Grid Trading: The Ultimate Guide
Grid Trading
One form of trading, called grid trading, gives day traders an option to capitalize on trend continuations in the market by increasing the size of their position as the trend continues. In this article, we will take a look at what grid trading is, as well as look at some of the best crypto-grid trading bots that you can utilize to create a passive income stream for yourself.
Disclaimer: We want to emphasize that this is not financial advice. Cryptocurrencies operate in a volatile market, where values can drastically fluctuate in a blink of an eye. It is imperative to conduct thorough research and seek guidance from a qualified financial advisor before investing.
What Is Grid Trading?
Grid trading is when orders are placed above and below a set price, creating a grid of orders at incrementally increasing and decreasing prices. Grid trading is most commonly associated with the foreign exchange market. Overall the technique seeks to capitalize on normal price volatility in an asset by placing buy and sell orders at certain regular intervals above and below a predefined base price.
For example, a forex trader could put buy orders every 15 pips above a set price, while also putting sell orders every 15 pips below that price. This takes advantage of emerging trends. They could also place buy orders below a set price, and sell orders above. This takes advantage of ranging conditions.
Understanding Grid Trading
Grid trading offers the distinct advantage of minimizing the need for intricate market predictions and offers an easy avenue for automation. However, it's not without its caveats. Potential downsides include the risk of substantial losses if stop-loss parameters aren't rigorously adhered to, as well as the complexity associated with managing and closing multiple positions within an extensive grid.
The underlying premise of with-the-trend grid trading hinges on capitalizing on sustained price movements by strategically increasing position sizes. This strategy functions by triggering additional buy orders as the price ascends, resulting in a progressively larger position. The profit potential burgeons as the price continues its trajectory, aligning with the trend's momentum.
Yet, this approach navigates a conundrum. Ultimately, traders grapple with deciding when to halt the grid, exit trades, and secure gains. Without prudent action, profits could quickly evaporate if the price reverses. While losses are curbed by equally spaced sell orders, the time it takes for these orders to trigger might allow a once-profitable position to transition into a loss.
Consequently, traders often confine their grid to a predefined number of orders, often around five. This could involve setting up multiple buy orders above a specific price point. If the price traverses these buy orders, traders exit the trade with a profit. This can be achieved all at once or by initializing a sell grid from a predetermined target level.
In scenarios characterized by choppy price action, it's possible for buy orders to trigger above the designated price and sell orders below it, culminating in a loss. This underscores the vulnerability of the with-the-trend grid strategy. Its optimal efficacy is realized when the price sustains a consistent direction. Fluctuations back and forth typically yield suboptimal results.
In contrast, during oscillating or ranging markets, the against-the-trend grid strategy tends to be more effective. Here, a trader places buy orders below a fixed price at regular intervals and sell orders above it. As the price dips, the trade leans long. When the price rises, the corresponding sell orders are activated, curbing the long position and potentially transitioning to a short position. The trader accrues profits as long as the price maintains its sideways oscillation, thereby triggering both sell orders.
However, the Achilles' heel of the against-the-trend grid lies in uncontrolled risk. Should the price persistently trend in one direction instead of oscillating, traders could amass an escalating, losing position. Inevitably, a stop-loss level must be established, as indefinitely sustaining or increasing a losing position isn't a viable strategy.
Best Crypto Grid Trading Bots
Now that we have taken a look at what grid trading is and how it works, let’s take a look at some of the best crypto grid bots in the market.
Pionex
Pionex is easily one of the best crypto grid trading bots in the industry, and one of the biggest reasons for this is that their grid trading bots are completely free for you to use. These guys offer five different kinds of built-in grid trading bots for no cost at all, and they vary based on what your needs are.
Their grid training bots let you automate grid trading strategies, which means you can set a price range, as well as the number of grids. You have to choose the percentage of funds that you would like to implement, and you can either set these yourself, or you can use their advanced AI strategy. Pionex also has a reverse grid bot that you can capitalize on, which lets you store your assets when the price is decreasing.
When it sells your allocated assets at the existing level, it will repurchase them when the price drops. If you think the price is going to drop, then you should make the most of a reverse grid bot. You will need to configure your own parameters, including the number of grids, price range, and the percentage of funds. Pionex also offers an Infinity grid bot, which is their premium version of grid trading bots.
Coinrule
Coinrule is another great crypto trading bot that you need to capitalize on because according to them they make automated trading really easy. They ultimately want to help their clients compete with professional traders out there, which means that they have a number of different grid bot trading strategies, as well as grid bots that can do everything for you, so that you don’t even have to think about it.
They are well connected with more than 10 popular exchanges, and they say that they offer their clients military-grade security and encryption, so you never have to worry about any of your assets being compromised in any way.
They allow their clients to create automated trading rules, and you can do this 24/7, and they, of course, have plenty of historical data based on existing and past grid bot trading strategies. This allows you to learn from the best, and work out how to implement your trades properly.
Bitsgap
Bitsgap is another grid trading bot that you need to make the most of in the industry right now as they offer their clients a variety of different kinds of grid trading bots. They let their clients choose the grid quantity, as well as price, exchange, and their lower and upper price limits. They also let you set the percentage of funds that you would like to allocate to that trade.
They offer additional features including taking profit, stop loss, trailing up, and calculating the profit of each grid by taking away the price percentage of each grid from the trading fee percentage, for selling and buying respectively.
Bitsgap has a demo mode, which means that you can try one of their crypto trading bots for free without having to pay anything. They have a minimum investment, but this is going to depend on the parameters that you have set. They calculate the minimum deposit based on grid quantity. You also have to choose your price based on which stop loss is going to be executed. When this is triggered, all open bot orders are going to be canceled automatically.
The bot is going to sell your base currency at the best available price based on a market order.
They say that their basic package is going to cost you $19, their pro package is going to cost you $44, and their advanced package is going to cost you $110.
Quadency
Quadency is another crypto grid trading bot that offers automatic grid trading strategies for its clients. They say that they ask their clients to configure the following parameters, like the number of grids, the exchange, the distance between grids, the amount per order, and when the bot should stop working.
Of course, the higher the number of grids, the higher the investment it is going to require.
There are a number of options with this crypto grid trading bot, including being able to re-create a grid around the exit price, so that you can continue trading. Another option is to cancel all options and stop the bot, cancel all orders, close your positions and stop the bot, and lastly, do nothing. This means that you do get to control a certain amount of the action, or you can choose to delegate this action to the grid trading bot.
This platform charges its clients zero trading fees, which means that you can open and close trading positions without being charged a cent. You will have to pay them when you generate a profit, and this is going to be 10% of your total earnings.
TradeSanta
TradeSanta is another premium quality crypto grid trading bot that wants its clients to be able to trade cryptocurrency like a professional, which is why they offer trading bots as well as a powerful terminal.
They want their clients to be able to automate their trading with proven strategies, bots, and signals. And they also want you to be able to trade quicker, so that you can maximize your results. TradeSanta also has a helpful tutorial video on their website about how they work, so you can really get to know the ins and outs of their grid trading bot before you sign up for anything, and once you’ve created an account with them, you can connect to a number of supported exchanges.
They offer long and short strategies, so you can take advantage of bear and bull markets, and they also offer spot and futures trading, so you can capitalize on grid trading bots working hard around the clock for you.
Grid Trading: Conclusion
Grid trading is when orders are placed above and below a set price, creating a grid of orders at incrementally increasing and decreasing prices. Overall the technique seeks to capitalize on normal price volatility in an asset by placing buy and sell orders at certain regular intervals above and below a predefined base price.
