Reading from a text file and executing contents in terminal

it can be done. Just cd to the directory of the file in the terminal and type chmod +x commands.txt, and then ./commands.txt runs commands in the file

No, it need not be .txt, extension doesn't matter

You can also put one command per line in the text file (e.g. my_commands.txt), and then run them all as:

source my_commands.txt