Crypto investors should consider using a Grid Trading Bot to mitigate the risk of missing market opportunities and inaccurately timing stop loss or take profit decisions. This new trading strategy enables the program to execute trades that “buy low and sell high” within a pre-determined price range automatically. Not only does this help crypto investors to overcome market volatility, but it also provides a steady source of profits.
What Is Grid Trading? How Does Grid Trading Work?
The Grid Trading Bot is a sophisticated trading program that enables users to automatically execute trades based on a pre-determined price range in the cryptocurrency market. In the dynamic and volatile environment of cryptocurrency trading, this technique helps to minimize the impact of human error on trading decisions. The Grid Trading Bot ensures strict adherence to a “buy low and sell high” strategy, providing a reliable and efficient solution for managing trades in the cryptocurrency market.
As an illustration, consider the BTC/USDT trading pair with an upper price of 150,000 USDT and a lower price of 15,000 USDT. Once the Grid Trading Bot is successfully set up, it will initiate trades by purchasing a specified percentage of the asset at the current market price and placing sell orders above it. At the same time, the Grid Trading Bot will allocate a portion of USDT to place buy orders below the current price. The bot will continually execute “buy low and sell high” trades within the designated price range, resulting in the buildup of frequent grid profits.
In the event that the market price rises above 150,000 USDT or drops below 15,000 USDT, the Grid Trading strategy will be temporarily suspended. Once the price returns within the specified price range, the Grid Trading strategy will resume its operations.
How to Set Up a Grid Trading Bot?
Whether you’re a new investor or an experienced cryptocurrency trader, seeking short-term trades or long-term investments, creating a Pionex Grid Trading Bot is effortless and requires only a few simple steps. Pionex supports a wide range of trading pairs and currencies, so you can easily create a bot that fits your investment strategy. The Grid Trading Bot operates 24/7, enabling you to take advantage of market opportunities even while you’re asleep, at work, or enjoying your free time. To get started, simply follow the tutorials on Grid Trading and create your first Grid Trading Bot today.
Creation Steps – APP Version
- Open the Pionex app and select the “Trade” button located at the bottom of the screen.
- Navigate to the “Bot” section located at the top of the screen.
- Click the “Create” button.
- Select the option for “Grid Trading Bot”.
- Choose a cryptocurrency and configure the relevant parameters for the Grid Trading Bot. Once complete, you will have successfully created your bot.
Creation Steps – WEB Version
- Log into your Pionex account on pionex.com and click the “Trade” button located at the top of the screen.
- Navigate to the “Bot” section located on the left side of the screen.
- Select the option for “Grid Trading Bot” and click the “Create” button.
- Select a cryptocurrency and configure the necessary parameters for your Grid Trading Bot. Upon completion, your bot will be successfully created.
Grid Profits Are Decided by Good Parameters
AI Strategy for Grid Trading Bot
Pionex AI strategy employs state-of-the-art quantitative algorithms to establish a comprehensive system for providing recommendations on Grid Trading Bot parameter settings.
For those new to grid trading bots, it is recommended to utilize the Pionex AI strategy for setting up the parameters. Simply input your desired investment, and the system will use historical backtest data from the past 7 days, 30 days, and 180 days to generate the most appropriate parameters for the current market conditions.
Never Miss AI 2.0 Strategy
With a focus on upgrading AI strategy algorithms, Pionex has implemented the AI 2.0 Strategy, resulting in three major enhancements: improved backtesting accuracy, increased grid profitability, and more intelligent grid range.
AI 2.0 strategy enhances the optimization of grid parameter algorithms. It offers higher grid profits for long-term investments in high-potential cryptocurrencies. Additionally, its universality allows for short-term investments in multiple cryptocurrencies with automatic adjustment of parameters based on their price fluctuations, thereby improving grid profits.
Besides, with its advanced predictive algorithms, AI 2.0 optimizes the grid parameter setting to better forecast the upper and lower limits of the grid range based on the unique price fluctuation patterns of different coins. This leads to an extended duration of prices within the grid interval, thereby realizing the goal of passive income generation.
Finally, Pionex AI 2.0 Strategy introduces a new feature called “Maximum Drawdown Indicator”. This feature displays the maximum drawdown rate in the past 7 days, 30 days, or 180 days in the backtest results. The maximum drawdown rate refers to the greatest percentage loss in a given period. This indicator helps investors assess the risk associated with Grid Trading Bots.
How to Use AI 2.0 Strategy?
AI 2.0 Strategy employs an analysis of market data from the past 7 days, 30 days, or 180 days to inform its recommendations for Grid Trading parameters. This includes the grid interval parameters and the maximum drawdown ratio. Users can choose to accept these parameters as is and simply invest their desired amount of USDT to create the grid trading bot, or they can choose to manually adjust the parameters to better suit their current market assessment.
Customize Your Grid Trading Bot
Before initiating a Grid Trading Bot, it’s essential to establish the parameters that the bot will abide by using a “buy low and sell high” approach to realize arbitrage. In this setup, we will cover crucial parameters such as the upper and lower limit prices, the number of grids, and the total investment amount, along with demonstrating their effects after being established.
The upper and lower limit prices define the price range in which the Grid Trading Bot will execute its arbitrage strategy of buying low and selling high. The bot will place a series of buy and sell limit orders, and will continuously execute this strategy as long as the market price remains within this range.
Price Exceeds the Range
If the price gets out of the upper or lower limit, the bot will temporarily stop. It will operate again after the price got back in the price range.
