Automated crypto trading is becoming quite popular these days, and for good reason. Trading bots can trade 24x7 without any intervention and most importantly, without human emotions.

Nowadays there are quite a few bot providers you can choose from. In this article, we will be discussing open-source trading bots. We'll go over what they are, their pros and cons, and what to look for when choosing one.

What are open-source crypto trading bots?

There are many kinds of trading bots out there. Some are simple; some are complex. Some need to be installed on your computer; some can be accessed from the cloud. But what are open-source crypto trading bots, and why are they interesting? The most important characteristic is that their code is public and they are entirely free to use. And when I say free to use, I don't mean a downgraded free plan of a company that offers different tiers; I mean completely free-to-use all features without any restrictions or paywalls.

Open-source crypto trading bots are popular for beginner traders, especially those on a tight budget. However, they have specific advantages and disadvantages, so make sure you understand them before using them.

Advantages of open source crypto trading bots

100% free
One of the most compelling reasons to use an open-source bot is that you can do it for free. You don't need to pay anything to get started with a good-quality bot. That said, if you want to use your own cloud-based bot, you will need to pay for hosting fees or other associated costs (more on that later).

Can be customized
Another advantage of open-source crypto trading bots is that their code is public. This transparency allows you to tweak it and modify the bot's behavior to fit your trading style. You can also add new features or indicators if you know how to code.

Can be trusted, to an extent
Since the code is open for everyone to see, anyone can check it for security vulnerabilities. This makes it more complicated (but not impossible) for malicious actors to insert harmful code into the bot. Of course, this only applies if you trust the bot's developers in the first place.

No need to trust a centralized entity with your sensitive data
If you use a cloud-based bot, you will need to entrust your API keys to the provider. This means they will have access to your account and could potentially do some damage if they were so inclined (very unlikely, but not impossible). With an open-source bot, you are in control of your API keys and no one else has access to them (as long as you don't get hacked, see below).

They (usually) have a strong community
Another good thing about open-source bots is that they usually have a strong community behind them. Since they depend on the community for their development, the community is generally very involved in helping others install it, set it up, or discuss trading strategies. If you encounter any problems or want to learn more about the bot, you can always contact the community for help.

Disadvantages of open source crypto trading bots

Can be complex to set up and use
The high customizability and transparency of the code come with a significant drawback: they can be complex to set up and use, especially for beginner traders.

If you're not a developer or don't know how to code, you will need to learn how to do it before you can start using the bot. Even then, you might encounter some errors along the way. This is why it's essential to ensure that the bot you choose has good documentation and a supportive community (more on that later).

Can be less secure
As we mentioned, anyone can inspect open-source code for security vulnerabilities. However, this also means hackers can find and exploit these vulnerabilities, so it's essential to only use bots from reputable developers and to keep your software up to date. If a hacker were to obtain your API keys, they could use them to wreak havoc on your account.

Fewer features and indicators
Another downside of open-source bots is that they often have fewer features and indicators than paid bots. This is because they rely on the community for development, and not everyone has the time or expertise to develop complex features. That being said, there are some very well-developed open-source bots out there.

Can be time-consuming to maintain
One often overlooked problem with open-source software is that you need to take care of the bot's and your machine's updates. In many cases, these updates go smoothly, but in some cases, they break compatibility, especially when making important updates such as the operating system.

You need to ensure the reliability of the hardware
If you're using a cloud-based bot, it will be hosted on a platform like AWS or Heroku. These platforms are usually very reliable, but there have been instances where they've gone down for a few hours (rare, but it does happen). If you are using it on your computer or laptop, you also need to ensure that your machine's internet connection is not interrupted, as your bot needs it to monitor the market 24x7. If your bot's internet connection is interrupted in the middle of a trade, this could result in unexpected losses.

Community support doesn't guarantee to solve your problems
Even if a bot has a large and active community, it doesn't mean that you will always get a timely response to your questions, or that you will solve your problems at all. This is especially true if you're asking for help with something that is not well-documented.

What to look for when choosing an open-source crypto trading bot

Now that you know the advantages and disadvantages of open-source crypto trading bots, let's consider what you should look for when choosing one.

Reputation
First and foremost, you want to ensure that the bot is from a reputable developer. An excellent way to do this is to check if the bot is being developed on a well-known open-source development platform such as GitHub. If it is, you can check how many people have contributed to the project and how often it is updated. This will also give you an idea of how active the community is and how well-supported the bot is.

Features
As we mentioned before, open-source bots often have fewer features than paid bots. However, they should still have all the essential features you need, such as an order book, charting tools, trading tools, backtesting, portfolio tracker, etc. Make sure you take the time to review what the bot can offer and decide what features you must have and which ones are optional.

Documentation
Another critical thing to look for is good documentation. Documentation is essential because it will make it easier for you to get started with the bot and troubleshoot any problems you may have. The documentation should be clear and concise and cover all the essential topics, such as installation, usage, features, etc.

Community
As we mentioned before, the community is vital for two reasons: development and support. If the bot has a large and active community, it's more likely that the community will develop new features, and you'll be able to get help if you have any problems.

Hidden costs
Finally, though open source bots are completely free, there are usually some cost associated to them that you ought to be aware of. If you plan to run the bot on your own server, you have to consider the associated server costs. Furthermore, you may want to consider the time you need to invest to set up, run and maintain the bot. While at first glance it may seem like an open source bot is a good idea, once you factor in hidden costs and the required time investment it may not be the best choice for you.