Grid Trading in the Cryptocurrency Market | CoinCasso Exchange
Grid trading strategy

Trading in the cryptocurrency market resembles riding a bucking bronco in a rodeo more than a staid finance activity; it is hard to predict and even harder to tame to profitability. However, human ingenuity and technology come together to rein in the volatility to some degree and keep investors in the green.

Cryptocurrency investors and traders (amateurs as well as professionals) can now call upon a special tool in the form of grid trading – commonly associated with forex trading.

What is Grid Trading?

It is a technique to manage and profit from market price volatility. It is most widely used by forex traders who use or develop a grid that maps price variations and uses a strategy to buy and sell orders at predetermined price intervals.

Everything is controlled by setting a range which is divided into multiple levels forming a grid. Traders can select a price range and set their buy/sell orders within a range or below or above a certain price. For example, a Bitcoin investor would set a buy order if BTC dips below a certain threshold and a sell order if BTC shoots above a certain value.

It is an automated, extremely flexible system where you can set the number of levels according to your requirement. You can choose to trade more for less profits or hold out for a fat paycheck. These automated commands provide a safe way to make money without recognizing or understanding patterns and trends and without relying on guesswork.

How Does Grid Trading Work?

Gird trading strategies are most useful in a sideways ranging market where price fluctuations have no clear pattern or trend. The goal of the technique is to profit from small ups and downs in the market.

To start with, you have to choose a price range; for example, if you are using a grid trading strategy for Bitcoin trading, then you need to pick a price range between which the BTC is likely to fluctuate – say $40,000 to $50,000.

Then you need to split this range into smaller sections or ‘grids’, for example, grids of $2000 or $1000. The more grids you create within your price range, the more frequent your trades will be.

Now you have to set buy or sell orders as per your grids to trigger the action. For example, every time the grid climbs over $45,000, you can add a sell order, or if it drops below $45,000, it sets in motion a buy order. You will make incremental profits with each fluctuation, but the grid strategy is almost foolproof.

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 Benefits Of Following A Grid Trading System

  • Easily automated – the strategy can very easily be automated and run with minimal work, even making you profits while you sleep.
  • Easy to learn and run – grid trading strategy is relatively simple to master and very straightforward to implement. You don’t need any specific skills to understand the process.
  • Minimal risk – as it works on increasing value or profits incrementally, it is relatively risk-free. You don’t have to tie up a large amount of capital and can scale up quite comfortably.
  • Useful for volatile markets – grid strategy is especially suited to trading profitably in very unpredictable markets such as cryptocurrencies.

What Is A Grid Trading Bot?

Many things that look simple on paper show hidden complexities when implemented. Grid trading is one of these. Manually applying a grid trading system is very time-consuming and prone to errors. But now, with the help of technology, you can automate the entire strategy with grid trading bots that can earn you profits even when you are offline – and literally asleep!

A grid trading bot helps you to place a purchase and sell orders within a given price range. The bot automates every incremental step. For example, when a purchase order is triggered and achieved, the bot automatically puts the next purchase order one grid lower. The same applies to offloading the investment as well; every time the price value drops below a certain point, the sale is activated, and the threshold is lowered to the next grid.

The crypto world has several great grid trading bots. Below we discuss the best of the bunch. But before we jump into these details, let us also understand some key points to keep in mind while running a grid trading bot (or simply, grid bot).

 

Things to Know before using a grid bot

Fees – important thing in grid trading strategy 

As the grid trading strategy usually involves lots of small trades, it is vital to select a service where the trading fee is low, and users get some price advantages. For example, Binance offers zero-fee events and fee rebates. These amounts might seem insignificant, but they can all add up to create a huge impact on your final profits, especially in the long run.

Market Analysis 

While the grid bot does most of the heavy lifting, it is, after all, your hard-earned money! We recommend you learn about market conditions and trends to pick a good price range to build your grid on. And it is not a one-time job; to keep making money, you also need to keep ‘reading’ the market to find the currencies with a slight uptrend (stay away from any that have documented history of long-term downtrends).

Research your price range before you start using grid trading strategy-

In a grid trading strategy, your price range pair is the single most critical factor for success. the ideal pair is the one that has continuous and substantial price movements within your selected range.

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Top 6 Grid Trading Bots

1. Pionex – the best when you using grid trading strategy?

Let us start with the most popular grid trading bot in the system, Pionex, one of the largest Binance brokers and aggregates liquidity from Binance and Huobi Global. It offers several in-built trading bots, and its grid trading bots offer advanced features, including stop-loss, take profit, and trigger price. 5 of these very advanced, modified versions of GRID Bots are available for free.

With Pionex, users can automate their trading activities to run around the clock without the need to physically monitor the markets.

The 5 Pionex Grid Bots are

  • Reverse Grid Bot (for when the price is likely to drop). It stores assets when the price is dropping and then sells them at the current level and repurchases them when the price drops further.
  • Infinity Grid Bot (for buying low and selling high)
  • Leveraged Grid Bot (for experienced traders working in an up-market scenario)
  • Margin Grid Bot (ice your collaterals to make profits without risking long-term position and capital)
  • Smart Grid Trading Bot (for a fully automated experience), you can pick one of the two options:
    1 ) “Use AI Strategy” is excellent for beginners and investors who don’t have the time or the inclination to study the market. It uses the Pionex AI Advisor, which recommends parameters calculated from a last week’s backtesting. Everything from price range to grid sizes is pre-decided; all you have to do is click to start.
    2) “Set Myself” – Here, the control and decisions rest solely with the user. Every parameter, such as Upper Limit Price, Lower Limit Price, Number of Grids, Amount per grid, and Stop-Loss price, is set by the investor at his or her discretion.

