In this week's Grid-themed AMA, we answered some of the most asked questions about Grid Trading. Here is the transcript:
Q1: Why It's Said that You Can Profit From Grid Trading in a Bear Market?
However, a bear market requires more complex strategies to achieve your profit goals:
1. Need to be able to capture smaller market fluctuations
2. Conduct more frequent and small-profit trades
This means executing numerous trades. However, manually opening and closing so many trades can be very time-consuming, and honestly, extremely tedious and monotonous.
However, utilizing the BingX Grid Trading Bot to implement your strategies can solve these issues.
This free trading tool will not only improve your profitability but also save you time and energy. It's equivalent to having a robot butler configured to execute your trading strategies in all potential situations and granting you the freedom to spend your time elsewhere.
Q2. What Is Grid Trading? Advantages？
Following this buying and selling method, you will earn a grid price difference each time and continuously accumulate profits in a volatile market.
At the same time, your risk has also been reduced because your investment has been divided into hundreds of tiny positions. As long as the market fluctuates, you will continue to make profits.
This aims to capitalize on one of the advantages of the cryptocurrency market. That is, its high level of volatility makes it naturally suited for Grid Trading. So, you're probably wondering, is the annualized profit for Grid Trading quite low?
It's important not to underestimate the volatility of the crypto market. Although the profit of each trade is very low, the high frequency of trades more than makes up for it. As long as the currency and ranges are appropriately configured, it is normal to have annualized returns of more than 100%.
Q3. What Types of Grid Trading Are Currently Available? How Do I Choose the Right One?
|
Spot Grid |
Futures Grid |
Infinity Grid |
|
|
Price Range |
Set an upper and lower price limit |
Set an upper and lower price limit |
Only set a lower price limit |
|
Type of Grid |
Geometric Grid |
Geometric Grid |
Arithmetic grid |
|
Trading Strategy |
Set price range and grid number to buy low and sell high |
Set price range and leverage, to buy low and sell high through Futures trading |
Set the profit per grid, and buy low and sell high |
|
Position Conditions |
Automatically opens the position, no leverage; margin equals the total investment |
Supports up to 20x leverage to amplify profits |
Automatically opens the position, no leverage; margin equals the total investment |
|
Profit Calculation Method |
Grid Trading Profits + Unrealized PnL |
Grid Long and Short profits + Unrealized PnL |
Grid Trading Profits + Unrealized PnL |
|
Ideal Scenario |
Market fluctuating within a range |
Volatile market |
Crypto that drops suddenly in price to allow for purchase in batches or the crypto is highly volatile |
|
Does it support Copy Trading? |
Yes |
(Stay Tuned) |
(Stay Tuned) |
Spot Grid
The Spot Grid could be considered the classic grid. After setting the upper and lower price limit, the grid will repeatedly sell high and buy low within the set price range to earn profits.
Ideal Scenario: Market fluctuating within a range
Spot Infinity Grid
The Spot Infinity Grid is an arithmetic grid with no upper limit. Digital assets' value is maintained through buying and selling at a fixed ratio. For example, if you have 10,000 USDT of BTC and set the Infinity Grid's profit per grid to 1%, whenever the price of BTC increases by 1%, the Infinity Grid will sell off this increased portion, allowing you to maintain continuous arbitrage in a rising market.
Ideal Scenario:
① Currency price has suddenly plummeted, creating a good opportunity for purchasing in batches.
② Holding currency for a long term
③ Volatile currency trending up
Futures Grid
The Futures Grid is an enhanced version of the Spot Grid. The essence of grid trading is position management + high-frequency trading. The Futures Grid builds on the foundation of the Spot Grid by adding leverage, thereby amplifying the margin and profits to achieve both low risk and high yield.
Ideal Scenario: As the Futures Grid is used to buy low and sell high through futures trading, the risk of holding a spot asset doesn't exist. Therefore, as long as there's market volatility, it's always a good time to use the Futures Grid.
Q4. Is Grid Trading Always Profitable?
Q5. Which Trading Pairs Are Suitable for Grid Trading?
If you already have a deep understanding of grid trading, you can try trading pairs with high volatility to earn high profits. However, it is essential to remember that risks and rewards go hand in hand.
