Crypto traders are finding it difficult to keep up with the fluctuations of the market. Prices can change dramatically in a matter of minutes, and markets are open all day. The novices aren’t able to react quickly enough to the volatility of the market to make profits. Transaction delays can worsen the situation. For better results traders can’t monitor the market for cryptocurrency or global markets throughout the day, continue?
Crypto trading bots provide the possibility of automating the process of trading in crypto. These bots are based on algorithms that trade and execute transactions.
We will discuss grid trading the trading strategies, grid trading, and the benefits that users can reap from it.
What is a grid trading strategy?
It is among the most utilized strategies in trading cryptocurrency. This involves placing orders at or below a price set with the grid of orders. This strategy involves placing orders with incrementally increasing and decreasing prices.
Contrary to other strategies that typically rely on the technical indicators to create any type of buy/sell signals this strategy uses the market’s price action to buy low and then sell high. It can be achieved by placing multiple orders on both sides. If the price changes or down on the grid, filled orders are automatically replaced by an appropriate buy or sell orders.
If a buy-order is completed, a sale order will be added to the gridline above, and in the event that a sale order is completed, a purchase order is also placed. And, the gap between these lines represents the profit earned on every purchase or sell order.
Usually, the trading bots use this method to navigate the ranging market, which has no clear direction. Grid trading bots do not reverse gains made previously but rather make use of the volatility in markets to lock in profits and capture opportunities. Bittrex trading bot also operates in grid strategy.
What grid trading functions
Grid traders set lower and upper limits on the grid that they use to perform sell and buy orders. Buy orders are executed if the price falls below the lower limit. How do you work it? Let’s consider an example: If the cost of any crypto asset, such as XYZ for example, is $10,000. Here the trader could decide to set a lower limit of $59,000 and an upper limit of $10,000. And, the area between these two price limits is known as the grid. When the price is lower than $9,500, a purchase order will be executed, and the price rises above $10,500, a sell order will be completed. In this case, traders can place multiple sell or buy orders in different locations on the grid.
In every grid, the trader needs to decide manually for the lower and upper limit. Then, the orders are executed by the trading robots within the pre-determined price intervals.
The larger is the gap between the lower and upper price limits on the grid. the higher will be potential profits.
Make sure you choose a price range for the strategy which you wish to implement and then choose how many grid you wish to use within that price range. Dividing the price grid into smaller grids, which will create profitable trades. The more frequently you trade the greater number of grids are available. You can perform this kind of trading with intervals of 1 minute five minutes 15, 30 minutes or an hour.