What Are the Major Types of Strategies Being Used in Crypto Market-Making Bots?

[smithtaylor]

Spread Strategy:

Bots place simultaneous buy and sell orders at slightly different prices, profiting from the spread between the bid and ask prices. This helps maintain liquidity in the market.

Rebalancing Strategy: 

Bots constantly rebalance asset holdings by buying and selling based on market conditions, ensuring that the portfolio remains balanced while capturing price differences.

Ping-Pong Strategy:

 The bot sets a buy order and, once it gets filled, immediately places a sell order at a higher price. It keeps “pinging” between these two actions to generate small, continuous profits.

Time-Weighted Average Price (TWAP): 

This strategy divides large orders into smaller ones, executing them over time to avoid sudden price impacts and reducing the risk of slippage.

Grid Trading: 

The bot sets predefined price levels (grid) and places buy orders at lower levels and sell orders at higher levels, capturing profits as the market moves within the grid.

 

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