What Is Grid Trading?
Grid trading is a system of trading in which a number of buy and sell orders are placed at predetermined intervals in the region of a fixed price. It works by using a price on either side of which traders can buy or sell their crypto assets up to a set upper or lower price limit.
Take a scenario where Bitcoin sells for $57,000 in the crypto market. You may place buy orders when the price drops for every $500 and sell orders for every $500 rise in the price up to a lower and upper price limit of $55,000 and $59,000, respectively. This means the number of price points between the current price and both price limits is the number of grids in the mix, eight.
A buy order will be executed as soon as the market price drops to any of the price points. Likewise, a sell order will be triggered as soon as the price climbs up to any of the higher price points.
The number of price points on either side of the divide corresponds to the number of grids, and the difference in the prices are the widths of the grid. And the buy and sell orders will be set below and above the current price.
When traders opt for a grid trading strategy, they mostly rely on a grid trading bot to carry out their transactions. The sheer amount of time and effort spent monitoring your screen for any sideward movement in the prices will be too much to ask of anyone. This is where a trading bot comes in. Traders only need to set the bot parameters, mostly by defining the lower and upper price limits.
The Best Grid Trading Bots
The crypto market is home to many trading bots, and we look at some of the best in the business below.
Bitsgap
With Bitsgap, traders get the freedom to make important decisions on the order that their grid will follow. You can set the number of grids, the exchange used, the lower and upper price limits, and the percentage of the funds that you get to set aside for your trading. Then there’s the provision of the Stop-loss, Take profit, and Trailing up features, a feature set that is vital to the success of your trade. The profit for each grid is estimated by removing the price percentage per grid, and it is mostly done by exchanging the fee percentage for buying and selling.
Bitsgap offers its users a demo mode that they can use to test any of their crypto trading bots at no cost. And if you want to switch over to the paid version, the basic package–at $19 is a good place to start from. Other plans include the pro package for $44 and the advanced package that will set you back by $110. They also define a starting price for your investment, and it will typically be hinged on the parameters you set.
This minimum deposit is calculated on the basis of the number of grids you use. The point at which the stop-loss is executed will also determine the price of your choice. And as soon as this point is reached, all the open bot orders will be automatically eliminated. The bot will now sell your base currency at the best price on the ground while considering the market order.
3Commas
3Commas ranks highly among the most popular grid trading platforms, and the reasons are not far-fetched. For one, its free trading option allows you to wrap your fingers around the grid bot strategy before trying it out with real funding. And with the free guides and tutorials that they offer on their platform, inexperienced traders can get a good grasp of the crux of grid trading.
With its support to many of the biggest exchanges around, you get a choice of the most viable option. And when you connect with any of these exchanges, you can automate your trades after going for any of the bot modes on offer. Not only does the bot analyze the fluctuations in the market for you, it will help you to define the upper and lower price limits of your grid, all of which it does automatically.
Then there’s the manual code that can be used to make changes to the number of grids, the grid spacing, and the price scale in particular. And if you’ve mastered the art of trading, you can very well build your trading strategy. To top it all off, it is free for trading, only charging 10% of your total earned profits.
Pionex
Pionex allows its users to choose from its two Grid trading bots–”Use AI Strategy” and “Set Myself.” With the “Use AI Strategy” option, its AI will recommend a set of parameters for you. These parameters have been calculated from backtesting operations in the last seven days. You’ll come across the suggested Price Range and the Profit Per Grid there.
You’ll only be required to specify how much funds you want to stake in your trade. If you opt for “Set Myself,” you will have to choose from a set of customized parameters for building your grid bot
You’ll be asked to specify the Upper Limit Price, the Lower Limit Price, and the number of grids. Other optional requirements include the prices for the Stop Loss and Take Profit points and the Trigger Price.
There’s also a reverse grid bot that lets you keep your assets if the price is in a period of decline. And it can also buy back the sold allocated assets at the current level during this same period.
Cryptohopper
With Cryptohopper, traders get to use their strategies and settings to automate their trade and then watch from the sidelines as it is executed. The makers of this platform take pride in allowing traders to trade on multiple cryptocurrencies, and it can be connected with nine different exchanges. These exchanges, some of the biggest names, can be matched with your grid trading bot, and the results are impressive for the most part. The bots can build on a strong selection of about 30 indicators, while its use of historical trading data is perfectly executed in the trading that it carries out. While they offer a free trial, their plan can go to $99 from a starting price of $19.
