The Power of Integrating Trading Bots with TradingView
The biggest advantage of using TradingView is that you have the power of the community to rely on. With thousands of experienced users regularly testing each other’s ideas and creating new complex indicators, you will be able to find something interesting regardless of your own risk style and investment preferences.
The variety of premade analytical tools unique to the platform and the selection of commonly used indicators make it a great choice for all users. Since the flexibility of the platform is such a huge factor, the TradingView integration became a strong focus for many automation vendors.
The benefits of integrating trading bots with TradingView are quite apparent:
- You can use a wide range of different unique strategies. The library of novel indicators and sophisticated trading systems that you find on TradingView is astonishing. It is continuously updated thanks to the efforts by the community and developers. You can find all sorts of interesting analytical instruments that are designed for specific exchanges, assets, and time frames.
- Use the advanced alert system. The TradingView platform generates so-called “alerts” to notify users about a potential entry point. These alerts can be used as signals for trading bots. The great thing about these alerts is that you can create a system with multiple confirmations to generate reliable signals that are produced and verified by several indicators.
- Analyze relevant market data. Charts can use all sources of publicly available data. Regardless of which centralized exchange you are using, it is possible to pull the data from it directly and analyze it with instruments provided by TradingView.
These advantages make automated trading much more efficient. Bots don’t have to rely on imperfect information, late signals, and manual inputs. Instead, they will be guided and triggered by advanced technical analysis strategies. Alerts can be also used to trigger the launch of algorithmic trading bots like DCA or GRID.
Choosing the Right Trading Bot for Your Strategy and Goals
The integration process is quite straightforward. Before initiating it, you should consider which bots to use and strategies to employ. There are many varieties of bots available to retail traders. Depending on which automation provider you choose, the selection may vary in terms of richness and quantity. However, some bots have become staples in the industry.
Here are ways to use the best trading bots with distinct strategies:
- DCA bots. Distributed Cost Average is a great approach if you need to trade safely or want to purchase certain assets for the long term. The method is based on the idea that splitting a single purchase into multiple trades will result in a discounted total price of the purchase. Obviously, the method works best during bearish trends. Use these bots in conjunction with technical indicators that help you evaluate the strength of any given trend (MACD or Moving Averages).
- Arbitrage trading was immensely popular several years ago when the market was still regionally fractured. Today, prices mostly converged across the world. However, arbitrage opportunities regularly occur between different exchanges and regions. You can also engage in triangular arbitrage. However, capitalizing on price discrepancies is possible only when the market is relatively calm. Use volatility indicators to search for moments when running arbitrage bots is most efficient (Average True Range or Volatility Index).
- Strategy-specific bots. It is possible to create an automated trading system (ATS) that works well only with a certain strategy. Custom bots are used by retail traders regularly but require more dedication and effort to be effective. You can employ trend-following bots to capitalize on price retracements within a strong overall trend or set up an ATS that will be triggered only when a reversal is detected in the market.
The criteria for choosing a trading bot are usually unique and should be reevaluated for each specific instance, but you can always find a good way of introducing a technical analysis strategy to your trading system.
Setting Up the Integration between Trading Bots and TradingView Platform
Let’s talk about how to integrate trading bots with TradingView. The exact method depends on the automation vendor you want to partner with. We will use WunderTrading as our example. The process of connecting your bot to the platform is straightforward. You won’t even need an API integration guide since WunderTrading does not require a direct connection between the platforms and pulls the necessary data directly from the Pine Code, the proprietary script language used by TradingView.
In general, the process goes as follows:
- Go to the WunderTrading website and log in (register if you don’t have an account).
- Connect the desired centralized exchange account.
- Go to the dashboard and create a new bot. In the right panel, you will see code lines that must be inserted in the Pine Editor.
- Go to the TradingView platform and log in.
- Open a new chart and deploy a technical analysis strategy or indicators that you like.
- Set up an alert system using the instructions on the website.
- Open the Pine Editor and insert the code from WunderTrading as instructed.
- Return to the WunderTrading platform and adjust the settings as you see fit.
- Launch the bot. It will run using alerts from the TradingView website.
This method is quite simple, does not require any direct connections between platforms and provides the necessary functionality without any additional hassles.
