A High Frequency Trading (HFT) Algorithm Arbitraging BTC/TUSD Pair

2023-7-6

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Table of Contents

Introduction

We've developed a high-frequency trading (HFT) algorithm specifically tailored for the cryptocurrency market. Our algorithm is based on a principle well known in the financial world - arbitrage. It leverages the 1-second price deviations between pairs of cryptocurrencies to secure profits through high-frequency trades.

In this particular case, we're focused on the price deviations between Bitcoin (BTC) and TrueUSD (TUSD) pairs. The algorithm calculates the theoretical price of the BTC/TUSD pair based on BTC/USDT and TUSD/USDT rates, and then compares it to the actual market price of BTC/TUSD.

Mechanics

Our algorithm constantly observes the markets and when the deviation between the theoretical price and actual market price of BTC/TUSD reaches a certain threshold, the algorithm quickly executes a buy and sell operation. This operation exploits the price inefficiency and secures a profit for the trader.

In the crypto market, these deviations occur quite frequently due to the inherent volatility, thus making it a fertile ground for our high-frequency trading algorithm. Thanks to Binance which doesn't charge BTC/TUSD trading fee, this algorithm remains effective under such conditions.

Stop-Loss Strategy

In order to limit potential losses in extreme market conditions, we have designed a sophisticated stop-loss module. This module works by placing stop-loss orders evenly between the current price and the latest original deal price. This strategy helps to safeguard the investment by minimizing the potential loss, while also allowing room for the market price to return to a favorable position.

Profits

With a base trading asset of 1000 TUSD, we have found that our algorithm is capable of generating a stable daily interest of 1-2%. It achieves this by executing thousands of trades on an hourly basis, each generating an average interest of 0.001%.

This might sound like a small percentage, but when aggregated over thousands of transactions, the returns are significant. Plus, given that the process is automated, it's almost like earning an effortless passive income.

Advantages and Transparency

While the prospect of high-frequency trading might sound risky to some, we've implemented various safeguards to ensure the reliability and safety of our algorithm.

First, we only trade when the price deviation is significant enough to guarantee a safe profit margin. Second, we've incorporated the above-mentioned stop-loss module to mitigate potential risks.

For the sake of transparency and control, our algorithm dynamically updates a table that shows the trading time, 24h trading volume, accumulated rewards, and number of stop-loss calls. This allows users to monitor the algorithm's performance and make informed decisions.

Conclusion

In conclusion, our high-frequency trading algorithm presents a promising opportunity to earn substantial returns in the crypto market. With built-in safety measures, consistent performance, and significant daily returns, this algorithm could be a valuable addition to any crypto trader's toolkit.