Kucoin
With Kucoin, traders can thrive especially well in a volatile market and yield bigger returns. When you choose the riskiest pair, you set yourself up for bigger yields, and this is where the built-in Kucoin bot comes in. This bot can assist you with executing a precise amount of buy and sell orders at a variety of price ranges based on the defined price.
A purchase order will be set off as soon as the price falls into any of your grids, and the bot can swoop in immediately. On the other hand, a sale order will be activated when the price makes significant gains in another grid that you’ve set up. Some of its biggest strengths are its strong security, a vast supply of crypto coins, and the ease of using its mobile app.
The major drawback with Kucoin lies in the fact that the rate at which your assets retain their value after being traded is weaker on other exchanges. And also, their trading bot is not well suited to large capital investments for the sole reason that there is an overwhelming depth to their operations.
Binance
One of the world’s leading cryptocurrency trading platforms, Binance presents its grid trading bots under the Futures Trading platform. Here, traders get to customize and fix the grid parameters that they use in building the bot strategy used in their trade. But if you’re wet behind the ears in the business of crypto trading, you’ll find it particularly hard to build a strategy that’s good enough to keep your assets afloat.
If you’re in this category, Binance will recommend a host of parameters that you can use to make your job much easier. On its Strategy Trading page, you’ll find the Futures Grid option, a provision suited to grid trading. There, you’ll find a series of grid trading auto parameters that can guide you in your strategy creation. Some of them include lower price limit, upper price limit, and grid count, three of the most vital components of a grid trading strategy.
Its assortment of bots and utilities make it a more convenient tool for trading cryptocurrency. They also offer support to a whopping number of cryptocurrency coins–above 300.
Coinrule
Coinrule can count its flexibility and its decent stock of trading data as its biggest strengths, but there are even more. This trading platform arms its traders with a vast array of trading bot strategies, from past and present, many of which draw on historical trading data to ply their trade.
The result is a decent number of grid bots that know exactly what to do as they have built on the strategy of the most successful traders. With Coinrule, traders can design and build automated trading rules at all times and connect to about 10 of the biggest exchanges. Their robust security provision and encryption is another high point, and it serves to further boost its reputation as a serious trading app.
Best Strategies For Grid Trading Bots
The strategy that you adopt for your trading bot goes a long way toward determining the profitability of your trading activities. To put it in more specific terms, the profit can be divided into two parts–grid and floating profits. The distinction between the two is in the value attached to the profits.
The grid profit always turns out positive, owing to its position as the proceeds from the Buy Low and Sell High action. It is the chief provision through which traders make their profit while trading on grids. On the other hand, floating returns can fall on either side of the rail. The changes in the price of your chosen exchange will determine if it yields positive or negative returns. The aim is to choose a token with the potential for going up in due course, a trend that will result in a positive floating return.
Another strategy that you can take to increase your returns is to execute your grid trading by employing a decent starting price and price range, along with a number of carefully selected grids. The trick is to buy at a time of decline in prices and spread these purchases across a reasonable range of price points. This range should not be too wide or narrow, so you don’t mismanage your funds.
Also, the number of grids used up in your trading will play its part. If the price range is too narrow, the grids will be too closely spaced, and your profit will be barely significant to even account for the recoup of your trading fees. At the same time, a wide grid will translate to a large number of grids at risk of losing your funds. In essence, the best strategy a trader can take is to build a robust grid that accounts for the trading costs, previous volatility, and investment size.
How To Use A Grid Trading Bot
A grid trading strategy works on the notion that you can gain a degree of control over the volatile crypto market by setting price points above or below which you can buy or sell your crypto assets. To use a grid bot, you’ll need to first define the price points that will govern the buying and selling of the crypto assets. These price points correspond to grids, and the disparity in the pricing relates to the width of the grid.
When a sell order is executed, a buy order can be placed at a level below it. Likewise, a sell order can be placed at a level above it if a buy order is executed. It is a strategy that yields the best results in a volatile market, one where the prices fluctuate according to a range. Profits are made whenever the selling price exceeds the purchase price in a lateral price movement.