Q6. What Parameters Significantly Affect Grid Trading Profits? Do you have any tips to make the most out of it?
Let's use Futures Grid for the following example:
Grid Profit = Price Difference per Grid * Quantity of Single Grid Purchases * Number of Completed Grid Sales. It can be seen from the grid profit formula that the premise of the grid's profitability relies on the currency price remaining within the price range you set, while the premise of high ROI is to improve the number of trades or profit per grid.
So the first significant parameter is the grid's price range.
That is setting the highest and lowest price for your grid strategy. Essentially asking you within what range you believe the market will fluctuate between.
From this image, we can see that the market of ETH and BTC has been recently fluctuating within a certain price range. This kind of market state is ideally suited for opening a Futures Grid strategy.
The system automatically suspends placing orders if the Futures price exceeds the set range.When configuring price range settings, it's essential to refer to recent market data and the maximum range of K-line fluctuations over a period of time to find the market's highest and lowest points during that time.
The reason for referring to the maximum range is to avoid being caught out by the market trending in one direction. If the grid trading strategy settings are misconfigured and the market trends in one direction outside your set grid range, then you will not be able to profit and even incur losses.
When the range is wide and the position is sufficiently diversified, risk will be reduced significantly, and then profits can be increased by adjusting the amount of leverage.
The second significant parameter is the grid number.
When the total investment is fixed, the grid number determines the frequency of grid trading and the fund allocated for each grid.
If the grid number is too high, it reduces the price difference per grid (buying and selling) and the quantity per purchase, thereby reducing the profit per grid. Therefore, configuring the number of grids appropriately is crucial to improve revenue.
From this image, we can see that under the same price range settings, the higher the grid number, the denser the grids, the more sensitive that the grid trading strategy becomes to price fluctuations.
Q7. How to Create a BingX Grid Strategy?
Next, using the Futures Grid as an example, I'll teach everyone how to create a grid strategy on BingX!
First go to the Futures Grid page.
APP: On the homepage, click "Grid Trading" and choose "Futures Grid."
WEB: Click the link to the right to go directly to the Grid Trading page: https://bingx.com/en-us/strategy/
After finding the Futures Grid portal, I will now show you how to start a Futures Grid strategy in three simple steps:
Step 1: Choose a trading pair, such as ETH/USDT
Step 2: Set your grid strategy parameters; you can follow the recommended parameters directly or manually configure the parameters yourself.
Step 3: Set the leverage & investment amount, and then start your strategy.
Q8. Any Recommendations for Users New to Grid Trading?
1. Create a strategy through Copy Trading. Grid trading is an advanced trading tool. Creating a grid trading strategy through Copy Trading to observe the parameter settings of seasoned traders for different currencies and market conditions, and you can gradually understand their logic.
2. Try it for yourself with a small investment. For your first strategy, it is best to choose BTC and ETH, which both have high market capitalization and good liquidity. The set price range should not be too narrow, and the grid number should not be too large. Instead of pursuing high-frequency arbitrage initially, aim for something stable.
Once you gradually understand the basics of grid trading and become more comfortable through hands-on experience, you can try creating a grid trading strategy with a more considerable investment.
It's Reward Time!
It's time for Grid Trading as the market swings!
Embark on your grid arbitrage journey today!
Here are two generous rewards BingX Grid specially prepared for you:
🎁 New User Exclusive: $88 Subsidy for Grid Trading
New users will enjoy a $88 subsidy for their grid trading. After signing up for the event, users will be subsidized up to a maximum of $88 if there is a loss incurred to your first grid strategy (applicable to all three types of grid trading) during the event.
Click the link on the right to view the details: https://bingx.com/act/template/2914
🎁 Spot Grid / Infinity Grid 0 Fees
Unlike other trading exchanges that only exempt BTC trading pairs from fees, BingX now waives all fees on Spot trading, and the same applies to the Spot Grid and Infinity Grid. Run Spot Grid at 0 fees and enjoy bigger profits!For more information, please check the announcement: "Enjoy "0 fees" on BingX Spot Trading and Take More Profits!"