Example trading strategy on Tradewave.Tradewave began as a side-project for Potter, who has worked as a software engineer for startups in Silicon Valley. Initial postings about the platform on Reddit, Bitcoin Talk and Twitter last December garnered about 1,000 users, he said. He declined to say how many users he currently has on the platform.
Although Tradewave users currently have to write their trading strategies in Python, Potter said he is working on simplifying that process. His platform will let users create strategies in simple English, keeping the programming language hidden. He plans to release this feature in two to three weeks, he said.
"People are really fascinated by automated trading," he continued. "But once they sign up, they find they can't code in Python. So the last two to three months I've been working on a new way of building a trading strategy in English ... we just translate it into Python, but the user never sees it."
Algorithmic trading trends
Even if users write strategies in English instead of Python, is there a market for DIY bitcoin trading bots? Potter, for one, believes a niche exists. By his estimates, about 50,000 individuals trade actively on the cryptocurrency markets, and he's betting that some of them will pay for a sophisticated tool like Tradewave.
Trading bot software has proliferated in the cryptocurrency markets. Off-the-shelf bot subscriptions, like at Butter Bot, can be purchased for about $140 a year. Opensource bots, like RBTC Arbitrage, can be installed for free. In the wider financial markets, a startup called Quantopia has raised millions to build a platform that allows individuals to create their own automated trading methods.
A new bitcoin-based derivatives platform, First Global Credit, said it's developing an API to allow automated trading because of demand from its clients. Cofounder Marcie Terman said:
"We have traditional funds who are putting together high net-worth money that they will trade ... we also have some private traders who asked for automated trading."
A former bot trader, Joseph Lee, wrote his own software to execute trades, claiming to have made $200,000 in profits. Today, Lee doesn't run his bots, but he operates derivatives platform BTC.sx. He said he is also seeing demand from his customers for automated trading.
Lee added that services like Tradewave are useful for introducing algorithmic trading to the cryptomarkets because they remove some of the tedious but complex tasks – like back-testing trading strategies – involved in creating a bot.
"The tricky part, back-testing the algorithm, requires large datasets and a lot of number crunching. This requires development skills ... easy if you know how, difficult if you don't," he said.
Featured image via jeffedoe/Flickr
BTC.sxFirst Global CreditTradewave
Original author: Joon Ian Wong