15 Best bitcoin Trading bots Review. [Online]
Available at: https://bitcoinexchangeguide.com/best-bitcoin-trading-bots/
[Accessed October 2018].

Revuelta, V. ́., 2018. Design and implementation of a software systemfor the composition of a
database and automatedtrading system on different cryptocurrencytrading markets, s.l.: ETH
Zurich.

Stephan de Haas, Q. d. H., 2018. Haasonline. [Online]

Available at: https://www.haasonline.com/
[Accessed 2018].

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