Trading on exchanges based only on intuition is a very bad idea. It is necessary to carefully analyze the market situation, using technical and fundamental analysis in order to obtain a stable income. In addition, the use of the trading strategy will make your trading more effective.
What to do for beginners and those traders who have no opportunity to devote enough time to trading? They can be helped by trading bots that automate many strategies used in the cryptocurrency markets.
Grid strategy trading
Grid trading is a fairly popular algorithm that many traders use in their work. It is not complicated, so even beginners can take advantage of it.
The essence of a method consists in "catching" the market price. It occurs as follows.
The trader places orders above and below the current price of a particular coin. Orders are placed in a certain range with a predetermined step, which is set by the trader himself. Thus, the grid of orders is formed, due to which the strategy got its name. As soon as the price of the selected digital asset moves up or down and crosses the grid line, the deal will be executed automatically.
The order grid can be of two main types: static and dynamic.
Static order grid
As it is clear from the name, a static grid, unlike the dynamic one, is not moving, i.e. static. It implies placing orders at fixed levels determined by the grid step. Such the grid is usually filled manually by a trader.
Dynamic order grid
This type of grid is more complicated than described in the previous paragraph and implies the movement of orders depending on the market situation. Therefore, trading robots are usually used for dynamic order grids as we will describe further.
The essence of the grid strategy is as follows. It is making a constant profit by automatically buying at a low price and selling at a high price due to constant price changes in the cryptocurrency market.
Grid methods may be utilized in both trending and turbulent markets, but the latter is more rewarding.
Advantages and disadvantages of grid trading
Grid trading, like any other trading approach, has advantages and disadvantages. Let's take a closer look at each of them so you get a thorough view of this algorithm.
The advantage of the grid trading strategy is that the trader can earn money even without knowledge of technical analysis. The placing of the grid of orders allows the trader to profit from small price fluctuations, which is very difficult to do in other trading methods. The trader just needs to forecast trend direction and place pending orders with a certain step. Moreover, it is possible to create the grid in both directions from the current price. In this case, the forecast does not matter at all, because it is possible to earn money at any price movement.
Here are some more reasons why automated grid trading is widely demanded:
- It's convenient. It is quick to figure out the principle of operation, and there are no overly complex calculations requiring a lot of experience.
- It's efficient in terms of risk management. The strategy allows you to adjust your risk/profit ratio much more correctly than others.
- It is reliable. The trading approach has been tested over the years and many traders have practiced it for decades in a variety of markets.
- It's flexible. It easily adapts to different market conditions.
- Finally, grid trading strategies are ideal for automation. They are extremely logical and have a clear action structure.
What are the disadvantages of this strategy? To make profits quickly, traders are often tempted to close profitable deals too early, but losing trades remain open, which leads to deep drawdowns.
What is grid bot trading?
It is software that automates the work of the trader on the cryptocurrency exchange using the grid strategy.
The strategy of creating the grid is very simple. You set the upper and lower limits of the price of the grid, as well as the number of its levels. Based on these data, the working range will be determined by the bot itself. Dividing the obtained figure by the number of specified levels, the bot gets the grid step. As a result, the grid bot creates a chart starting at the lower level by adding a new interval until it reaches the upper level of the grid.
How spot grid bot works? The strategy of the bot does not look complicated. It waits for the price to cross the lines of the grid. At the moment of their meeting, the bot executes an order to buy or sell, depending on which line the price has crossed. The bot works only within the price limits set by the trader. If the market price leaves that range, the bot will stop placing orders until the price returns to those values. You can find one of the many grid trading bot tutorials on the internet, in which the principles will be described in more detail.
The grid strategy itself is considered to be quite automated. The trader creates the grid, and can not monitor the market, minding his own business. Because when the price approaches this or that order, they will be executed automatically. So the question may arise here - why automate the grid strategy?
There are several reasons for this.
- Not every trader, especially beginners, is able to calculate the basic parameters of the grid - step, stop-loss, and take-profit. A trading robot will do it for you based on your trading preferences.
- Traders can place orders manually, but after some time interval, each of them will be closed. If you use the trading robot, it will place new buy and sell orders according to your trading plan, thereby continuous trading.
