Strategies
A Hummingbot strategy is a continual process that monitors trading pairs on one or more exchanges in order to make trading decisions. Strategies separate trading logic, open source code that defines how the strategy behaves, versus parameters, user-defined variables like spread and order amount that control how the strategy is deployed against live market conditions. Strategy parameters are stored in a local config file that is not exposed externally.
Strategies utilize the standardized trading interfaces exposed by exchange and protocol connectors, enabling developers to write code that can be used across many exchanges. Each Hummingbot strategy is a sub-folder in the /hummingbot/strategy folder.
Strategy types¶
Hummingbot offers the following automated trading strategies, each with its own set of configurable parameters.
- Market making: strategies that provide liquidity to a market
- Arbitrage: strategies that exploit differences between markets
- Utility: other strategies
Maintainer¶
Strategy maintainers are responsible for responding to community feedback, fixing bugs, and actively improving the strategy over time.
As the creator of Hummingbot, CoinAlpha maintains for most strategies, particularly the market making strategies. As the number of strategies grows, however, CoinAlpha will enable other community members to contribute and maintain strategies.
Customizing strategies¶
These strategies are meant to be basic templates. We encourage users to extend these templates for their own purposes, and if they so desire, share them with the community.
Developers may submit strategies for review. Please note the Contribution Guidelines. For developers interested to create or customize their own strategies, please see Strategies in the Developers section.
List of strategies¶
Market making¶
Market making strategies help you provide liquidity to an exchange while mitigating risk by dynamically repositioning and/or hedging your orders.
| Name | Valid Exchanges | Maintainer | Description |
|---|---|---|---|
avellaneda_market_making |
spot |
CoinAlpha | Single-pair market making strategy based on the classic Avellaneda-Stoikov paper |
aroon_oscillator |
spot |
Modified version of Pure Market Making that uses Aroon technical indicator (Open DeFi hackathon winner) | |
cross_exchange_market_making |
spot |
CoinAlpha | Provide liquidity while hedging filled orders on another exchange |
liquidity_mining |
spot |
CoinAlpha | Provide liquidity on multiple pairs using a single base or quote token |
perpetual_market_making |
perp |
CoinAlpha | Market-making strategy for perpetual swap markets |
pure_market_making |
spot |
CoinAlpha | Our original single-pair market making strategy |
uniswap_v3_lp |
uniswap-v3 |
CoinAlpha | Manage liquidity positions on Uniswap-V3 style AMMs |
Useful Links:¶
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🎥 What is Market Making? Interview with Hummingbot CEO Michael Feng
- Hummingbot's CEO, Michael Feng, explains how the market-making and hedge fund business works. Michael talks about how Hummingbot started out as a quantitative hedge fund and turned to open source software to decentralize the market process with the Hummingbot miner liquidity mining platform.
-
HBOT 101 : What Is Market Making?
- This article goes through the basic concepts of market making for beginners.
-
Basic concepts of Crypto Trading
- Basic 101 concepts of crypto trading and common terminologies.
-
- Basic walkthrough of how market making works
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Beginner’s Top misconceptions on market making
- Common misconceptions for beginners that can save you a lot of time from making mistakes
-
Common hallmarks of successful miners
- You must be wondering, what are the top miners doing that is earning them thousands of dollars a week? This piece is a result of discussions with some of the miners who are in the Eagle Club, and we hope it unveils some of the things profitable miners do.
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🎥 Trader Sharing: Pure Market Making with cgambit
- Eagle club member cgambit who ranks top on our leaderboard shares his tips and insights on pure market making
Arbitrage¶
Arbitrage strategies help you monitor different markets for opportunities to realize an arbitrage profit and capture them when they arise.
| Name | Valid Exchanges | Maintainer | Description |
|---|---|---|---|
amm_arb |
spot, amm |
CoinAlpha | Exploits price differences between AMM and spot exchanges |
arbitrage |
spot |
Exploits price differences between two different spot exchanges | |
celo-arb |
celo |
Exploits price differences between Celo and other exchanges | |
spot_perpetual_arbitrage |
spot, perp |
CoinAlpha | Exploits price differences between spot and perpetual swap exchanges |
Arbitrage is the buying and selling of an asset in order to benefit from a difference in the price of the asset between markets. To explore arbitration further, here are a few helpful links.
Useful Links:¶
- What is Arbitrage?
- Introducing the new Balancer connector and arbitrage strategy!
- Learn more Arbitrage and other Arbitrage opportunity / strategies
- 🎥 How to Spot Market Making and Arbitrage opportunities?
Utility¶
| Name | Valid Exchanges | Maintainer | Description |
|---|---|---|---|
hedge |
perp |
Hedges spot exchange inventory risk using perpetual swaps (dYdX hackathon winner) | |
twap |
spot |
Places a batch of limit orders over a period of time | |
vwap |
spot |
Places a batch of limit orders based on order book volume |
ℹ️ More Resources¶
Strategy coding for dummies: This article is a blog post submission from our of our users. It is not directly related to TWAP strategy, but it demos how you can write a custom script for cross exchange market making strategy
Create a Custom Strategy | Hummingbot Live: Learn about creating custom strategies with Paulo. Hummingbot lets you customize your strategies by configuring your bots to optimize its maximum potential in liquidity providing.
Check out Hummingbot Academy for more resources related to this strategy and others!