DigitalOcean is known for a clean dashboard and excellent documentation, which makes it a comfortable first VPS for freqtrade. Its Singapore region is close to several large Asian exchanges. This guide walks through creating a Droplet (DigitalOcean's name for a server), securing it and starting freqtrade in dry-run.
Time needed: about 30 minutes. You need: a DigitalOcean account and a terminal on your computer.
Step 1: Create an SSH key
Skip this if you already have one.
ssh-keygen -t ed25519 -C "freqtrade-do"
cat ~/.ssh/id_ed25519.pub
Copy the public key (the line starting with ssh-ed25519).
Step 2: Create the Droplet
In the DigitalOcean dashboard, click Create → Droplets and choose:
| Setting | Choose |
|---|---|
| Region | Singapore (SGP1) for Binance, Bybit or OKX; Frankfurt or Amsterdam for European exchanges |
| Image | Ubuntu 24.04 (LTS) x64 |
| Size | Basic, shared CPU, 2 vCPU with 2–4 GB RAM for one bot |
| Authentication | SSH Key: add the key from Step 1 |
| Hostname | freqtrade-1 |
You can leave optional add-ons such as backups off for a bot server. Click Create Droplet. After about a minute, copy its IPv4 address.
Make sure your exchange allows API access from the country you choose. See our VPS guide for why location matters.
Step 3: Log in and update
ssh root@YOUR_DROPLET_IP
apt update && apt upgrade -y
Step 4: Create a user and disable password logins
adduser trader
usermod -aG sudo trader
rsync --archive --chown=trader:trader ~/.ssh /home/trader
sed -i 's/^#\?PasswordAuthentication.*/PasswordAuthentication no/' /etc/ssh/sshd_config
systemctl restart ssh
In a new terminal, confirm the new user can log in before you close the root session:
ssh trader@YOUR_DROPLET_IP
Step 5: Firewall, clock and automatic updates
sudo ufw allow OpenSSH
sudo ufw enable
sudo timedatectl set-ntp true
sudo apt install -y unattended-upgrades
DigitalOcean also has Cloud Firewalls under Networking. If you use one, allow only inbound SSH (port 22).
Step 6: Install Docker
curl -fsSL https://get.docker.com | sudo sh
sudo usermod -aG docker trader
Log out and in again, then confirm with docker compose version.
Step 7: Install and start freqtrade
mkdir ft_userdata && cd ft_userdata
curl https://raw.githubusercontent.com/freqtrade/freqtrade/stable/docker-compose.yml -o docker-compose.yml
docker compose pull
docker compose run --rm freqtrade create-userdir --userdir user_data
docker compose run --rm freqtrade new-config --config user_data/config.json
Choose dry-run when asked. Add a strategy and start:
curl -o user_data/strategies/AverageStrategy.py \
https://raw.githubusercontent.com/freqtrade/freqtrade-strategies/main/user_data/strategies/berlinguyinca/AverageStrategy.py
sed -i 's/--strategy SampleStrategy/--strategy AverageStrategy/' docker-compose.yml
docker compose up -d
docker compose logs -f
See the Docker installation guide for what each command does, and compare strategies in our leaderboard before choosing one.
Step 8: Reach FreqUI safely
ssh -L 8080:localhost:8080 trader@YOUR_DROPLET_IP
Then open http://localhost:8080 on your computer. Never open port 8080 in the firewall.
Step 9: Monitoring
DigitalOcean shows CPU, memory and disk graphs for each Droplet. You can also install its free monitoring agent to set alerts, for example when memory stays above 90%, which usually means you need a bigger Droplet or fewer pairs.
Step 10: Connect your exchange
When dry-run results look reasonable, create an exchange API key restricted to your Droplet's IP with withdrawals disabled. Follow our Bybit setup guide, then add Telegram alerts.
Costs to expect
Droplets are billed by usage up to a monthly maximum. A powered-off Droplet is still billed; destroy it to stop charges. Check the current price for your chosen size on the Droplet creation page.
Ready to connect an exchange?
Freqtrade needs an exchange account with API access. Bybit supports both spot and futures in freqtrade and offers a demo mode for testing.
Affiliate link: we may earn a commission if you sign up, at no cost to you.
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