Tips for Effectively Using Trading Bots in Conjunction with TradingView's Features
Maximizing benefits of integration with TradingView is quite important if you want to run a successful automated trading system. Several factors determine the outcome of using bots together with a technical analysis strategy deployed on TradingView:
- Which strategy you use. The endless selection of various analytical systems available to users of the platform can be overwhelming. TradingView automated trading is a powerful concept if you can through the “noise” of information. Picking the right analytical approach to power your bots is one of the most important parts of running an ATS.
- How you test strategies. Different approaches work well for different assets and markets. It is important to verify the validity of your approach and create a system that will benefit your portfolio. Monitoring and tweaking your strategies is also imperative if you plan to build a lasting automated trading system capable of producing profits in the long run. Use the “Strategy Tester” on TradingView and the backtesting functionality on WunderTrading to check how bots operate and adjust them as needed.
- How you verify alerts. Regardless of which strategy you use, it is a good idea to add more layers of signal verification to reduce the number of false positives. Leveraging technical analysis tools in tandem with bots can be incredibly efficient. Consider deploying simple indicators to verify signals. Relative Strength Index and Stochastic are good at verifying reversal alerts while Bollinger Bands helps with identifying price deviations.
Risk Management Considerations when Using Automated Trading Systems
Any technical analysis strategy will tell you when to enter the market. In some cases, you will also receive estimates on potential price action changes (future support and resistance levels which can be used to set take-profit orders). However, all other parameters of any given trade are set by bot operators.
Let’s talk about some risk management strategies for automated trading that can help you reduce potential losses and maximize profitability.
- Setting stop-loss orders. It is hugely important to reduce potential losses for every single trade. Delayed orders should be used to close trades when necessary to either lock in profits or stop losing money. Some experts suggest using standard ratios for all trades. A 1:3 ratio means that you need to set a 10% stop-loss order for a trade with a 30% take-profit limit.
- Using take-profit wisely. Some traders do not like using take-profit orders as they believe that manually closing positions with the maximum profit is the best approach. However, automated trading systems require take-profits to operate autonomously and to stick to the strategy. The general rule of thumb is to set take-profit higher for long-term positions and lower for short-term positions.
- Managing leverage and position sizing. It is necessary to limit your bots to a certain portion of your portfolio. The WunderTrading platform allows you to set the position size parameter in percentile points of your portfolio or in absolute units. You should also remember about leverage if you are working with a margin trading account.
Recommendations for Monitoring and Evaluating Performance of Integrated Systems
While all of the aforementioned suggestions are valid, we need to pay a little bit more attention to testing, iterating, and monitoring the performance of integrated systems. It is a good idea to keep evaluating bot performance on TradingView platform’s interface using the Strategy Tester, but it is also quite important to use other methods of refining your strategy.
Here are some performance tracking tips that will help you achieve greater consistency and profitability:
- Regularly check the portfolio analytics section in the dashboard. If you are using the WunderTrading platform, you will have access to the fullest information about the performance of your bots. Analyzing statistics and evaluating the profitability of each automated trading system in your portfolio is quite important if you want to be successful.
- Backtesting strategies to refine results. It is a good idea to iterate on your system continuously even if you think that you found the optimal combination of settings. Use the backtesting functionality on the WunderTrading platform to reevaluate the performance of your bots and adjust settings when necessary.
- Monitor how bots work under different market conditions. It is a good idea to let bots operate during periods of high volatility and relative calm when prices do not change much. This approach will give you more context for the evaluation of your automated trading systems by allowing you to see how they work in difference circumstances. Don’t forget about setting up appropriate stop-loss orders.
- Work on other strategies all the time. Different approaches shine in certain scenarios. Even when you have several bots running well using already tested strategies, you should continue iterating on them and test new ideas. You can use “mock” accounts and backtesting features to regularly search for ways to optimize your trading systems.
Regardless of which automated crypto trading platform you are using, it is a good idea to integrate a technical analysis strategy that produces consistent results. Bots can be efficient on their own with some manual inputs, but the fast pace of the crypto market makes it much more effective to use them in conjunction with time-tested technical indicators and sophisticated analytical systems.