What is a grid trading bot, and how profitable is it?
Is spot grid bot trading profitable? Grid trading is a trading technique or tool that works perfectly in a changing market. It is a strategy that investors use to profit from the ups and downs of prices in a market and can be used on different financial assets.
The more frequent and larger fluctuations, the more profitable the strategy will be. To be successful with a grid strategy, you must schedule and configure buy and sell orders at a set price level. It takes its name because this method will create a grid-like formation.
What are the grid strategies available in the market?
If you want to build an effective and safe grid strategy for grid longing and shorting spot trade, you need to consider certain aspects:
• There should be no negative interest or finance charges for maintaining levels daily.
• You should not use a market that has little chance of reaching 0.
• You must have sufficient funds to maintain positions at 0.
But how does the network trading strategy work? You should imagine a grid where you can establish a chain of both long and short buy and sell orders at different intervals of the current amount.
You can imagine all the possibilities that can be presented for any scenario. In addition, you will be sure that there will always be an order that will be triggered to enter the trade in whatever direction the market takes. The number of orders and the intervals set in each direction determines the size of the grid.
A grid trading bot is created to operate in a non-trend market, as with digital currencies. Cryptocurrencies are a financial instrument that does not move up or down in a clear direction. This function is known as lateral movement, range, or chopping.
These robots are easier to design, use and configure for beginning investors.
• Sell an asset long
For long selling spot trade using grid trading, you only need to set up a series of long orders at different intervals from the current value. When the profit level is activated and generated, it will be sent to your account instantly.
The number of orders and the intervals established in the direction of the uptrend will determine the size of the grid.
• Sell an asset short
It is the opposite of long grid sales. It is a series of short orders at different intervals from the current price. In this case, the size of the grid will also be determined by the intervals and by the number of stop orders set on the downtrend.
What happens when the price breaks out of the top of the grid?
In this case, the trading bot will stop automatically and wait for the asset prices to return within the grid and thus resume trading. It will be an opportune moment to remove or stop the robot and evaluate if you want to continue with that bot or if you want to replace it with a new range or with different assets.
All assets were initially bought by the bot from the network when it was started the first time they have been sold. This strategy applies the motto of buy low and sells high to make a profit.