Crypto traders are struggling to keep up with the fluctuation of the market. Prices can be drastically changed in a matter of minutes, and markets are open all day. Inexperienced traders are unable to react quickly enough to the volatility of the market to earn a profit. Additionally, delays in transactions can further compound the issue. The traders are unable to monitor the cryptocurrency exchanges and markets 24/7 to ensure greater results, click for source!

Fortunately, we have crypto trading automation opportunities in the form of crypto trading bots. They use algorithms to perform trades and execute transactions.

Here we will discuss about the grid trading bot trading strategy, and the ways it benefits users.

What is grid trading exactly?

This is one of the most popular methods of trading crypto, that involves placing orders that are above or below a specific price using the price grid for the orders. This method involves placing orders that are gradually increasing or decreasing in prices.

In contrast to other strategies which typically depend on technical indicators for any kind of buy/sell signals this strategy uses the price action of the market to buy low and sell high. It can be achieved by placing multiple orders on both sides. As the price moves up or down in the grid, the filled orders are automatically replaced with appropriate buy or sell order.

If a purchase order is fulfilled, a sell order will be added to the gridline above. Likewise, in the event that a sale order is fulfilled, a buy order is also placed. The gain on every buy or sell order is represented by the space between the lines.

Typically, the trading bots use this method to navigate the fluctuating market with no clear direction. Instead of cancelling the previous gains, in reality, the grid-based trading bots profit of market’s volatility to lock in the potential profits and also to take advantage of opportunities. Bittrex trading bot also works on grid strategy.

What grid trading functions

Grid traders establish upper and lower limits within the grid that they use to perform sell and buy orders. If the price drops below the lower limit a buy order will be fulfilled, and vice versa. Now, the question is: how does it work? Let’s consider an example: If the cost of any crypto asset, such as XYZ for example, is $10,000. The trader may decide to set a lower limit of $59,000 and a higher limit of $10,000. The grid is the region between these two limits. When the price falls to $9,500, the buy order will be executed, and when it is above $10,500, a sell order will be completed. The traders are able to place multiple buy and sell orders on different grids.

In each grid, the trader needs to set the price manually for the upper and lower limit. These orders are then executed by trading bots according to the price intervals which have been set by the trader.

Profits will be higher If the price gap between the grid’s upper limit and lower limit is bigger.

Choose how many grids would like to utilize in the price range you select. By splitting the price grid in smaller grids it is possible for traders to initiate an effective trade. The more grids you have in the price grid, the greater the trade frequency. This type of trading could be executed at intervals such that of 1 minute, 5 minutes, 15 mins, 30 minutes or 1 hour.