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API Trading on dYdX Exchange: A Detailed Guide with Gunbot

· 5 min read

Get started with dYdX and Gunbot with our easy-to-follow guide. We'll introduce you to API trading on a decentralized exchange using automated trading software. By the end of it, you'll feel confident to venture into dYdX trading using Gunbot.

Symbol image of trading on dydx exchange

Explore how to capitalize on the dYdX exchange's Decentralized Layer 2 Perpetuals using Gunbot for trading automation.

About dYdX and Its Unique Layer 2 Perpetuals

dYdX is a decentralized exchange (DEX) that has rapidly risen into prominence due to its innovative approach to crypto trading. The dYdX news is mostly about their unique approach to crypto trading, especially through Decentralized Layer 2 (L2) Perpetuals with extremely low trading fees. It looks and feels like Centralized Limit Orderbook exchange, but it's a decentralized platform that happens to be great for bot trading.

These defi L2 Perpetuals use a 'roll-over' system, keeping positions open indefinitely until the trader decides to close them. Consequently, they offer efficient tools for diverse trading strategies, be it long-term or short-term. When trading on dYdX, traders enjoy multiple benefits, including absolute control over their positions and funds, even when the dYdX exchange itself faces issues.

Overcoming Unforeseen Events: Forced Withdrawals & Position Closure

dYdX allows traders to preemptively exit their positions and access their funds through L2, shielding them from scenarios where the exchange may be offline or unavailable. Here's how:

  • Forced Withdrawals: If the exchange faces issues or becomes inaccessible, traders can rely on the smart contract-powered architecture of dYdX, ensuring seamless forced withdrawals. Consequently, traders can retrieve their funds, maintaining control over their assets.

  • Forced Closing of Positions: dYdX also facilitates forced closing of positions on L2. This allows you to proactively close open positions before executing a withdrawal.

Now that we've discussed these functionalities, let's delve into how Gunbot can optimize your experience on dYdX.

Using Gunbot with dYdX exchange

Gunbot, a leading automated trading software that runs from your own device, supports trading Perpetual Futures on dYdX. This feature provides an alternative to trading on centralized futures exchanges. Here's how to get started:

Getting Your API Credentials

  1. Begin by connecting your wallet to dYdX. This process is the web3 equivalent of 'creating an account' on centralized exchanges.
  2. During this process, ensure you select the 'remember me' option.
  3. No need to create an API key; it's automatically generated for you.
  4. Store your API Key and Secret securely as they're essential for Gunbot setup.

🔒 Security Tip: Guard your API secrets rigorously, never share them. Gunbot only stores API secrets on your local device.

The steps are simplified here, refer to our full guide on retrieving the dYdX api credentials for more details.

Setting up Gunbot using the sgsfutures Strategy

With your API credentials in place, you can set up your preferred trading strategy. Here are the steps for implementing the sgsfutures strategy:

  1. Access your Gunbot user interface.
  2. Go to 'Trading Settings' and add a new trading pair for the defi market you wish to trade. The correct pair name format is USD-ETH, the rest of the guide assumes you select this pair.
  3. Choose sgsfutures as the strategy.
  4. Look in the Balance settings catogy for three crucial settings: Trading limit (amount in USD), Max open contracts (amount in ETH), and Max loss (amount in USD). They define the default amount per buy order, maximum position size, and trigger for stop loss, respectively.
  5. Fine-tune the rest of the strategy parameters according to your trading preferences. To start with an unrestricted grid, start with disabling the restrictive options listed here.
  6. Save your settings and start trading.

✅ Congratulations! You've successfully implemented the sgsfutures strategy for automated trading on the dYdX Exchange.

Typical sgsfutures trading behavior

typical sgsfutures trading behavior on dydx crypto markets

Info: sgsfutures is a versatile strategy that adapts to market phases. It monitors trends, momentum, and more across multiple timeframes, alternating between various trading styles like grid trading, scalping, and support trading.

In Conclusion

Revolutionize your crypto trading journey on the dYdX exchange with Gunbot, the trading bot that stands at the forefront of automated trading.

Backed by an active and supportive community, Gunbot provides traders with cutting-edge features and a wealth of knowledge to excel in the crypto market. With Gunbot's powerful capabilities and dYdX's innovative platform, you'll gain a significant advantage in maximizing your returns and managing your risk. Remember that continuous learning and strategic adaptability are key to staying ahead of the curve. 🚀