Grid Trading Bots - The Real Player in the Crypto Trading World in 2023

Trading on exchanges without any crypto market knowledge is a bad idea. It’s better to analyze the market situation, technical indicators, and fundamental analysis so as to earn good profits. Additionally, using a crypto trading strategy is of great help and effective. 

 

What about those who are new to the crypto trading market or those who cannot devote time to trading? Well, automating the trades using crypto trading bots is beneficial. When carefully configured, a crypto trading strategy and bots can execute orders automatically to make profitable trades. One such trading method getting huge popularity among traders is grid trading which works best in a competitive market with regular price variations.

 

Grid trading strategy

This trading strategy comprises placing a series of buy and sell orders at predefined intervals to earn profits from the volatility of the market. Grid trading is a kind of algorithmic trading which automates order execution by utilizing grid trading bots. These bots enable traders to place multiple buy and sell orders while creating a grid of positions that may generate profits in both up and down markets.

 

This trading system combines both manual and automatic strategies. As you will manually set up a grid at specific intervals, and once the grid is set, the system will automatically execute buy and sell orders at predetermined levels. Grid trading allows investors to minimize risk because it places orders at a certain distance from each other. If the price of the crypto asset falls, a new buy order is placed at the lower level, allowing you to buy the cryptocurrency even at lower prices. If the price of the cryptocurrency rises, new sell orders are placed at the top level, allowing you to sell the cryptocurrency at a higher price.

 

This strategy is based on the idea that the price of the asset will fluctuate within a certain range, and placing orders at different points in that range. This way, the trader can earn profits from the upward and downward price movements. 

 

A successful grid trading strategy involves increasing your position size as the market price of the asset moves in one direction. And, if the price moves up consistently, your position will become more profitable. However, this strategy may pose a dilemma for its traders, as they have to decide when to close the grid and exit trades to earn profits before the price reverses its direction.

 

To create a successful grid trading strategy, follow the below steps:

 

·       Choose an appropriate market

·       Determine the right size of the grid

·       Set buy/sell orders

·       Monitor the market 

·       Manage your risks

·       Incorporate other trading strategies

 

What are grid trading bots?

Grid trading bots assist traders to carry out grid trading strategies. These are the algorithms that attempt to make profits from market price fluctuations within the predefined range. The trader sets up the parameters for the bot to function within this predefined range and execute orders.

 

Let’s understand with an example how grid trading bot works:

 

Setting upper and lower grids

Let’s say, the price for BTC is $20000 and it has neared $10000 in the last two weeks. The trader has also 5000 Tether trading at USDT $1 and decides to trade $400 above and below range. Here the trader will set $10400 as the upper limit and $10200 as the lower limit.

 

Creating multiple grids

Now after setting the upper and lower grids, it’s time to divide the interval upper limit price and lower limit price into grid levels. The exchanges like Binance, ByBit etc. have their own set of rules. In manual mode, the trader will select levels, and in automatic mode, the grid levels are set automatically by the bot.

 

Whenever the price rises and crosses the sell grid, the bot will sell BTC and makes a profit. On the other side, when the price dips in the buy grid, the bot will buy BTC automatically. Buying and selling here continue with an aim to make profits. 

 

Different parameters for grid trading bot to function

• Trading pair
• Upper/lower price limit
• Number of grids
• Amount to invest

 

Key things to consider before running a bot

When it comes to running a bot on any crypto trading terminal, fees are one of the vital considerations. The exchanges with minimal costs which offer periodic zero-cost events have a significant influence on your grid trading. Other things that you need to consider are finding the best pairs and market circumstances, trading charts, etc.

 

Benefits of using a grid trading bot

Grid trading bots are highly beneficial for traders in a number of ways including:

• Automation- After you have set the limits including grid buy/grid sell orders manually, the grid trading bots perform the trades on behalf of their trader. The grid trading bots at the best crypto trading platforms like TrailingCrypto work 24x7, and allow traders to earn profits without tracking the price movement themselves.
• Multiple grids- In the grid strategy, a trader can set either tens or even hundreds of automatic buy/sell limit orders. This will further minimize the risk and maximizes the chance of profitability.
• Risk management- The grid trading bots can be programmed smartly to close trades automatically if it has reached to certain risk thresholds. This helps traders to minimize potential losses.
• Adaptability- This kind of trading strategy applies the most elementary trading concept i.e. buying assets at low price and selling them at a higher price so as to earn the difference.
• Profitability in sideways market - Grid trading bot strategy allows you to earn profits when the current market isn’t showing any trend clearly. There could be times when prices of cryptocurrencies go sideways for months and here this trading strategy takes advantage of those conditions.

 

Is grid bot trading profitable?

Of course, yes! This kind of trading is beneficial for traders if the trader has configured the bot parameters carefully. Make sure to set the grid upper and lower limits along with setting the grid levels. Furthermore, you may consider other settings in conjunction with the above parameters including take profit price, stop-loss price, and trigger price. It’s important to consider the fees too. If the trading fees are higher, then it may eat up all your profits.

 

Grid trading works well in spot and futures markets both! Grid trading bot Binance works best for the futures market and you should try that once via TrailingCrypto or other third-party trading platforms.

 

Conclusion

Grid trading is a highly profitable trading strategy which is unaffected by human emotions. This kind of trading method will create orders at consistently increasing and dropping prices so as to earn profits from market fluctuations.