- Every trader can make mistakes, and those mistakes in trading are quite expensive. In the case of trading robots, this is impossible as they are based on pre-built algorithms from which they never deviate.
- A trading robot can move the grid of orders if the market situation begins to change to the disadvantage of the trader.
Add to this the absence of emotions, the round-the-clock work without rests, and a variety of settings. Now you can understand why trading robots are in high demand among traders.
How to get a trading robot?
The trading robot is software. Therefore, you can get it like any other program in three ways.
Develop it yourself
This is ideal for those who have software development skills and a good understanding of technical analysis. You can implement many trading strategies that automate your work on exchanges - both cryptocurrency and traditional ones.
In addition, you can sell trading robots to traders who cannot develop it on their own. The demand for such software has always been quite high. There are many sites where you can put your grid trading bot up for sale, as well as communicate with other developers and exchange experiences with them.
It is an option for those who are seriously interested in trading but do not have development skills. There are a lot of offers to buy trading robots, and the robots for sale are very varied. You can choose the one that is best suited for your purposes.
There is one big disadvantage. The price of such software is quite high because the creation of crypto grid bot trading is a complicated process. Chances that the developer, having invested a lot of effort and time in his work, will want to sell the grid bot at a low price or give it away for free are very small.
Download for free
This option is most often used by novice traders, or by those who are not ready to invest large sums of money in trading. There are as many free robots on the web as there are paid ones.
Free robots have two disadvantages, and both of them are significant.
- You can download low-quality software. Remember that robots are developed by humans, and they, for various reasons, can make mistakes. These reasons include lack of experience or inattention.
- The danger of facing scammers. You will be very unpleasantly surprised to find out that after a successful trading session the money was not deposited to your trading account.
To prevent such problems, try to avoid free trading robots. It is possible that you will find good software without paying for it, but the probability is very low. You are much more likely to run into the two scenarios we have described above.
Suppose you're not a programmer, you don't want to spend money on the robot, and you're afraid of running into scammers. What should you do in this case? Look at another option that is quite popular. These are automated trading platforms.
They are equipped with everything you need to work on cryptocurrency exchanges. Why should you choose their cryptocurrency software?
- No need to pay. To use the trading robot, you do not have to pay any money. It is enough to create a trading account. The starting plan of many platforms includes the use of software for automation.
- High quality. Cryptocurrency platforms hire the best developers to create robots. Each stage of work is carefully controlled, and the finished product is released to the market, which has passed many tests.
- Automation of multiple strategies. In addition to grid trading, platforms offer software for multiple strategies that can be used on the most popular cryptocurrency exchanges.
If you're interested in this option, check out the WunderTrading platform. It has all of the above benefits and additional trading tools that will make your work on exchanges much easier.
How to set up a grid bot?
In order to start trading on any of the exchanges, you need to connect it to your WunderTrading account via an API.
The API interface is a layer between the two applications that allows them to exchange information. In our case - to use all the functions of the cryptocurrency exchange on the automated platform.
Let's describe the process of connecting the robot step by step:
- Create the account on WunderTrading and the cryptocurrency exchange, for example, KuCoin.
- Get API keys on KuCoin. To do this, go to your personal KuCoin account, open the "API Management" section and click on "Create API". Then choose an API name and password for the API. The next step is to go through security checks: enter a password, two-factor Google authentication, and email verification. Your API key will be sent to that email.
- Paste the received keys into your personal account on WunderTrading. Open the "My Exchanges'' section, and click on "Add" under "API Profiles''.
- Configure the robot for grid trading - set the range and other parameters.
- Start trading.
If you don't understand anything during the setup process, you can always refer to the technical manual of WunderTrading or the exchange on which you are going to trade.
What else can you use WunderTrading for? First, it has a trading terminal that you can use to trade multiple exchanges at once. All you have to do is connect them via API. Second, try the copy trading feature - the ability to copy deals of professional market participants. Third, you can always exchange the cryptocurrency here at a favorable rate. Fourth, look at the blog and the learning section. There you will be able to find answers to many questions, for example, “what is the best crypto for grid trading bot".
The grid strategy is one of the most popular among crypto traders. If set up correctly, it will allow you to achieve good results in trading. Using robots will help you automate this algorithm, thereby making your work even more efficient.