Dave Scotese wears many hats. He is a scientist specialized in computer programming, a businessman dealing in crypto-currency, a blogger educating readers, and a family man. But above all, he has the soul of a philosopher with endless quest for reason and truth. Added to all this, he is an innovator and his recent innovation is a program that buys and sells cryptocurrencies (or BTC) for its user.
kraken-grid – The Crypto Trader
Dave has named his program kraken-grid. It was designed for use with the exchange kraken.com and is available on github. At this point it works only in text but Dave says he has plans to make a webpage interface for it. According to him, it is not yet very user-friendly. But it is free to everyone to use, copy, or modify. In fact, Dave is open to collaboration on improving it. In his words:
It took Dave about 3 months to write kraken-grid, but part of that was playing with the pieces he would use, like Nodejs and Kraken’s API (Application Programmer’s Interface). Once ready to use, it proved useful in trading BTC. As Dave tells, here is how kraken-grid works.
How Kraken Works
Many exchanges allow their users to place trades in such a way that they execute both the buy and sell of a particular amount of a particular cryptocurrency. For example, if you expect the price to go up by $10, but then come back down, you can place a “limit sell order” (limited to sell only at or above the higher price) with a “conditional close” (a corresponding buy of the same amount at a lower price, that gets placed only if the sell executes). If you expect the price to do this several times, you’d have to place several trades. The program (a “trading bot”) automates this by A) recognizing the limit order with a conditional close, and B) turning the conditional close into a new limit order with its own new conditional close. This can happen over and over if the price keeps going back and forth.
But wait, there’s more! If the bot detects that a sell executed and there are no higher sells, it will compute the difference between the corresponding buy order (in percentage), and place a new limit sell order that far above the one that just executed. It does the same thing when a buy executed and there are no lower buys. This “extends” the range over which you are trading. Each price is called a “grid point” which is where this kind trading bot gets its name, “grid trader.”
While Dave is committed to improving kraken-grid, he doubts that he will patent, copyright, or trademark it. In his view, these methods of profiting all require coercion to enforce, and he sees that is a bad strategy for social cohesion.