Crypto traders are finding it harder to cope with the fluctuations of the market. Prices can fluctuate dramatically within a few minutes and markets are open all day. The novices aren’t able to respond quickly enough to the volatility of the market to make profits. Additionally, delays in transactions could exacerbate the issue. To achieve better results, traders cannot monitor the cryptocurrency exchanges or the global market throughout the day, related site!
Bots for trading in cryptos give us the opportunity to automate trading with crypto. They use algorithms to make transactions and trades.
We will be discussing grid trading as well as trading strategies and the benefits for users.
What is a grid trading strategy?
This is one of the most well-known strategies for trading in crypto that involves placing orders at or below a specific price using the price grid for the orders. This strategy involves placing orders with incrementally increasing and decreasing prices.
This trading strategy utilizes the market’s price fluctuations in order to decide if you want to purchase low or sell high. And, this can be achieved by placing multiple orders on both sides. As the price moves up or down on the grid, orders are replaced automatically with appropriate buy or sell order.
If a buy-order is fulfilled, a selling order will be added to the gridline above. And in the event that a sale order is fulfilled, a buy order is also placed. The gap between these lines represents the amount of profit that is earned from each buy or sell transaction.
Trading bots typically employ this strategy when the market is swaying with no direction. Grid trading bots do not reverse gains made previously but rather make use of the volatility in markets to secure profits and seize opportunities. Bittrex trading bot also operates on grid strategy.
How grid trading functions
Grid traders define upper and lower limits within the grid where they execute buy and sell orders. If the price falls below the lower limit, then a buy order will be executed, and reversed. What is the procedure? Here’s an example to help get the picture: Let’s assume that the price of XYZ, a crypto asset is $10,000. The trader is able to decide to set a lower limit of $59,000, and a greater limit of $10,000. The space between these two price limit is known as the grid. Once the price drops to $9,500, a purchase order will be executed. And when it goes above $10,500, the sell order will be executed. It is possible for traders to make multiple buy and sell orders in different grid points.
In every grid, the trader is required to decide manually for the upper and lower limit. These orders are then executed by trading bots according to the price intervals that are predefined.
Profits are higher If the price gap between the grid’s upper and lower limit is bigger.
Make sure you select a price range to the strategy you intend to employ and then decide how many grid you wish to include in the interval. Split the price grid into smaller grids, which will make profitable trades. The more frequently you trade, the more grids there are. This kind of trading can be done at intervals as that of 1 minute, 5 minutes, 15 mins, 30 minutes or 1 hour.