Quickstart - Configure a market making bot

  1. Overview
  2. Install Hummingbot
  3. Configure a market making bot
  4. Run the bot in paper trading mode

If you have successfully installed Hummingbot you should see the welcome screen, read through the important disclaimer and create a secure password.

Create a secure password

If you are using Hummingbot for the first time on this machine, the system will prompt you to create a password. This password will be used to encrypt sensitive configuration settings e.g. API keys, secret keys and wallet private keys.

Warning

For security reasons, the password is only stored locally in encrypted form. We do not have access to your password.

After setting up your password, you should see the command line-based Hummingbot interface.

First, let's walk through the design of the Hummingbot client interface:

  • Left top pane: command output pane
  • Left bottom pane: command input pane
  • Right pane: trading logs

Enter the command help to see a list of commands:

Command Function
connect List available exchanges and add API keys to them
create Create a new bot
import Import a existing bot by loading the configuration file
help List available commands
balance Display your asset balances across all connected exchanges
config Display the current bot's configuration
start Start the current bot
stop Stop the current bot
status Get the market status of the current bot
history See the past performance of the current bot
exit Exit and cancel all outstanding orders
paper_trade Toggle paper trading mode
export Export your bot's trades or private keys

Enter API keys

Hummingbot requires trade enabled API keys to access your exchange account. If you wish to test Hummingbot and simulate trading without risking actual assets, proceed to enable paper trading mode.

Enter the command connect [exchange] to connect your exchange account to Hummingbot by adding API keys, where [exchange]is one of the exchanges supported by Hummingbot. You can hit SPACE or start typing to see available options.

The command connect shows if API keys have been successfully added.

Note that each exchange has a different format for API keys. For exchange-specific information on how to find your API keys, please see the individual exchange pages in Connectors.

Tip: Copying and Pasting

Users have reported not being able to copy and paste their API keys on some platforms. Our help articles such as Other ways to copy and paste and Paste items from clipboard in PuTTY may help.

Enable paper trading mode

In this Quickstart guide, we will run Hummingbot in paper trading mode and simulate trading strategies without executing and placing actual trades.

If you wish to use Hummingbot using real assets and place live orders, skip this step.

Enter the command paper_trade to enable this feature.

Binance Trading Pair

Create a new configuration

Next, we'll create a configuration for a market making bot using the pure market making strategy.

Enter the command create to begin creating a strategy config file. This configuration will be saved to a file that can be imported later on.

Binance Trading Pair

Select exchange and trading pair

Next, select the exchange and trading pair.

Since we are creating a paper trading bot, you don't need any assets on the exchange. However, you will need an account in order to generate API keys.

For the trading pair, select either ETH-USDT or ETH-USDC depending on the exchange. Here are two examples:

Binance.com

Binance Trading Pair

Coinbase Pro

Coinbase Pro Trading Pair

Enter market making parameters

A bot's strategy parameters control how it behaves. During this step, you will define the basic parameters for your market making bot: order spreads, order sizes, and how often to refresh orders.

Tip: What spreads should I set?

Order spread is one of the most important levers that market makers can control. Tighter spreads cause your orders to be filled more often, resulting in more trades, bigger changes in asset balance, and potentially more risk.

We recommend that new users start with wider spreads, such as 1.00% for each side of the order book or higher.

Pure-mm Parameters

Later, you can access and configure the advanced parameters of this strategy. A more detailed explanation of each prompt for basic pure market making strategy are explained here and advanced market making here.

Alternate buy and sell orders

The ping pong feature helps users in managing inventory risk by alternating buy and sell orders after a fill.

For more information, you may read through Ping Pong in the Advanced Market Making section.

Save configuration

Enter the name you want for your configuration file to complete the process.

Proceed to the next section: Run Your First Trading Bot