DYDX Pairs Trading Bot Build in Python Running in the Cloud from Udemy

Learn how to interact with the DYDX Layer 2 Ethereum trading exchange using Python by running a trading bot on AWS Elastic Cloud Compute (EC2). Your bot will be highly advanced in trading in being able to take advantage of statistical arbitrage opportunities in Pairs Trading. This is a great strategy to know given how closely linked many cryptocurrencies are in price behaviour.

Your bot will be able to message you via Telegram so that you can receive live notifications on how well the script is performing (or not performing). It will enable you to:

- Automatically close all existing open positions

- Find cointegrated (linked Crypto pairs) for trading and ascertain whether statistically it makes sense to open a trade

- Manage any open positions and look for exits

- Find and place new trading opportunities

- Alert you if something goes wrong

- Run your bot without your laptop whilst you sleep

Our Python code will interact heavily with the DYDX API and to ensure you understand how to use the API, a cheatsheet has been provided to fast-track you onto being able to use DYDX.

To do this course, you should have used Python in the past, having created and installed packages in a virtual environment and be familiar with basic programming concepts.

That said, you do NOT need to be an advanced Python programmer or advanced trader to do this course. Our strategy uses statistical arbitrage for Pairs Trading, of which you will be walked through the strategy and theory in the beginning in reasonable detail so you understand the nature of what is going on.

See you in Class.

About Your Instructor: Shaun McDonogh has been developing tools for traders for over 5 years at Crypto Wizards and is very close to where the action is in regards to trading Crypto. Shaun's passion is developing applications and teaching others and is delighted to bring this information to the retail market.

What's inside

Syllabus

Introduction

What to Expect

What NOT to Expect

Course Plan of Attack

Discord and Resources

Manually Trading on DYDX

US, UK and Canada Citizens - Please Read

Read Content Here (free links to help with course content) and Code Resources are attached here too

Strategy

Statistical Arbitrage and Cointegration

Trading the Spread Based on Z-Score

About the Hedge Ratio

About Half-Life

Homework: Please watch video on the "Kelly Criterion Crypto Wizards" via YouTube. This video is not available for uploading to Udemy.

Position Sizing and Risk Management

Test Your Knowledge

Understand how to get resources code working in line with 2024 V4 API updates

NEW CODE AND RESOURCES

2024 Code Updates

Downloading Code Package

DYDX Testnet Account Setup

Code Package Overview and Testing

APPENDIX - DYDX FastTrack - OLD (REFERENCE ONLY)

IMPORTANT: NEW DYDX VERSION 2024

MetaMask Setup

Alchemy HTTP Provider Setup

DYDX Credentials Access

Connect to DYDX in Python with Colab

Interpreting DYDX API Documentation

Get Public Candlestick Price Data

Place Orders on DYDX via Private API

Environment Setup - OLD (REFERENCE ONLY)

VS Code and Python VENV Setup

GitHub Repository Setup

Adding Environment Variables

Bot Build - Stage 1

Bot Constants Configuration Setup

Stage 1 - Plan of Attack

Connect_To_DYDX

Close All Positions Function - Part 1

Close All Positions Function - Part 2

Bot Build - Stage 2

Stage 2 - Plan of Attack

Get ISO Times

Construct Market Prices - Preparation

Construct Market Prices - Completion

Construct Cointegration Functions

Spread Calculation Update

Store Cointegrated Pairs Data

Bot Build - Stage 3

Stage 3 - Plan of Attack

BotAgent Class - Initialize

BotAgent Class - Completion

Open Trades - Initial Setup

Open Trades - Trade Trigger Logic

Open Trades - Engage BotAgent

Manage Exits - Part 1

Manage Exits - Part 2

Build Test Run

Git Deploy and Next Steps

Telegram Messaging Inclusion

Telegram Bot Setup

Sending First Message Via URL

Send Message Via Python

Message Placement and GitHub

AWS Cloud Deployment

About AWS and Signup

AWS EC2 - Plan of Attack

Create Security Group

Launch EC2 Instance

Connect to EC2 and Install Python

Download and Test Bot

Making Code Updates

Full Automation with CRON

Next Steps

Bot Improvements and Next Steps

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in DYDX Pairs Trading Bot Build in Python Running in the Cloud with these activities:

Review Python Fundamentals

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Solidify your understanding of Python fundamentals to ensure a smooth learning experience when building the trading bot.

