Crypto trading bots have become the most popular and profitable tools in the crypto trading sphere. Here, we will discuss about grid trading bots and how these work to make your trading more successful and profitable. You will be apprised of a variety of trading bots, their features and benefits, like DCA bots, scalping bots, grid trading bots, and more.
We all know that the trading bots and other automated trading tools have resolved many issues of the traders. These tools save a lot of time and effort for the traders. They act differently in different market conditions. And, one of the key features of trading bots is that you can apply a particular strategy to your trades.
Let’s understand about grid trading strategy:
What’s the grid trading strategy?
Unlike other strategies which usually rely on technical indicators to create any kind of buy/sell signals, the grid trading strategy makes use of the price action of the market to buy low and sell high. And, this could be achieved by placing multiple orders on both sides. As the price moves up or down in the grid, the filled orders are replaced automatically with appropriate buy or sell order. If a buy order is fulfilled, a sell order will be placed on the gridline above, and if a sell order is fulfilled, a buy order is also placed. And, the gap between these lines is the profit earned on every buy or sell order.
Grid trading bots rely on this strategy which really works well in a ranging sideways market with no clear direction. Instead of canceling out the previous gains, these bots take advantage of market volatility to lock in more profits. The more frequent the fluctuations are, the more profitable will be the strategy.
What is a grid trading bot and how it works?
Grid trading bot is a bot that assists the traders in carrying out the grid trading strategy. This bot enables the traders to place a series of buy and sell orders within the defined price range, creating a grid-like formation.
Grid traders set lower and upper limits in the grid where they execute buy and sell orders. If the price drops below the lower limit, a buy order will be executed, and vice versa. Now, the question is how it works? Let’s understand this with an example:
If the price of any crypto asset, say XYZ is $60,000. Here, the trader could set a lower limit of $59,000 and an upper limit of $61,000. And, the area between these two price limits is the grid. Once the price drops to $59,000, a buy order will be executed, and when it goes above $61,000, a sell order will be executed. Here the traders can set multiple buy or sell orders at different points in the grid.
In each grid, the trader has to set the price manually for the upper and lower limit. And, these orders are executed by the grid trading bots at defined price intervals.
Note: The larger the gap between upper and lower price limits, the higher will be the profit potential.
So, choose a price range for the grid strategy you wish to employ and then decide how many grids you want to have within that range. By dividing your price range in a smaller grid, you will trigger a profitable trade. The more grids you make, the higher will be the trade frequency. This kind of trading is performed on short time charts, which differs significantly in terms of price volatility. Most often, this kind of trading is performed on 1-minute, 5-minutes, 15, or 1-hour charts.
The price of crypto coins may appear stable in long-term charts, but you can take advantage of abundant volatility in the short-term charts.
Why to use grid trading bots?
Now the question is, why you should consider using grid trading bots?
Here are a few great reasons for using grid bots:
- Automation – After you set limits including grid buy/grid sell orders manually, the grid trading bots perform the trades on your behalf. TrailingCrypto’s grid trading bots work 24 x 7, and allow traders to make a profit without tracking the price movement themselves.
- Grid density options – In the grid strategy, a trader can set either tens or even hundreds of automatic buy/sell limit orders. This option minimizes the risk and maximizes the chance of profitability.
- Usability – The grid trading strategy is very easy to understand as it doesn’t contain any sophisticated calculations, market indicators, or measurements. These are very easy to use that even novice traders can earn good profits effectively.
- Adaptability – This kind of trading strategy applies the most fundamental trading concept i.e. buying low, selling high, and earning the difference. Therefore, it can be applied to nearly any market and generate the profit effectively. In this kind of trading, you may determine the period and frequency of the strategy by selecting the number of grids and price range. Apart from this, you may set them for the short term or long term.
- Profitability in sideways market – Grid trading bot strategy allows you to earn profits when the market isn’t showing any clear trend. There are times when prices of cryptocurrencies go sideways for months at a time and this strategy takes advantage of those conditions.
How to set up a grid trading bot?
Now, we will briefly recall the basics in order to launch a grid trading bot at TrailingCrypto. So, to launch a grid bot, it is enough to specify the upper and lower price limits for the bot to operate in and the number of price line levels between these limits.
The strategy creates a series of horizontal buy or sell level, and the grid trading bot accumulates profits as the price moves, bouncing within the grid. To do so, go to the grid bot settings at www.trailingcrypto.com and start viewing the charts of different coins. Performing manual analysis and grid bot creation is to find and select the best trading pairs where the price is near the support level. This is the most crucial factor for the success of any grid trading bot.
Higher volatility leads to higher risks, but also opens up more opportunities for earning while trading. Setting up a grid trading bot at TrailingCrypto is much easier. As discussed above, you can set the following parameters in the grid bot settings:
- Trading pair
- Upper price limit
- Lower price limit
- Number of grids
- Quantity in one grid
- Investment amount
When grid bot settings are complete, click create and then OK. Now, your grid bot is ready to use. Buying a trading bot is not an option always and if nothing strikes in your mind, you can try creating your own trading bot that will meet your preferences.
How to build a grid trading bot on TrailingCrypto?
- Sign up to TrailingCrypto
- Connect your exchange through API keys
- Create a grid bot by clicking on the bots option and then you will see a list of bots
- Set the parameters
- Start trading
TrailingCrypto supports multiple exchanges including Binance, KuCoin, Bittrex, Huobi Pro, Bitstamp, Polenix, and more. These exchanges offer grid trading bots that allow you to trade on fluctuating crypto market. Grid trading bot is one of the best options for new traders as it is intuitive to use and works great with all the popular crypto exchanges.
We hope now you have found the answer to all your queries like what are grid bots, how these work, why you should use them, how to set them at TrailingCrypto, and more. So, if you want to earn profits from the sideways market, try out the grid trading strategy. This strategy takes advantage of volatility on a short-term chart such as 1-minute, 5-minutes, or more. Once the price hits the set price limits, a buy or stop sell order will be triggered automatically.