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Technical Deep Dive into the Avellaneda & Stoikov Strategy

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In our previous blog post, we introduced the new avellaneda_market_making strategy. This time, we delve deeper into the mathematical aspects of this strategy. We aim to explain how we adapted the original Avellaneda-Stoikov model for the cryptocurrency market and simplified the calculation of key parameters, known as greeks.

This article mathematically substantiates the assumptions and calculations that made the authors' model more suitable for Hummingbot traders.

Original Model and Our Proposed Extensions

Let's start by revisiting the core equations from the Avellaneda-Stoikov paper:

  • in Academy
  • 6 min read

Guide to the Avellaneda & Stoikov Strategy

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Welcome back to the Hummingbot Academy!

The latest Hummingbot release (0.38) introduces an exciting strategy based on classical academic market-making models. This article will delve into the Avellaneda & Stoikov paper from 2008 and its implementation in Hummingbot.

For those who enjoy in-depth scientific papers, the original publication is readily accessible online or directly here.

  • in Academy
  • 6 min read

Sharing is Caring: 3 Trading Pairs I Picked

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by Thomas Yit

Until now, the majority of the articles are about learning and optimizing Hummingbot. Let’s take this to the next level.

Is it possible to profit from market making, and does liquidity rewards help mitigate directional risks? I share the following three markets(live) and performance in an attempt to address these concerns.

A little bit of intro about myself, been a retail trading in forex for a couple of year till i stumbled on Bitcoin back in 2015 which a buyer accept only BTC as payment back then, bought some using localbitcoins and forget about Bitcoin till 2017 ICO crazy period. Over the next few years start to move into crypto trading space and found Hummingbot in May 2020. Ever since, have been running 4-6 instances but not every instance is performing liquidity mining.

  • in Academy
  • 5 min read

Guide to the Spot-Perpetual Arbitrage Strategy

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Welcome back to the Hummingbot Academy!

Each Hummingbot release brings exciting new features, and version 0.37 is no exception.

This version introduces two significant enhancements to our favorite algorithmic trading robot:

  • Perpetual Protocol connector: a new decentralized AMM protocol for derivatives markets operating on Ethereum's layer 2 xDai.
  • Spot-perpetual markets arbitrage strategy: an innovative strategy enabling traders to capitalize on price discrepancies between these market types.

In this article, we'll delve into the new spot-perpetual arbitrage strategy, elucidate its logic, and discuss identifying lucrative trading opportunities.

Hummingbot Architecture - Part 1

Introduction

Hummingbot is a modular framework for building highly reliable, and high performance trading bots. While the official Hummingbot package already allows you to run high frequency trading strategies on a number of cryptocurrency exchanges, the underlying framework is freely extensible for building custom strategies, custom market connectors, and more.

In this blog post, we will discuss some of the key architectural features in Hummingbot, and the rationales behind their designs.

  • in Academy
  • 4 min read

Order Management Configurations

Welcome to our series where we delve into all possible configurations of Hummingbot, exploring the underlying concepts. In this installment, we focus on Order Management, covering:

  • The essentials of order management for market makers;
  • Managing orders using the Hummingbot Client;
  • The rationale behind traders' frequent offer adjustments in order books;
  • Understanding and implementing order optimization;
  • Enhancing order management with scripts.

Missed our previous articles? Catch up here:

  • in Academy
  • 6 min read

Hummingbot vs Haasbot

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In the previous comparison blog, we compared Cryptohopper and Hummingbot, and this time, we will continue to compare Haasbot and Hummingbot.

The goal of this article is to test out both bots and help you make better decisions on which software to use for liquidity mining (Remember, you do not need to use Hummingbot to earn liquidity mining rewards). We will make a comparison of their features and run these two bots for liquidity mining to test out the performance.

  • in Academy
  • 8 min read

Hummingbot vs Cryptohopper

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Back in 2019, we investigated 12 bots based on their relative ease of use of installation, configuration, and operation in two blog posts, Bot reviews, part 1, and Bot reviews, part 2.

This time, we decided to do an more in-depth comparison of Cryptohopper against Hummingbot in terms of general features and market making parameters. Cryptohopper is a commercial web-based application while Hummingbot is a free and open source command line application.

We selected Cryptohopper because it also has a market making feature that's not available for many crypto trading bots, so you can actually use it to do liquidity mining on Hummingbot Miner, rather than running the open source Hummingbot software.

In addition to making an apple-to-apples comparison of features, we will also test out running the bots to earn rewards on Hummingbot Miner with both trading bots, so that you can make better decisions on which software to use for liquidity mining.

  • in Academy
  • 11 min read

How to arbitrage AMMs like Uniswap and Balancer

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Welcome back to the Hummingbot Academy!

Lately, we have talked a lot about how you can use and customize Hummingbot to create a market-making strategy that will suit your trading needs.

But with the release of version 0.33, we added a new decentralized exchange connector and a new strategy called amm-arb that allow our users to execute arbitrage trades on blockchain protocols.

You can now arbitrage Uniswap and other Automated Market Maker protocols!

  • in Academy
  • 7 min read

Commands and Configs - Price Source

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Welcome back to the series of articles where you will learn how to make the best use of your Hummingbot configurations.

In the two latest articles (Part 1 and Part 2), we went through all the commands you can use on your client terminal and the global configurations.

Today we will talk about the configuration settings related to the markets and the price information, and how you can use them for your benefit.

What you will learn:

  • How to make your Hummingbot use a reference price from a source different from the exchange it is trading on;

  • What are the various price sources Hummingbot can use as a reference;

  • How the information about price moves around different markets;

  • Why use the price information from a different source.