Browse courses on Python Programming

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Review basic Python syntax and data structures.
Practice writing simple Python functions.
Work through online Python tutorials or exercises.

Brush Up on Statistical Concepts

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Revisit key statistical concepts like cointegration and Z-scores to better grasp the underlying principles of the pairs trading strategy.

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Review definitions of cointegration, Z-score, and hedge ratio.
Work through examples of calculating these values.
Understand how these concepts apply to pairs trading.

Mastering Python for Finance

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Study this book to gain a deeper understanding of how Python can be applied to financial analysis and trading, including algorithmic trading strategies.

View Mastering Python for Finance on Amazon

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Read the chapters related to time series analysis and algorithmic trading.
Experiment with the code examples provided in the book.
Apply the concepts learned to the DYDX trading bot project.

Four other activities

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Follow DYDX API Tutorials

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Practice interacting with the DYDX API using online tutorials to become more comfortable with the platform's interface and functionalities.

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Find tutorials that demonstrate placing orders and retrieving data from the DYDX API.
Follow the tutorials step-by-step, testing each function as you go.
Adapt the tutorial code to your own trading bot project.

Backtest a Simple Trading Strategy

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Develop a simple backtesting framework to evaluate the performance of different trading strategies before implementing them in the DYDX bot.

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Gather historical price data for the crypto pairs you want to trade.
Implement a basic backtesting engine in Python.
Test different trading rules and parameters to optimize performance.
Analyze the backtesting results to identify profitable strategies.

Document Your Trading Bot Journey

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Create a blog or video series documenting your experience building the DYDX trading bot, sharing insights and lessons learned with others.

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Choose a platform for your documentation (blog, video, etc.).
Document each step of the bot building process, including challenges and solutions.
Share your documentation with the online community and solicit feedback.

Contribute to a Crypto Trading Library

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Contribute to an open-source Python library for crypto trading, enhancing your skills and giving back to the community.

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Find an open-source crypto trading library on GitHub.
Identify areas where you can contribute, such as bug fixes or new features.
Submit your contributions to the library maintainers for review.

Career center

Learners who complete DYDX Pairs Trading Bot Build in Python Running in the Cloud will develop knowledge and skills that may be useful to these careers:

Quantitative Trader

A quantitative trader develops and implements automated trading strategies. This career utilizes programming skills, statistical analysis, and knowledge of financial markets to identify profitable trading opportunities. The DYDX Pairs Trading Bot course helps build a foundation in this area, specifically focusing on statistical arbitrage in the cryptocurrency market. This course's hands-on experience with the DYDX API, Python, and cloud deployment on AWS EC2 provides the practical skills needed to develop and deploy automated trading systems. The course is designed to create a pairs trading bot, which will give learners a head start in quantitative trading. The concepts of cointegration, spread calculation, z-score trading, and risk management are also covered.

See salaries and explore the career path for Quantitative Trader

Algorithmic Trader

Algorithmic traders design, build, and deploy automated trading systems that execute trades based on predefined rules. This career requires a solid understanding of programming, financial markets, and trading strategies. The DYDX Pairs Trading Bot course provides a practical introduction to algorithmic trading, focusing on the development of a pairs trading bot for the DYDX exchange. The course helps a learner understand how to interact with the DYDX API, implement statistical arbitrage strategies, and deploy the bot to the cloud using AWS EC2. The course's emphasis on automated trade execution and risk management makes it particularly relevant for aspiring algorithmic traders.

