Why Should You Use Grid Trading Strategy to Automate Your Trades?

by Trailing Crypto cryptocurrency experts

If you are a regular crypto trader, you might have tried many trading bots. Well, if you haven’t tried grid trading bots yet, then it is recommended to use them to earn good profits. Many experienced crypto traders are using grid bots as they are quite remarkable. Now, you might be thinking what is grid trading and how can one use grid trading bots?

Let’s explore these answers one by one:

What is grid trading?

Grid trading is a type of quantitative crypto trading strategy. In this type of trading, orders are placed above and below a set price, creating a grid of orders at increasing and decreasing prices. This trading strategy seeks to capitalize on normal price volatility in a crypto asset by placing buy or sell orders at certain regular intervals above or below the preset price.

It’s an automated trading strategy where an investor or trader creates a price grid and the basic idea behind this strategy is that the trader will repeatedly buy at some predefined price, and then wait for the price to rise above that level, and then sell that position. This kind of trading works great in the ranging sideways market, and using a grid trading bot allows you to execute the strategy even if you are sleeping.

Grid trading gives profits to traders with ups and downs of the price fluctuations in the market. It allows traders to make profits with smaller price fluctuations. And, a grid trading bot helps traders to perform grid trading to make good profits. The more frequent and the bigger price fluctuations are there, the more profitable the trading strategy will be.

What is a grid trading bot?

Grid trading bot is a kind of bot that assists its traders in carrying out the grid trading strategy. It enables them to place a series of buy and sell orders within a defined price range. The main principle of grid bots is the same as that of Dollar Cost Averaging (DCA) bots.

In grid trading, the bot first places a buy order, and if the price moves in the opposite direction, it places some additional orders. The main difference is that in this bot, each buy order will place a take-profit order separately unlike DCA bots where a take-profit order is placed for all the executed buy orders.

When you choose to trade using grid bots, every buy order will place a sell order. If you have placed 10 buy orders, a total of 10 sell orders will be placed here. One can also consider crypto trading signals to set the grids on the bot.

This bot has a continuous closed loop of work and once the bot closes all sell orders, it will start a new cycle by placing a new buy order.

While performing grid trading, the traders must make sure that the proper risk management measures are in place. Determining a lower price range on the grid is the key to guaranteeing profitability in grid trading. So, it is important that you must be extremely selective on the market trends suitable for your grid trading strategy to avoid being on the risky market.

Determining an appropriate leverage ratio is a must for grid trading. Make sure to set suitable stop-loss and take-profit orders to avoid losses due to the fluctuating market conditions. Also sure that the grid trading parameters set by the traders are compatible with the current market conditions. These parameters can be adjusted in real-time as per the present market settings.

Grid trading is ideal for everyone who wishes to trade cryptocurrencies in a systematic way. And, one should take advantage of trading bots when it comes to automating their trading strategy.

Best grid trading bots

Some popular exchanges supporting grid trading:

Binance grid trading bot

Being one of the most popular cryptocurrency exchange platforms, Binance offers grid trading bot available on their futures market. A lot of Binance users may not be aware of it, and if you are the one looking for the best grid bot to earn profits on the grid strategy, try Binance trading bot. This bot is different from other trading bots as it won’t hold positions, rather it shorts or longs over each grid where the price reaches to its buy or sell threshold.

TrailingCrypto grid trading bot

This is another popular crypto trading terminal in the market that supports grid trading. The platform allows its traders to connect with the popular and major crypto exchanges to perform grid trading. This trading bot allows you to set grid quantity, lower and upper price limit, price, and more. Additionally, some additional parameters are also available including take profit, training orders, stop loss, and more. The platform provides crypto trading signals to the traders to place the trade smartly.

3Commas grid trading bot

This is one of the best grid trading bots which works with all the major crypto exchanges. This bot actually offers AI-based grid trading where you will allow the bot to decide the upper and lower limit. Manual trading option is also available where the trader can set the parameters by their own.

Conclusion

Grid trading bots allow you to trade by automating your trading strategies while minimizing the manual work. After comparing the above bots, TrailingCrypto works the best. Grid trading will create orders at progressing increasing and decreasing price to profit from the price fluctuations in the market.

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Created on Feb 7th 2022 23:23. Viewed 131 times.

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