Mastering Grid trading - Tips and tricks

Bitgetters,

As a crypto investor it's pretty common that your assets gain or lose 10% of their value over night. And daytrading requires constant “Screen sticking”. One good or bad news on the web, and prices change within seconds. Newcomers will have a hard time digesting the vast amount of information that is being thrown at them, and learning things by “doing it themselves”.

But what if there was a way that you can profit from this volatility? What if you could automate your trades and just sit back and check your gains once in a while. Using a Grid with an automated bot can be a solution. However, it would be unwise to blindly start using a bot, lean back and imagine all the gains. There are still risks involved and some things need to be taken into consideration

We have let an experienced trader test our Grid bot trading strategy for a period and in this article we highlight some of his findings, tips, tricks, and what to look out for if you seek to extract sustainable profits from trading through a Grid.

Market conditions

Grid trading tends to yield the best results when the market moves sideways. A trading pair that is extremely volatile and has huge ups and downs, while its average price doesn't change much over a longer period, indicates a good pair for grid trading for the longer term.

Grid profits

A high grid profit means very little. The context must always be taken into account. If an asset increases by 100% every bot will show a nice Grid profit, but in reality the grid would be left behind with a lot of open orders still, and would work differently than intended.

Fees

The orders that are being executed when opening the grid and while the grid is running, are a mixture between limit and market orders. Therefore you are making costs you don't immediately see. If trading a smaller grid, it might be wise to keep track of this.

Evaluate

To evaluate if a grid is good, it might be wise to look at more than just the grid profit. For example: if the price when you started the grid is the same as the current price and your grid made 5% as well, it can be classed as a good grid that yields well. If the current price is 20% higher than the startprice of your grid and your grid made 10% it would have been better to just trade manually with one single order. There are still benefits of using a grid either way, as it also ensures profit taking. Something which might be hard to do when manually managing your trade.

Pick your winners

If trading for a longer time period, and you are looking to copy someone else's grid strategy, then it is good to check out for how long the grid has been running. If it was profitable but only ran for one day, it says nothing about its performance over a week.

Disclaimer:

The information provided above is not financial advice but for educational and entertainment purposes. Please do your own due diligence or consult a financial advisor before investing in any digital assets.