The world of cryptocurrency trading moves fast. For many, manually monitoring prices and executing trades around the clock is simply not feasible. This is where automated trading systems come in. By utilizing algorithms and predefined strategies, these systems can operate 24/7, capitalizing on market opportunities without constant human intervention.
This guide explores several prominent open-source automated trading systems designed for Bitcoin and various altcoins. Using open-source code as a foundation, you can study, modify, and customize these systems to implement your own trading strategies.
Understanding Automated Crypto Trading
Automated trading involves using computer programs to execute trades based on a set of predefined rules and conditions. These systems can analyze market data, identify patterns, and place buy or sell orders much faster than a human ever could.
The primary benefits include emotion-free trading, the ability to backtest strategies, and the capacity to operate continuously. For crypto markets, which never close, this is a significant advantage. The open-source projects listed below provide a powerful starting point for anyone interested in building or customizing such a system.
Top Open-Source Automated Trading Systems
Here is a curated list of some of the most notable open-source automated trading bots and frameworks available.
Blackbird
- Programming Language: C++
- Supported Platforms: Bitfinex, OKCoin, Bitstamp, Kraken, ItBit, Gemini
- Core Concept: This is a Bitcoin arbitrage system. It is designed to profit from price discrepancies between different exchanges without the need to transfer funds between them. It identifies moments when an asset is undervalued on one platform and overvalued on another, executing simultaneous trades to capture the spread.
Gekko
- Programming Language: JavaScript / Node.js
- Supported Platforms: Bitstamp, CEX.io, Kraken, BTC-e, Bitfinex, LakeBTC, Cryptsy
- Core Concept: Gekko is a versatile and modular trading bot. It can operate based on technical indicators like DEMA, MACD, RSI, or PPO. Its architecture allows users to easily add custom trading strategies. Furthermore, its functionality can be extended through plugins for news integration, email notifications, and profit simulation.
Bitcoin Arbitrage
- Programming Language: Python
- Supported Platforms: Primarily Bitstamp for execution, but it monitors a wide array of exchanges for pricing data, including Paymium, BTC-e, Bitfinex, Kraken, OkCoin, CampBX, Gemini, BTCC, and Coinbase.
- Core Concept: As the name implies, this Python-based bot focuses on identifying and executing arbitrage opportunities across the global cryptocurrency market. It scans multiple exchanges to find profitable price differences.
Bitcoin Dealer
- Programming Language: Django (Python web framework)
- Supported Platforms: Bitstamp
- Core Concept: This project provides a simple automated trading bot with a web-based management interface. Built with Django, it's a good example for those who want to understand how to build a user-facing dashboard for controlling a trading system.
Crypto Arbitrage Trader
- Programming Language: Python
- Supported Platforms: Coins-E, BTC-e, Vircurex, Cryptsy
- Core Concept: This bot expands the arbitrage concept beyond just Bitcoin. It is designed to compare prices for various altcoins across different supported platforms and automatically execute trades to profit from any identified arbitrage opportunities.
tAPIbot
- Programming Language: Python
- Supported Platforms: BTC-e
- Core Concept: This is a straightforward automated trading system specifically for the BTC-e platform. While it may not have been updated recently, its simplicity is its strength. All configuration parameters are managed in a clear
settings.inifile, making it easy to understand and modify for those familiar with Python.
BTC-E Arbitrage Bot
- Programming Language: PHP
- Supported Platforms: BTC-e
- Core Concept: This bot is designed to perform arbitrage between different currency pairs on the BTC-e exchange itself. The codebase is noted for its simplicity, making it an excellent project for PHP developers to study and adapt for their own intra-exchange arbitrage strategies.
Key Considerations Before Getting Started
Jumping into automated trading is exciting, but it requires careful preparation.
- Technical Knowledge: A solid understanding of the programming language used by your chosen bot is essential for troubleshooting and customization.
- API Keys: You will need to generate API keys from the exchanges you wish to trade on. It is crucial to restrict these keys to only the necessary permissions (e.g., trade and read info, never withdraw) for security.
- Backtesting: Always test your strategies on historical data before letting a bot trade with real capital. This helps you understand potential performance and risks.
- Risk Management: Never invest more than you are willing to lose. Start with small amounts to test the bot's live performance. Implement strict stop-losses and define the maximum capital allocation for any single trade.
- Fees: Remember to factor in trading fees on all exchanges involved. A profitable arbitrage opportunity on paper can become a loss after fees are applied.
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Frequently Asked Questions
What is the main advantage of using an open-source trading bot?
Open-source bots provide full transparency. You can see exactly how the code works, audit it for security, and, most importantly, customize every aspect of the trading logic to fit your specific strategy, which is not possible with closed-source, commercial bots.
Do I need to be a programmer to use these systems?
While it is possible to run some bots with minimal coding knowledge by following setup instructions, a strong understanding of programming is highly recommended. You will need to debug issues, configure settings, and likely want to modify strategies, all of which require technical skill.
Is arbitrage trading still profitable?
Yes, but it has become more competitive. Profitability depends on market volatility, the speed of your connection and execution, and the trading fees involved. Opportunities often exist for very short periods before the market corrects the price difference.
How do I keep my funds secure when using a trading bot?
Security is paramount. Only use API keys with trade permissions and explicitly disable withdrawal permissions. Run your bot on a secure, private server (not a shared hosting service), and use strong, unique passwords for both your server and exchange accounts.
Can I run these bots on a regular computer?
You can, but it's not ideal for 24/7 operation. For best performance and reliability, it is advisable to run trading bots on a virtual private server (VPS) located geographically close to the exchanges' servers to minimize latency.
What is the difference between a market-making bot and an arbitrage bot?
A market-making bot provides liquidity by placing both buy and sell orders, aiming to profit from the bid-ask spread. An arbitrage bot, on the other hand, looks for price differences for the same asset across different markets and buys low on one while selling high on another simultaneously.