1) Signal generation: sources and sanity checks

Start with a single, well-understood signal (momentum break, VWAP deviation, mean reversion on high-liquidity pairs). Combine multiple orthogonal data sources — exchange order books, trade ticks, on-chain metrics, and sentiment feeds — to reduce single-source failure. Always run fresh sanity checks (price bounds, liquidity checks, timestamp drift) before passing a signal downstream: an invalid price feed is the most common cause of rogue trades.

2) Strategy validation and backtesting

Backtest on realistic data with simulated fees, slippage models and fills informed by order-book snapshots. Use walk‑forward or out‑of‑sample testing to avoid overfitting. Maintain a version-controlled repository of strategy code and configuration; store the hash of each release so that every live trade can be traced to the exact strategy version used.

3) Execution engine and exchange selection

Choose exchanges that provide robust, documented APIs, WebSocket market feeds and clear rate limits — and that support the order types you need (limit, IOC, maker/taker options, OCO). In Canada many active traders use exchanges that publish institutional-grade APIs and FIX connections; Kraken provides REST, WebSocket and FIX APIs with clear developer docs for order placement and private feeds. When possible, prefer exchanges that allow IP whitelisting, API permissions and order-size controls to reduce key compromise risk.

For Canadian traders who require regulated marketplaces and local fiat rails, look for platforms that explicitly support programmatic access and institutional features (order books, FIX/REST) rather than custodial retail products that restrict automation. Kraken is an example of an exchange with full API documentation and institutional interfaces. citeturn1search1

4) Which Canadian exchanges support programmatic trading?

Not all Canadian retail platforms expose public trading APIs or permit bot trading. Bitbuy advertises a Pro platform and institutional-grade API/FIX access for Pro users and markets regulated to operate as a registered marketplace in Canada. NDAX similarly offers documented REST and WebSocket APIs for programmatic access and API key management. Evaluate each provider’s developer docs, rate limits, and institutional offerings before connecting live. citeturn3search0turn1search9

By contrast, some well-known Canadian retail apps intentionally limit or do not offer public trading APIs; confirm a platform’s official policy before building automation around it to avoid account freezes or Terms of Service violations.

5) Risk and order management layer

An execution engine should never accept raw go/no-go signals directly. Implement a risk middleware that enforces per-order limits (size, notional, max slippage), position limits (per-symbol, aggregate), cooldown windows, and global kill switches. Use conservative defaults in production: prefer limit or post-only orders where possible, split large orders with TWAP/VWAP slicing, and always simulate order fills against current order-book depth before sending marketable orders.

6) Observability, monitoring and incident response

Design monitoring for latency, fill rates, P&L drift, anomalous balances, and API error rates. Send alerts to multiple channels (email, SMS, pager) and create automated safety actions: account-wide cancel, machine-level shutdown, gradual position unwind. Maintain immutable logs of incoming signals, executed orders, exchange responses, and reconciliation records for audit and troubleshooting.

7) Accounting, record-keeping and CRA compliance

Canadian traders must retain complete transaction records to support tax filings: dates, times, amounts, counterparty (exchange), wallet addresses, and CAD valuations at the time of each transaction. The CRA explicitly advises keeping books and records for crypto-asset transactions and retaining them for at least six years. Automated pipelines should export daily transaction ledgers and maintain human‑readable CSVs for accountant review. Use automated reconciliations between exchange trade history and your internal fills to detect missed or duplicate entries. citeturn0search0

8) AML, exchange onboarding and Canadian regulatory context

Exchanges and virtual asset service providers in Canada operate under AML/ATF rules and many are registered with FINTRAC as Money Services Businesses (MSBs) or foreign MSBs when they serve Canadians. FINTRAC guidance and enforcement activity underscore the importance of using regulated counterparties and understanding reporting thresholds (e.g., large virtual-currency transaction reporting). When designing automation, be aware that exchanges may ask for additional KYC, explain unusual flows, or impose withdrawal review processes that can affect your execution strategy. citeturn5search5turn5search0

9) Security: keys, permissions and infrastructure

Treat API keys like production secrets. Enforce least-privilege (trade-only keys, withdraw disabled unless necessary), IP whitelisting, and HSM or secrets vaults for storage. Rotate keys on a cadence and store each rotation event in your audit log. For high-frequency or institutional strategies, consider colocating in a low-latency provider or using exchanges that offer colocation and FIX/low-latency endpoints.

10) Sandboxes, testnets and staged rollouts

Never jump from backtest to mainnet. Use exchange sandboxes or testnet environments where available, and run canary deployments with tiny notional sizes on live markets. Increase size in measured steps while monitoring slippage, cancellations, and downstream accounting. Exchanges such as Kraken offer test environments and complete API guides to support staged integration. citeturn1search1