Non-Custodial Vs. Custodial Trading Bots: What’s the Difference?

Trading bots have become a crucial tool for many cryptocurrency traders, helping automate the trading process and allowing for 24/7 monitoring of the market. However, not all trading bots are the same. There are two types of trading bots that traders should be aware of: non-custodial and custodial. These two types differ primarily in how they handle user funds and trading operations.

Custodial Trading Bots

Custodial trading bots are ones where the platform holds user funds. Essentially, custodial exchanges technically have custody of their users’ funds and are mostly responsible for keeping it secure. Some examples of custodial exchanges are Binance, Bittrex, and GDAX to name a few​1​.

The main advantage of custodial exchanges is that the exchange holds all of the liability to protect the funds from hackers, not the user, ensuring a more seamless crypto investment experience​1​.

However, custodial exchanges do come with their disadvantages. The most significant of these is that the exchange, not the user, holds the money. This means that custodial exchanges hold the custody of your private wallet keys, which could potentially allow unannounced access to your money. The information security support requirements for these exchanges are also more complicated​1​.

Non-Custodial Trading Bots

On the other hand, non-custodial trading bots do not have custody of users’ funds. Traders have complete ownership and responsibility for their money, meaning they are individually liable to keep their money secure at all times. Examples of non-custodial exchanges include Evercoin, Shapeshift, and Coinswitch​1​.

The main advantage of non-custodial exchanges is that the user, not the exchange, holds their own money, allowing consistent access to their cryptocurrency funds. Additionally, there are less information security support requirements for the exchange​1​.

The disadvantage is that the user, not the exchange, carries around the burden to protect their funds from hackers. Additionally, there tends to be little to no customer service for traders on non-custodial exchanges​1​.

The Growing Trend of Non-Custodial Trading Bots

Non-custodial trading bots and exchanges have been gaining popularity in the crypto community, primarily due to the increased emphasis on security and control over funds. As the trend towards decentralization in the crypto space continues, the use of non-custodial platforms is likely to increase.

Despite the potential challenges that come with non-custodial trading bots, such as the responsibility for securing one’s funds, many traders prefer them due to the control and transparency they offer. This control extends to the ability to import and review transactions across over 500+ crypto exchanges and wallets, calculate capital gains and losses, and ensure accurate tax reporting​2​.


When it comes to choosing between non-custodial and custodial trading bots, there is no one-size-fits-all answer. The decision depends on your individual needs, risk tolerance, and trading strategy.

However, if you value having full control over your funds and operations, a non-custodial trading bot like the one offered by MyDexBot might be the best choice for you. At MyDexBot, we prioritize your autonomy and security, offering a decentralized bot trading platform that puts you in the driver’s seat.

Ready to take control of your trading? Sign up on our website at app.mydexbot.com today!

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