- Exceeds upper limit: All investments have been sold. If the price gets back to the range, the bot will initiate buying again.
- Exceeds lower limit: All investments have been fully acquired. The bot will initiate selling again once the price returns to the price range.
Risk Advisory: When the price drops below the lower limit, it indicates that you are holding a full position (100%). To mitigate the risk of price downside, you could consider setting a stop-loss price via Advanced settings.
Number of the Grids
The bot will place a series of buy and sell limit orders within a price range. The range is divided into multiple levels forming a grid.
The more the number of grids, the greater the arbitrage opportunity from the price fluctuations, but the smaller the profit per grid. On the other hand, less number of grids result in a higher profit per grid, but less arbitrage opportunity.
The system will calculate the minimum investment required for the Grid Trading strategy based on the specified price range and the number of grids. The current availability of your funds is displayed below for reference.
Advanced Settings of a Grid Trading Bot
Pionex offers advanced customization options for Grid Trading strategies through its Advanced settings features, located on the manual settings page. The Advanced settings features include Trigger price, Taking profit price, Stop loss price, Slippage control, Grid mode, Investment mode, and Trailing up.
- Trigger Price
The bot will be activated when the price reaches the trigger price, which can be set either above or below the current market price.
- Taking Profit Price (Close bot at)
The bot will automatically close and sell all positions locked by the Grid Trading strategy when the price rises to the taking profit price.
- Stop loss Price
The bot will automatically close and sell all positions locked by the Grid Trading strategy when the price drops to the stop loss price.
- Slippage control
The slippage control is used to limit the initial purchase price to not exceed a specific percentage of the order price, thus controlling the slippage caused by price fluctuations. (Slippage control is implemented to restrict the initial purchase price from exceeding a specified percentage of the order price, thereby mitigating the impact of price fluctuations on slippage in the highly volatile cryptocurrency market.)
- Grid mode – Arithmetic
The arithmetical interval refers to placing orders at equal price intervals. The price difference between grids is the same. (For example, 1, 2, 3, 4)
- Grid mode – Geometric
The geometric interval refers to placing orders with a constant rate of change in price. The price changes between grids are the same in percentage. (For example, 1, 2, 4, 8)
- Investment – USDT only
Only use USDT to create the Grid Trading Bot.
- Investment – Both
You can invest with both coins in your account at the same time to create the Grid Trading Bot. (For example, when you select the BTC/USDT trading pair, you can simultaneously invest with BTC+USDT or invest with your existing BTC only to create the bot.)
- Trailing up
Enable the trailing up function to move the upper and lower limits prices of the grid up automatically when the price increases.
3 Benefits of Grid Trading Bots
- The Grid Trading Bot operates continuously, providing 24/7 automation for buying low and selling high in the ever-open cryptocurrency market. This ensures that you never miss an opportunity for arbitrage, as the bot operates even when you’re sleeping, eating, or working.
- The cryptocurrency market presents ample opportunities for profit, but its high volatility can lead to poor investment decisions. The Grid Trading Strategy minimizes risk by mitigating the impact of greed and fear, preventing “buy high, sell low” scenarios, and reducing the average cost of holding positions.
- The cryptocurrency market experiences a sideways market approximately 70% of the time. To take advantage of this, the Grid Trading Bot can assist you in regularly and frequently executing an arbitrage strategy within a set price range, while strictly adhering to the Grid Trading method. The bot will steadily accumulate grid profit, avoiding the temptation to sell all positions in response to regular market fluctuations. Additionally, the Grid Trading Strategy is well-suited for sideways targets, enabling you to make consistent buys and sells, thereby avoiding impulsive actions such as chasing high prices or selling in a panic during market downturns.
3 Drawbacks of Grid Trading Bots
- The Grid Trading Bot will temporarily stop the operations if the price exceeds the upper or lower limit price. It will resume once the price returns within the designated price range. (Note: The Grid Trading strategy will be terminated if the user-defined taking profit or stop loss price is reached.)
- The Grid Trading Strategy requires a certain amount of funds to be held in reserve, therefore, reducing the efficiency of the use of funds. If the user sets the number of grids too small, and the price fluctuates at the two points (which two points are far away from each other) set by the user, the system will not automatically place orders.
- The Grid Trading Strategy is best suited for markets with high volatility or targets, and it comes with inherent risk. While the Grid Trading Bot has the potential to earn less profit compared to spot holders during spikes in the market, the bot isn’t designed to hold 100% spots of positions. However, this may also result in missing out on potential profits from any subsequent market spikes due to the upper limit price setting.
3 Risks You Shall Know Ahead
- During the operation of the Grid Trading Strategy, if the currency encounters unpredictable circumstances such as suspension or delisting of the currency, the Grid Trading Strategy will be automatically suspended.
- It is recommended that users should read and fully understand the Grid Trading Tutorial and make risk control and trade rationally.
- Grid trading Bot is a trading tool but should not be regarded as financial or investment advice from Pionex.
The Grid Trading Strategy is a popular investment approach in both traditional financial markets and the cryptocurrency market. Despite its popularity, it is important to note that investing in cryptocurrency involves risk, and fluctuations in the market can impact the outcome of a transaction. As a new investor in the cryptocurrency market, Pionex’s Grid Trading Bot can be a valuable tool for managing risk and making stable profits. With its comprehensive tutorials and educational resources, you can gain a deeper understanding of Grid Trading Bot and develop the skills to make informed investment decisions.
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