Hummingbot Review 2023
How do you get in the black in today’s crypto market? Well, by picking an appropriate crypto trading tool, or a crypto bot.
Not every bot gets the profit flowing in, of course. So, how do you know which one does? And is Hummingbot one of those?
Trading crypto has something in common with traveling. You can do it yourself, without any special tools except your own legs.
Which is fine, as long as you don’t expect to go anywhere far or quickly. To move distances, you need the means to go fast.
Walking is good for your health, but it isn’t a serious solution if you want to cover a good mileage and be in front of others.
The same thing goes for crypto trading. You can get into the market without any special tools, but for any serious chance of making a profit or establishing a career out of it, you need something more than your limbs.
Getting a crypto bot reduces the daily time spent on looking for deals and executing them from hours to minutes.
Additionally, bots never sleep, do not need lunch breaks, or suffer from detrimental changes of mind.
Trading with the help of a crypto bot makes manual trading look like a hobby more than a profession.
But you need the right trading bot. Today in this review we ask a simple, yet challenging question: is Hummingbot the right trading bot?
Hummingbot is an open-source trading automation solution designed to make crypto day trading a simpler solution and one that is more freely available to wider audiences.
Made with the intention to help traders, investors, exchanges, and token issuers alike, its primary goal is to increase liquidity of the crypto market as a whole.
To make this goal come true, Hummingbot trading bots rely on market making as the chief means of linking multiple exchanges and traders into a network of profitable trade deals marked by stability and reable profits.
Minimizing the infamous costs of maintaining a cryptocurrency network and processing transactions is supposed to uplift the market to a whole new level of popularity and value, and Hummingbot aims to be among the vanguard of this trend.
A mixture of pre-made bots, capable script editors, market making, and liquidity mining, Hummingbot is a platform that aspires to being a multi-purpose solution which is to satisfy a wide array of crypto traders and dealers.
This is what they claim to be. This review will test this claim for its basis in reality. Stay tuned!
Hummingbot Trading Bot Review
Hummingbot’s crypto trading bot is designed to be a part of the bigger picture. However, it is susceptible to individual analysis because, after all, crypto trading bots are the crux of every trading automation effort.
Hummingbot, while having some pre-made bot solutions in stock, encourages its users to make their own bots.
In other words, Hummingbot hosts a command-prompt line interface in which traders build their own bots.
Two coding languages are integrated into the platform and these two are Python and Cython, so the maneuvering space is pretty limited to anyone not well-versed in these two programming languages.
On the plus side, Hummingbot trading bots implement a strategy called “market making” (more on this later) which was previously available mostly to big names and hedge funds only.
However, this does not take away from the fact that the tech-intensive requirements severely limit the number of traders who are able to safely rely on Hummingbot.
While the Hummingbot team downplays these requirements and promotes the software as being beginner-friendly, it is obvious that low-level programming languages, a steep learning curve, and an unfamiliar trading strategy stand like a roadblock that few can leap over.
The “special” trading automation method employed by Hummingbot is called market making. It turns its bots into second-hand markets by posting high-frequency bids on multiple exchanges.
By taking into account all its connected exchanges, it forms prices in such a way as to always be able to buy where the tokens are cheaper and sell where the tokens are more expensive.
This ties in neatly with the whole idea of more global liquidity for the crypto market. However, it is the execution that matters the most.
Why would day traders selflessly support a market if it comes at the expense of their profits?
Small quantity market making has generous intentions, but shows little signs of beating the profitability of the more conventional trading methods for the very traders upon whom it relies.
To increase the liquidity of its own network and the liquidity of their integrated exchanges, Hummingbot also deployed a market miner besides its trading bots.
It works as all mining methods do: by providing liquidity to associated parties’ trading pairs, you get rewards in respective tokens.
It is community-driven and the Hummingbot central authority does not have control of the product of your labor.
However, it does provide a real-time stats tracker and a list of the most successful miners out there.
It is worth noting that you can participate with your own software, which also limits the profitability of this activity when newcomers and the less experienced in the field decide to participate.
Ease of Use & Accessibility
A big factor in calculating the quality of a trading bot lies in ease of use and accessibility.
The most powerful crypto trading bot becomes useless to nearly every trader if it requires a bachelor’s in computer programming in order to operate it.
Hummingbot does not require a bachelor’s in programming, but it still requires a degree of technical expertise in coding, programming, and exchange trading that is prohibiting to the vast majority of day traders.
If you do not have considerable control over Python and Cython, do not expect to be able to run trading bots made with this platform.
Yes, some pre-coded solutions do exist within the platform, but with Hummingbot being an open-source project, there is little to no support given to updating old code and keeping track of their performance in the ever-shifting crypto market circumstances.
In other words, no one guarantees that what you run will bring in the money.
If you do not meet these qualifications, this review points out that it might be a good idea to save your time and give up on Hummingbot immediately.
Being a promoter of cross-platform liquidity, it makes sense for Hummingbot to have an enormous network of supported exchanges, both centralized and decentralized.
With the trading strategy consisting of linking multiple markets, you need to have integration for multiple markets in the first place.
Some of the supported exchanges include: Beaxy, Binance, FTX, HitBTC, Huobi, Balancer, and many others, for a total of more than 30 connectors.
This is a good thing and should be marked with a positive grade in every review. Kudos!
Regarding safety and security policies, Hummingbot does not deviate from the standards of the industry.
These standards are harsh, as finances and the digital world in conjunction spell the name of a disaster if certain protocols do not get enforced.
Hummingbot’s users have full control over the code and the external signals that they send over the web, while the platform itself has no access to your funds.
Even in the case of digital breaches, hackers would not be able to tap into your wallet due to the reliance on private keys or API.
After all, the project is open-source so anyone can check it for safety soft spots or dangerous loopholes in security policy.
Hummingbot as an open-source project is free and available on Github for anyone to download, modify, analyze, etc.
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To return to the question asked earlier in this review, is Hummingbot the right bot for users to rely on for safety, stability, and profits?
The answer is a bit complicated. While it undoubtedly has some positive and innovative aspects over its competition, its immense difficulty and cruel technical requirements render it unusable to many of us.
After all, a trading bot that cannot be used loses all its potential value to a trader as an individual.
Ultimately, can this review recommend Hummingbot to a majority of day traders? The answer is a decisive no.
The requirements outrank any potential gain from the use of Hummingbot. It takes too much to justify providing little in return.
However, it would be very wrong to assume that every capable trading automation software has a steep learning curve or massive tech-intensive requirements.
Take Pionex and Bitsgap as examples. With much less tech-intensive processes and incomparably better ease of use and accessibility they achieve everything that Hummingbot is capable of and more.
With extensive beginner support, premade bots and features, great performance potential, and powerful editors for those with a knack for that sort of thing, Pionex and Bitsgap render the use of software such as Hummingbot meaningless.
Is there a reason to stress over difficult details if you get more out of a software that is much easier to use? Exactly.