Full Guide for Grid Trading Beginners
1. What is Grid Trading?
Grid trading is a strategy that automatically assists traders in buying low and selling high in a specific interval. The user sets the trading parameters in advance, and the bot will automatically trade according to the pre-designed parameters after opening. As long as the currency price does not break through the set range, the bot will continue to trade unless the user manually stops it.
If the currency price breaks through the price range, the grid trading will be suspended. When the currency price returns to the range price, the bot will continue to operate as originally set.
If the currency price reaches the take profit/stop loss price, the bot will perform take profit/stop loss operations and stop trading.
It should be noted that when the user is set up and started to execute, the bot will first automatically adjust the balance of the two currencies, and then the bot will place multiple buy and sell orders in the grid interval.
For example: if the user uses 1000USDT for BTC/USDT grid transactions, when the setup is completed and execution starts, the bot will first buy about 500USDT of BTC at the market price (this value will vary according to the interval price and the buying price), and then Place buy and sell orders for grid trading.
1.1 Why we need grid trading?
Grid trading is a strategy that automatically assists traders to buy low and sell high in a specific interval. Crypto assets have the characteristics of large price fluctuations and 24-hour trading, which is very suitable for the use of grid trading. Using grid trading, the bot will execute the trading operations of selling high and buying low in strict accordance with the preset settings, helping traders make profits.
2. How to set Grid trading?
Users can enter grid trading on the spot trading page of TruBit, and TruBit grid trading can only use the assets in the spot wallet. TruBit currently supports 6 grid trading pairs: BTC/USDT, ETH/USDT, ADA/USDT, XRP/USDT, XRP/BTC, EOS/BTC.
TruBit grid trading settings can be divided into: AI strategy and individual strategy
AI strategy: Use the backtest data of the past seven days and the recommended optimal setting parameters. If users use grid trading for the first time, using AI strategy may be a better choice.
Individual strategy: Users manually set grid trading parameters.
2.1 Grid Trading Parameters
Highest Price: the highest price in the range
Lowest Price: the lowest price in the range
Grids: That is, how many pending orders are placed within the price range you set. TruBit supports 2-99 grids settings.
Investment: How much funds users use to conduct grid trading
Whether to use dual currency
For example, the user’s wallet has the two currencies required to open the grid, such as BTC and USDT.
If you choose not to use the BTC in the wallet, all USDT will be used for grid trading, and the bot will automatically buy a certain percentage of BTC at the market price when the grid transaction is opened.
If you choose to use the BTC in the wallet, the BTC and USDT in the wallet will be put into the grid trading, and the bot will automatically start the pending order after the grid transaction is opened.
- Arithmetic: That is, the amount of profit generated by each grid is the same, for example, each grid can generate 5 USDT profits. More suitable for a smaller price range.
- Geometric: That is, the rate of return generated by each grid is the same, for example, each grid can generate a rate of return of 0.5%. More suitable for a larger price range.
Using different grid types, each grid’s pending order price and profit will be different.
Advanced settings (optional)
After setting the Trigger Price, the bot will start according to the preset trading parameters when the market price of the trading currency reaches the Trigger Price. If the market price does not reach the Trigger Price, the bot will not be turned on.
Stop Loss Price
The Stop Loss Price setting must be less than the Lowest Price. When the trading currency price falls to the Stop Loss Price, the bot will trigger a stop loss operation and sell all trading currencies in the user’s account. This will help users prevent higher losses caused by falling prices of trading currencies.
Take Profit Price
The Take Profit Price setting must be higher than the Highest Price. When the trading currency price rises to the Take Profit Price, the bot will automatically close the order to prevent the trading currency price from falling and the bot will sell the currency at a high price before buying again.
2.2 How to open grid trading?
In the AI strategy mode, users only need to choose whether to stop loss and set the total amount of investment to start.
In the Individual strategy, the user can click “Click to Copy AI Strategy Parameters”, the system will automatically fill in the AI Strategy information, and the user can make changes.
Users can also start grid trading after all manual settings.
The user selects the BTC/USDT trading pair in TruBit grid trading, and the settings are as follows:
Highest price: 25000 USDT
Lowest price: 20000 USDT
Number of grids: 50
Total investment: 1000 USDT
Then the bot will divide the price range into 50 equal parts within the price range of 20000 USDT-25000 USDT, and conduct uninterrupted high-sell-low-buy transactions in this range.
If the trigger price, stop profit and stop loss price are set, the bot will perform the corresponding operation after the corresponding price condition is reached.
3. When should we use Grid trading?
From the operation mode of grid trading, it can be seen that grid trading is suitable for: Interval fluctuating market or fluctuating rising market.
In these two types of market, grid trading can conduct sufficient transactions and continuously obtain profits, and the profits can continue to accumulate to achieve final profits.
But grid trading does not apply to: fluctuating falling market. Because it may eventually make the user’s overall account return rate negative.
It should be noted that the grid should not be too dense, otherwise the profit may not be enough to pay the transaction fee. At the same time, when the bot is running, insufficient assets in the spot wallet may cause the bot to stop running.
3.1 How to determine the market?
In trading, users can predict market trends through some technical indicators. Among the many indicators, the ones that are closely related to grid trading are CCI (Commodity Channel Index) and SuperTrend.
Commodity Channel Index
The CCI compares the current price to an average price over a period of time. The indicator fluctuates above or below zero, moving into positive or negative territory.
When the CCI (Commodity Channel Index) indicator fluctuates between -100 and +100, or when the indicator is >100.it’s the moment for using Grid trading.
How to use
In the K-line chart on the trading page, click on “Indicators”, enter “CCI” in the pop-up box and click on “Commodity Channel Index “The CCI indicator chart will appear below the K-line chart.
As the name suggests, ‘Supertrend’ is a trend-following indicator plotted on prices. It is easy to use and gives an accurate reading about an ongoing trend.
The buy and sell signals are generated when the indicator starts plotting either on top of the closing price or below the closing price. A buy signal is generated（Green graphics） when the ‘Supertrend’ closes below the price, and a sell signal is generated（Red graphics）when it closes above the closing price.
We will use the grid bot when the indicator turns Green graphics, and close the grid bot when it turns Red graphics.
How to use
Click on “Indicators” on the trading page, enter “Supertrend” in the pop-up box and click on “Supertrend”, then the Supertrend indicator will appear on the K chart.
4. How to view the profit of running grid trading?
On the grid trading page, click “Running Bots” to view the profit generated by the running grid bot. Click “DETAILS” on the running bot page to view grid trading pending orders and transaction and profit details.
- Total Investment
Total investment = (The quantity of required base to create the grid) * History price + The quantity of required quote value
- Realized Profit
Realized Profit = Price gap of two grids * Grid quantities * Number of filled sell orders
- Unrealized Profit
Unrealized Profit =（base current price — Average buy price）* holding base quantity
- Annualized return
Annualized return = Realized Profit / Total investment / Grid lasting time (normalized into days) * 365 * 100%
- Total Profit
Total Profit = Realized Profit + Unrealized Profit
Note: base and quote refer to the two currencies in the front and back of the trading pair. For example, BTC in BTC/USDT is base and USDT is quote
5. How to view historical profit of grid trading?
On the grid trading page, click “History Bots” to view the profit details of all bots that have finished running. Click “DETAILS” in each bot property to view grid trading parameters and transactions details.