See salaries and explore the career path for Algorithmic Trader

Trading System Developer

A trading system developer builds and maintains the software infrastructure that supports trading operations. This career requires strong programming skills, knowledge of financial markets, and experience with real-time data processing. The DYDX Pairs Trading Bot course helps a learner gain hands-on experience in developing a complete trading system, from data acquisition to trade execution and cloud deployment. The course's focus on the DYDX API, Python programming, and AWS EC2 deployment provides the practical skills needed to succeed in this role. The course will provide the ability to maintain a trading infrastructure.

See salaries and explore the career path for Trading System Developer

Cryptocurrency Trader

A cryptocurrency trader analyzes market trends, executes trades, and manages risk in the cryptocurrency market. This career requires knowledge of blockchain technology, trading platforms, and market analysis techniques. The DYDX Pairs Trading Bot course helps a learner gain practical experience in cryptocurrency trading by building an automated trading bot for the DYDX exchange. This course's focus on statistical arbitrage, automated trade execution, and cloud deployment provides valuable skills for anyone looking to trade cryptocurrencies. Learning how to use Python, the DYDX API, and AWS EC2 will be helpful. The course provides a solid foundation in automated cryptocurrency trading strategies.

See salaries and explore the career path for Cryptocurrency Trader

Financial Engineer

A financial engineer designs and develops new financial products and trading strategies, often using quantitative methods. The DYDX Pairs Trading Bot course helps a person to gain practical experience in developing and implementing an automated trading strategy. The course's focus on statistical arbitrage, Python programming, and cloud deployment provides valuable skills for designing and testing new trading models. Additionally, understanding how to use APIs will be helpful. The course's practical approach makes it beneficial for aspiring financial engineers.

See salaries and explore the career path for Financial Engineer

Quantitative Analyst

A quantitative analyst, often called a quant, develops and implements mathematical models for pricing derivatives, managing risk, or identifying trading opportunities. This role requires strong analytical skills and knowledge of financial markets. The DYDX Pairs Trading Bot course helps a quantitative analyst better understand how to implement statistical arbitrage strategies in the cryptocurrency market. The course's coverage of cointegration, spread calculation, and z-score trading can complement a quantitative analyst's existing knowledge of financial modeling, and may enhance the ability to create trading strategies. The course provides a practical application of these concepts.

See salaries and explore the career path for Quantitative Analyst

Financial Data Analyst

A financial data analyst gathers, cleans, and analyzes financial data to provide insights and support decision-making. The DYDX Pairs Trading Bot course may help a financial data analyst gain experience in working with APIs to access real-time market data and applying statistical analysis techniques to identify trading opportunities. The course's focus on data acquisition, processing, and analysis can be valuable for improving skills in financial data analysis. The concepts of cointegration, spread calculation, and z-score trading will also be helpful.

See salaries and explore the career path for Financial Data Analyst

Data Scientist

A data scientist uses statistical and machine learning techniques to analyze data, identify patterns, and build predictive models. Data scientists are often involved in developing trading algorithms or risk management systems for financial institutions. The DYDX Pairs Trading Bot course helps a data scientist gain experience in applying statistical analysis to financial data and building automated trading strategies. The course's coverage of cointegration, spread calculation, and z-score trading may be valuable for building predictive models in finance. Furthermore, the course will teach learners how to use APIs.

See salaries and explore the career path for Data Scientist

Market Risk Analyst

A market risk analyst identifies, measures, and manages the market risks faced by a financial institution. Understanding automated trading strategies and their potential risks is crucial. The DYDX Pairs Trading Bot course may help a market risk analyst gain insights into the workings of algorithmic trading systems and the risks associated with automated strategies. The course's focus on risk management and automated trade execution can provide a valuable perspective for assessing market risks. The risk assessment concepts taught in this course will also be valuable.

