I see this is tailored toward crypto exchanges -- what, if any, are the major differences between crypto based trading and more traditional stock/future/option exchanges?
- you can trade crypto 24/7, this sounds obvious but on the other hand side this also means, there is no pre-market trading and all the obscure things attacked to it
- before blocks are being created, transactions are usually collected in so called mempools. (Way oversimplified) block proposers or miners, who are selected to create the next block, can choose which transactions to include, as space is limited. They can also determine the order of these transactions. All of this is publicly visible and opens a lot of opportunities to harvest slippage etc. (lookup MEV-bots)
- generally speaking, there is no robin hood or other intermediary, that can block you from trading
- in crypto, you essentially have access to all available financial products without any barriers to entry compared to traditional finance
it looks like this repository is using Binance APIs for trading. So my statements are no entirely true for this case. But you can use trading bots like this on decentralized exchanges or DeFi products like curve finance without being dependent of an intermediary
In crypto, you have only two assets - BTC and ETH, all other assets are not tradeable because of volume/liquidity, sure you can & sell them, but most trading strategies wont work well in underliquid markets
Basically, people can front-run your trades, and this is built into the market by design. Also, instead of the winner being the fastest like in tradfi, there is a competitive auction where participants pay for priority. See, e.g., https://archive.ph/W0nvi or pages 7...9 of https://assets.ey.com/content/dam/ey-sites/ey-com/en_us/topi... for examples. Even if you are not the one doing the front-running, you have to be aware that someone else will be.
To make it more exciting there are also implementation bugs: https://archive.ph/9w32t
The closest thing to legit crpto trading is to trade CME's btc/eth futures, but they don't have much volume or data to backtest with.
Cryptocurrency exchanges are direct-to-retail so anyone can run HFT strategies and act as a market maker. Thus, cryptocurrency trading is “more democratized.”
Cryptocurrency exchanges are like many FX exchanges. They are not exchanges like the regulated stock, futures and options exchanges are, but are more like decentralized trading pools with unsynchronized order books, which are opaquely operated by a single broker. In crypto exchanges, it is not that there is no broker, but that the exchange and the broker are the same entity. There is no standardized protocol to route independently managed orders directly to crypto exchange servers. There's usually no way to directly interact with the exchange server at all.
On the order of thousands of dollars a month[0], depending on how close you want to get.
[0]: https://www.cmegroup.com/globex/connectivity-options.html
With no stance on whether people should be doing HFT as a hobby, presumably there is a finite amount of colocation space available and an opportunity cost/maintenance associated with onboarding people so this is what the market and regulators decided were the table stakes?
This layer of protection allows better specialisation. In crypto, you need to trade on your own balance sheet. In centrally cleared markets, it is routine for trading firms to lease balance sheet from banks, who have lots of capital and good risk management at scale, but who are typically less effective at trading specific markets competitively. This leads to more liquidity being available and more competitive markets.