Robots Working With Grid Trading Strategy

2. KuCoin

A mobile-first grid bot, KuCoin is run by a popular cryptocurrency exchange of the same name. It offers traders a variety of trading strategies, most commonly spot or classic grid trading, which profits off small price fluctuations.

Here is a bit more information about these strategies.

  1. Classic Grid: makes money from market volatility by buying low and selling high.
  2. Futures Grid: An advanced take on the classic grid bot, this variant buys short and sells high.
  3. Margin Grid: The Margin grid trading bot uses cash to increase income. It is riskier at bigger sums
  4. Infinity Grid: this grid strategy sticks strictly to user-defined conditions and is perfect for investors who want to always be in control.

3. 3Commas

3Commas is a crypto trading platform that is incredibly popular in Russia and the United States. Launched in 2017, 3Commas, allows users to trade on 23 exchanges with its trading bots. The grid Bot on 3Commas comes with its PRO plan, which is currently available at a discounted monthly fee of $49.

The 3Commas’ USP is its simplicity. Even novices can figure out how to set it up and make money on it without too much hassle. All one has to do is select a coin to trade on, put in the initial investment, and select your price range – the bot does the rest. The grid bot work in two modes – the AI strategy (which automates the process based on a running 7-day price history of the selected coin) and the manual mode (which allows users to set the strategy from scratch).

4. Bitsgap

A new entrant, Bitsgap, is made for beginners who want to testride the bot before putting in their money. The Bitsgap grid bot allows you to set grid quantity, exchange, price range, and more. The bot also comes with advanced features like stop-loss, auto-adjust grid size, take profit and trailing up.

Bitsgap supports 30 exchanges as of now, including the major ones such as Binance, Kraken, and Bitfinex. It also gives traders access to over 10,000 cryptocurrency trading pairs and provides strategic guidance and support with various technical indicators. Bitsgap has a backtesting feature which is super useful for investors who want to validate their new strategies without risking their money.

There are two grid bot strategies available on Bitsgap:

  1. The ‘Classic’ bot puts the same amount in each grid.
  2. The ‘SBOT’ strategy varies the amount invested for each buy and sell trigger.

5. Quadency

A fully automated grid bot offered by Quadency is a simple – yet powerful – solution for amateurs. Unlike other grid trading, bots with Quandency users cannot set the upper or lower price limits. Instead, the range is set automatically by the platform’s AI. However, it gives you more control over what to do when the exit price is reached.

Once you reach your limit, the bot lets you:

  1. Make a new grid around the exit price – you have the option (if you have enough balance) to recreate the grid and keep trading anew.
  2. Cancel all orders and stop the grid bot – You can close all open orders and stop the bot. However, if the bot has bought some amount and hasn’t sold it yet or vice versa, then that position remains open.
  3. Cancel everything and stop – this option allows users to halt all trades completely
  4. Wait and watch – enter a holding pattern where you wait for the coin to reenter the price range. When that happens, the bot will start trading again automatically.

6. BitUniverse

With a constellation of 26+ exchanges and 6000+ crypto coins, BitUniverse is quite popular with traders across the globe. It bills itself as the easiest bot to use, and newbies with zero market and trading knowledge have been attracted to its user-friendly avatar in droves.

Robots Working With Grid Trading Strategy

The bottom-line

There is absolutely no doubt that using a Grid Bot opens up cryptocurrency trading to everyone! Whether you are a novice or a seasoned trader, its simplicity and AI-backed automation is the BEST way to make profits in a volatile market. It allows diversification and minimizes risk with very little effort from users.

Naturally, to make consistent profits and work the crypto market correctly, it is advisable to understand it and make informed decisions; a grid bot cannot replace experience, but it sure does make it easier to trade!

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FAQ

Are grid trading strategies profitable crypto?

Forex Grid strategy has been the strategy of choice for most forex traders squeezing out profitability from a volatile market for decades. The unpredictable nature of the cryptocurrency market mirrors that of the Forex, and grid trading is a great tool for making money in erratic, sideways leaning markets.

In the right circumstances, it can certainly be profitable also in crypto world!

What is the grid strategy?

Grid Trading is a strategy that allows traders to buy and sell orders at predetermined price intervals. The trader chooses a specific coin (the more sideway leaning, the better. Make sure to choose something that doesn’t have a pronounced downward trend). The trader then picks a price range to trade between and divides it into multiple levels forming a grid.

The buy and sell orders are set below and above the current price. As the prices fluctuate, the buy or sell orders get triggered automatically. Each time an order is executed, the bot automatically sets a new order for the next level on the grid.

What is a grid trading bot?

A grid trading bot is an automated tool that replicates grid trading strategies for the cryptocurrency sector. Made available on many prominent exchange platforms, either as a free tool or a paid software, a grid trading bot usually links to multiple exchanges and trades in 1000s of coins to give users a lot of choices.

One doesn’t need any programming knowledge or a deep understanding of crypto trends to work with a grid bot. All you need to do is add your investment, choose a coin, and set your price range and grids, and the bot does the rest.

Are trading bots legal?

Yes! Grid bot trading is 100% legal and is an extremely popular tool for traders. It gives traders all the control while doing all the heavy lifting of executing the strategy. Even more importantly, the automated nature of the bot ensures that profits keep flowing 24×7 without compromising on security or ignoring risks.

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