- automated trade execution
- customizable and easy to use
- enhanced risk management
- trading with multiple coins simultaneously
- suitable for both bull and bear markets
- trading fees might be higher than generated profits
- the market might not move within your set range
- Grid trading is a trading strategy in which predetermined prices are set for buy and sell orders, which are then executed automatically.
- It is suitable for both bull and bear markets, and even flat sideways
- Based on the idea that crypto will fluctuate within a pre-set range, and traders will make a profit from both upward and downward moments.
- Used for spot and futures trading
You can’t monitor the markets 24/7. You can, however, set the parameters and use one strategy or another to get the best possible results, for example, by copying the moves of other traders or trading at a specific time. One of these strategies is grid trading. Grid trading is an automated strategy where you place numerous orders at incremental price levels above and below the current market price. With this series of orders, you can make profits even on small price fluctuations and avoid losing everything due to emotions, which goes both ways in bull and bear markets.
In this article we’ll explain what this strategy is about, what advantages and disadvantages it has, give an example, and give you the best grid bots on the market.
How Does Grid Trading Work?
With crypto grid trading bots, you can set up a bunch of different buy and sell orders at different prices, forming a sort of grid of orders. When the price reaches the price you set, the first buy order is executed. Then, a sell order is put above the buy price on the next grid. If the price continues to rise and reaches the next grid, the sell order is executed and you make a profit from the price difference.
Grid Trading Strategy Example
Imagine you want to invest in a pair of DOGE and USDT. DOGE is currently trading at $0.25 USDT. You decide to set an upper price limit of $0.30 USDT and a lower price limit of $0.20 USDT. You also want to use 6 grids with intervals of 0.01 USDT between each grid. Your total investment is $500 USDT.
Now you don’t have to worry about placing orders manually. A trading bot will take care of it for you. It’ll buy DOGE through market orders based on the parameters you set.
If the market is volatile, the bot will place a buy order when DOGE reaches $0.24 USDT. The first sell order will be placed at $0.26 USDT, just above the next grid. Once DOGE rises above $0.26 USDT, the bot will execute the first sell order. After that, the bot will place another buy order at $0.24 USDT. This cycle will continue until the upper price limit of $0.30 USDT is reached.
So, when the price of DOGE rises, you will automatically make a profit with each sell order.
Where Сan I Use Grid Trading?
As we’ve already mentioned, grid trading is available for both spot and futures trading. Spot trading is deploying funds from the wallet and stopping when the funds are insufficient. Futures trading, on the contrary, suggests the use of margin trades, and you can borrow additional capital. So, that makes spot grid trading a relatively safer option than the futures one.
Grid trading strategy is available via any reputable exchange of your liking.
Binance Spot and Futures
Binance offers free grid trading for both spot and futures. Beware of the risk you’re taking going for futures. Available for more than 600 cryptocurrencies, easy to use, and set parameters you’re looking for. As we said before, future trading is riskier, so we suggest you trade via Binance Futures only if you’re experienced.
A popular and legit crypto trading bot with both free and paid plans. The difference between them is the number of strategies you can set before you start trading. 7 strategies are available within the free plan.
More on the crypto trading bot: Coinrule review: automated crypto trading bot for everyone
The crypto exchange provides a free crypto grid for spot trading. No additional fees included. All trading pairs available for trading on the exchange are also available for grid trading.
A well-known and proven crypto trading bot. To use it, you need to choose the plan that suits you best. There is also a free 7-day trial version. Along with providing pre-configured trading bots, you will also be able to track and manage your portfolio.
Take a closer look at this bot: Bitsgap Review: Is It Safe?
Why Grid Trading Bots?
Imagine the market is sideways, meaning there is uncertainty about which way it’s going to move. A grid bot is especially useful in that kind of situation, given its design to catch the change in the market right away. In other words, it follows the rule Buy Low, Sell High. If the market is sideways flat, and the market price of a certain coin fluctuates within certain levels, then that’s the best time to use grid bots.
Again, no-no to 24/7 market monitoring. It’s exhausting, and even if attempted, it leads to a loss of concentration and making unnecessary aka emotional decisions. In addition, grid bots allow you to simultaneously trade multiple coins. It depends on the trials you signed up for, yet, the very possibility of this magnifies your profit.
Grid bots are like your personal risk manager ’cause you get to control your risk-reward ratio. You can play it safe and make steady profits with stablecoin pairs or you can go big and trade the riskier, volatile coins with low market caps for the chance at bigger returns. And since the bot adjusts to your risk tolerance, you become a total risk management boss!
First, you don’t have to be a trading whiz to use it! And you can totally make bank with trading bots, especially grid ones! They keep it simple: make money no matter what’s going on in the market. They don’t even bother checking what’s happening, they just put in a bunch of buy or sell orders and average it all out. It’s perfect for markets that aren’t going up or down too much. And the current cycle is a great time to give it a shot ’cause things are pretty sideways. Just make sure you find a good provider and use your brain to set it up right.