Step 1: Understand the Mechanism
Most of Grid Trading strategy is intended to profits in bullish swing trade. Grid Trading bot creates orders proportionally in the basis of buy low and sell high, as long as market price within the price range you set. Besides, when market price once reached the pre-set grid level, the buy or sell order will be executed, again and again.
You may be interested about the mechanism of operating a Grid Trading bot as a real case, apart form the trading parameters you not known, the definition of parameters are discussed in step 4.
For example of BTC/USDT trading pair, as illustrations below. First, you need to prepare sufficient USDT for purchasing BTC when operating the Grid Trading bot. Then, Grid Trading bot will separate your capital to two parts. One for initial position which is purchase some BTC directly according to parameters you decided, at the same time, placing sell orders above initial opening price. Another part is placing buy orders under the initial opening price proportionally. In the end, the transaction details and outcome will be denominated in USDT.
Initial position refers to first order you create for purchasing suitable quantity of BTC, which is the essential process to running Grid Trading bot. And the initial opening price is the purchase price of first order when the bot activated.
The size of Initial position depends on the price range and grid quantity. The closer the initial opening price to the price lower limit, the smaller the amount of capital used to place the buy order and the larger the initial position, and vice versa.
Assuming price range is set at 20,000 to 50,000, quantity of grid is 7, and the grid mode is arithmetic. Thus, you create Grid Trading order when BTC/USDT is 35,000. Hence, the Grid Trading bot will initially purchase three-times quantity of unit grid order, i.e., the quantity corresponding to pending sell orders — — 5, 6 and 7. In addition, place three buy orders — — 1, 2 and 3 at the same time, as shown in the figure below.
Buy or sell orders will be triggered when market reaches the grid level. Such as situation A, BTC/USDT rises to 40,000 level and trigger the sell order (5), the grid bot will sell portions of BTC and place buy order (4) simultaneously. Later, BTC/USDT downwards to 30,000, the buy order (3 and 4) will be executed to purchase BTC; Situation B with same logic, you will profits by triggering the sell orders (4 and 5) when BTC/USDT rises above 40,000 after previous executions.
In conclusion, your orders will be executed continually as long as the market price is within predetermined price range. As you can see in the example, there always exist 7 orders in grid bot no matter which side the order is, and that’s the advantage of Grid Trading bot to achieve mission of investment in ideal way.
Step 2: Preparation before Trading
2.1 Download the BOXTradEx App, and register your account or login.
2.2 Deposit your capital
You can see deposit function in Home page and Asset page. Choose desirable cryptocurrency to deposit in your BOXTradEx account and make sure everything correct. By the way, USDT is always suitable for using Gird Trading bot.
2.3 Go to Exchange Page
In Exchange page, you can start Grid Trading bot by selecting favorite trading pair. As figures exhibit, there have several trading parameters you need to set up, like price limit, grid quantity and grid mode.
Step 3: Select Trading Pair
Grid Trading strategy reveal more profitability in swing market condition, choose favorable target trading pair can result in better performance. Therefore, you can observe or select which trading pair is most competitive, generally, the best target is that market price consolidates between highs and lows for long time period.
Step 4: Set up Parameters
Make sure understand the definition and function of each parameter before you use it. You can take reference detail of parameters below.
4.1 Price lower limit and price upper limit (USDT)
Price lower limit refers to the lowest price level the buy order will be place. In other words, it represents the lowest price the market can be, also the lowest you desire to purchase, vice versa. Different trading pair may consult in different price limitation, nevertheless, be ware of Grid Trading bot will cease to operate when market price escape the price range.
4.2 Grids (2–100)
The more grids, the smaller the profits of each grid order is. Grids, or called grid quantity, is interacted with price range to influence profitability of grid. In same grid quantity, larger price range will have larger range between each grid level. As two example below, with 7 grids condition, the price range within 20,000 to 50,000 will have 5,000 unit range which is double than small price range (20,000 to 35,000).
Therefore, the smaller range of each grid will have higher trading frequency, which may benefit in consolidation period. In opposite side, grids may benefit in bullish trending market but with more unrealized risk. The transaction fee is the another issue you need to concern.
You can decide how to set up price range and grids as your plan. If target market is in consolidation, then it better use more grids, however, if target market is in trending, less grids may be favorable.
4.3 Grid mode
Grid mode is about distributing profit of grids in two manner, Arithmetic and Geometric. In Arithmetic mode, the amount of profit generated by each grid is the same. And in Geometric mode, the rate of return generated by each grid is the same.
As illustration above, the range between each grid is elevated by the market price rises when you choose Geometric mode, by saying that, less likely the next order may execute if market can’t satisfies particular level. In contrast, the Arithmetic mode has constant range of each grid.
At the view of trading strategy, Arithmetic grid is more suitable in consolidation phase or smaller price range, and the Geometric grid is more suitable in upward-trending phase or larger price range.
4.4 Investment (USDT)
Investment parameter is about how much funds you use to conduct Grid Trading bot. The minimum amount of investment will be calculated by parameters you decided, so you need to prepare and schedule how to allocate your funds to Grid Trading bot. In USDT quotation system, you need to have enough USDT to support your bot.
Step 5: Transaction Interface
After completing the parameters setting and confirm to create your Grid Trading bot, you can simply overview your Grid Trading order in Exchange page, also you can close it as you wish.
5.1 Open order
You can check the trading details by clicking the grid order in the open order area.
As figures above, you can comprehensively view the predefined parameters and how it process the orders. However, what users are most concerned about should be the profit shown in the middle part. The system will automatically update the profit data in real time.
5.2 Close order
If you want to stop transactions or reset the Grid Trading bot, you can click close order button to terminate the bot. There are two ways to terminate your order and positions, auto sell or manual sell. If you want to liquidate your cryptocurrency into USDT automatically, choose auto sell, vice versa.
Done! After you learn and practice this 5 Steps you can now enjoy your trading bot and enhance it consistently.
Notice: Grid Trading bot is all on your command, detail of execution and the parameters are very important.
Risk Warning
Grid Trading bot as an automatic trading tool should not be regarded as financial or investment advice from BOXTradEx. Grid Trading bot is used at your discretion and your own risk. BOXTradEx will not be liable to you for any loss that might arise from your use of the feature. It is recommended that users should read and fully understand the Grid Trading tutorial and make risk control and rational trading within your financial ability.