See salaries and explore the career path for Market Risk Analyst

Software Engineer

A software engineer designs, develops, and maintains software applications. While not directly related to finance, a software engineer with an interest in trading systems can find relevant skills in developing trading infrastructure or supporting algorithmic trading platforms. The DYDX Pairs Trading Bot course may help a software engineer improve their skills in Python programming, API interaction, and cloud deployment using AWS EC2. The course's focus on building an automated trading bot can provide experience in developing real-time data processing and automated decision-making systems. The course can improve your skills in coding.

See salaries and explore the career path for Software Engineer

Blockchain Developer

A blockchain developer designs and develops applications that leverage blockchain technology. While this role doesn't focus solely on trading, understanding how to interact with decentralized exchanges like DYDX is beneficial. The DYDX Pairs Trading Bot course may help a blockchain developer gain experience with the DYDX API and understand how to build applications that interact with a Layer 2 Ethereum exchange. This knowledge can be valuable for developing decentralized finance applications or building tools for cryptocurrency traders. The course can help developers learn how to interact with APIs.

See salaries and explore the career path for Blockchain Developer

Data Engineer

A data engineer builds and maintains the data infrastructure that supports data analysis and machine learning. In the context of trading, this involves building systems for collecting, processing, and storing real-time market data. The DYDX Pairs Trading Bot course may help a data engineer gain experience in working with APIs to access market data and deploying applications to the cloud using AWS EC2. The course's focus on data acquisition and processing can be valuable for building data pipelines for trading systems. The course will provide the opportunity to learn how to gather information through an application programming interface.

See salaries and explore the career path for Data Engineer

Financial Analyst

A financial analyst analyzes financial data, identifies trends, and provides insights to inform investment decisions. This role often involves building financial models and forecasting market behavior. While a financial analyst may not directly build trading bots, understanding automated trading strategies and market dynamics can be advantageous. The DYDX Pairs Trading Bot course may help a financial analyst gain insights into quantitative trading techniques and the use of APIs for data analysis. Additionally, the course's coverage of statistical arbitrage and cointegration may broaden the understanding of market relationships. The knowledge gained from learning the principles of the trading bot can be applied when dealing with financial models.

See salaries and explore the career path for Financial Analyst

Investment Strategist

An investment strategist analyzes market trends and economic data to develop investment recommendations for clients or firms. While not directly building trading bots, understanding quantitative trading strategies can be advantageous. The DYDX Pairs Trading Bot course may help an investment strategist gain insights into the use of statistical arbitrage and automated trading in the cryptocurrency market. This knowledge can inform investment decisions and provide a deeper understanding of market dynamics. The course may also help in Python development.

See salaries and explore the career path for Investment Strategist

Portfolio Manager

A portfolio manager constructs and manages investment portfolios to meet specific client objectives. While a portfolio manager might not directly code trading bots, understanding various trading strategies is essential. The DYDX Pairs Trading Bot course may help a portfolio manager gain insights into quantitative trading strategies and the use of APIs for data analysis, especially in the cryptocurrency market. The portfolio manager may find that understanding how these models work from a technical level is advantageous. The course will provide a basis to improve an awareness of automated cryptocurrency trading strategies.

See salaries and explore the career path for Portfolio Manager

Reading list

We've selected one books that we think will supplement your learning. Use these to develop background knowledge, enrich your coursework, and gain a deeper understanding of the topics covered in DYDX Pairs Trading Bot Build in Python Running in the Cloud.

Mastering Python for Finance

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Provides a comprehensive guide to using Python for financial analysis and trading. It covers topics such as data analysis, time series analysis, and algorithmic trading. It is particularly useful for understanding how to apply Python to real-world financial problems. This book valuable reference for students looking to deepen their understanding of financial applications using Python.

Mastering Python for Finance

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Mastering Python for Finance

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DYDX Pairs Trading Bot Build in Python Running in the Cloud

What's inside

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Activities

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