Why do you need to Use Grid Trading Bots and How You Can Earn Benefits from Them?

Why do you need to Use Grid Trading Bots and How You Can Earn Benefits from Them?

With the price of cryptocurrencies fluctuating widely within minutes, and markets opening 24x7, it becomes tougher for the crypto traders to keep up. For beginners, crypto traders are unable to react quickly enough to take advantage of the opportunities to earn profits from the rapid volatility of the market. Furthermore, the delays in transactions may further worsen the problem. Traders cannot watch the crypto exchanges and global markets round the clock to achieve better results. Fortunately, we have crypto trading automation opportunities in the form of crypto trading bots. These bots run on algorithms to trade and execute transactions.

Here we will discuss about the grid trading bot, grid trading strategy, and how it is beneficial for users.

What is a grid trading strategy?

This is one of the most popular crypto trading strategies that involve placing orders above and below a set price by using the price grid of the orders. This grid involves orders at incrementally increasing or decreasing prices.

Unlike other strategies which usually rely on the technical indicators to create any kind of buy/sell signals; this 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.

Usually, the grid trading bots work on this strategy in the ranging sideways market with no clear direction. Instead of cancelling the previous gains, actually, the grid trading

bots take advantage of the market volatility to lock in the profits and opportunities.

Bittrex trading bot also works on grid strategy.

How grid trading works 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 $10,000. Here the trader could set a lower limit of $59,000 and an upper limit of $10,500. And, the area between these two price limits is the grid. Once the price drops to $9,500, a buy order will be executed, and when it goes above $10,500, 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 the pre-defined price intervals.

The larger is the gap between the upper and lower price limit of the grid, the higher will be potential profits.

So, make sure to choose a price range for the strategy which you wish to employ and then decide how many grid you wish to have in that particular range. By dividing the price grid into smaller grids, the traders can trigger a profitable trade. The more grids are there, the higher will be the trade frequency. You can perform this kind of trading on the intervals like 1 minute, 5 minutes, 15 minutes, 30 minutes, or 1hour.

Why to use grid trading bots?

Now the question is, why you should consider using grid trading bots?  

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Low entry point - Using a grid trading bot, the traders can enter positions at levels which you might not achieve by trading manually.

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.

Easy to use and customizable - This bot is easily customizable and straightforward. Once you sign up, you can easily set the parameters that you wish. You need not calculate the complex metrics, rather using grid trading bots is a “Plug n Play” method. Anyone can set up a grid trading bot in minutes.

Higher automation level - After you set limits including grid buy/grid sell orders manually, the grid trading bots perform the trades on your behalf.

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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 profit effectively.

Turn strategies into profit during a quiet market- Grid trading bots have the unique advantage of turning a profit in a time of market dejections. There are times when the prices of cryptocurrencies go sideways for months at a time and this strategy takes advantage of those conditions.

So, if you want to earn profits from the sideways market, try out the grid trading strategy and grid trading bots.