How To Configure Your Grid Trading Bot
The steps to take in configuring your trading bot are pretty easy. First, you’ll have to select your preferred token to be used with your trading bot. Next, change the parameter or make use of an artificial intelligence advisor. You can now create your first grid trading bot, using your chosen strategy and the placement orders that you program into the bot. As soon as you’ve defined your grid trading bot, you can take note of its information and other details about its ROI.
What To Know Before Running A Grid Bot
Before you set your grid bot in motion, you’ll need to consider many factors and conditions and put a few provisions. You’ll need to have taken account of the charges that come with each bot platform because these fees have a bearing on the profitability of your trade. Then you should also place a premium on the performance of your potential exchange.
An exchange with an excessively volatile status will not be beneficial to the trader. But if this exchange has a minimal cost, you can stand a better chance of making a profit. Another important detail you should know is the trading pair you opt for. The security provisions that the bot and its parent platform offer are other things to note.
Are Grid Bots Any Good?
These grid bots will be of benefit to you if you use the most effective trade strategies and parameters to configure them. This means that the performance of your grid trading bot will rely on your inputs to know when and what to trade. They’ll only swing into action at the set price intervals, and you will define these price intervals.
The good thing about these bots is that they automatically execute the trade deals that they’ve been ordered to act on. And while they are at it, they’ll not skip a beat. They’ll help cut back significantly on the time and effort traders spend while monitoring the price movement or forecasting the market direction.
However, these bots are more suited to ranging markets than trending markets where prices are more stable.
Which Grid Bot Is Best for US Residents?
If you’re an American, you’ll want to know which of the grid bots in the market are more friendly to your terrain. To this effect, we recommend Bitsgap and 3Commas, which is due largely to their ease of integration with America-based cryptocurrencies.
FAQs
In the following sections, we answer a few of the most common questions people have about grid trading bots.
How Much Can I Make With A Grid Trading Bot?
A few factors determine how much you can make from a crypto bot, chief among which is the stability of the exchange you settle for. If you trade on an unstable coin pair, your chances of profit will look much better. You can earn as much as the difference between your buying price and the selling price, minus commission and any other charge.
The irony is that you’ll profit most from a volatile market. However, the risks associated with this type of market are such that you can end up with the shorter end of the stick.
Are Grid Trading Bots Profitable?
Crypto bots have been proven to be profitable by the tons of traders that have trusted them for their trading, but it is not always a blast with them. The profitability of your chosen bot largely depends on how properly configured you make them to be. So, in essence, you still have a part to play in the success or otherwise of your crypto bot. Because crypto bots mostly thrive in a volatile market, you’re going to make more profits when the market price of your chosen exchange fluctuates, that is, a price that is constantly climbing up and down the mark.
In this scenario, your bot will take advantage of the price movements to buy at lower prices and then sell at higher prices, and you can eventually profit from the situation. However, situations where the price is following an upward or downward trend are more delicate, and your bots will most likely not reach their full potential in terms of gainful performance. You can set targets for the profit mark that you intend to hit. And as soon as the mark is reached, you can order the closure of your trade.
What Is The Best Grid Bot?
The criteria used to define a good trading bot will border on a broad range of factors. Most grid trading bots rely on the collection and analysis of market data, while a few others are wired to work optimally, as if by default. The best grid trading bot should be able to combine ease of operation with its performance over a ranging or trending market situation. This bot should also have an effective stop-loss and take profit provision and a robust security to top it off.
Very few grid bots tick all these boxes, but a few of them can reach the mark. All the bots discussed in this article can stake strong claims for ranking at the top of the leaderboard, and there’s space for three or maybe five of them. According to the feelers we have gotten from tons of traders, these five bots – Pionex, Bitsgap, Quadency, 3Commas, and KuCoin are the best in the business.
What Is An Infinity Grid Bot?
As its name implies, an infinity grid bot is a bot that sets no upper limits on the price, only setting a lower limit price. This bot is suited to markets on an upward trend, and it will only ever make a move when the price goes below your set limit. You’ll have zero care for the price going above your Grid-price-range with infinity bots.