Crypto traders are finding it harder to cope with the volatility of the market. Prices can change dramatically within minutes and the markets are open 24 hours a day. People who are new to the market cannot respond quickly enough to the fluctuating market to generate profits. The delay in transactions could cause problems. The traders are unable to monitor the market for cryptos and other currencies throughout the day to obtain better outcomes, article source!
Crypto trading bots provide the chance to automatize trading with crypto. These bots are based on algorithms to trade and perform transactions.
We will talk about grid trading techniques, trading strategies, as well as the benefits it offers to customers.
What is a grid-based trading strategy?
This is among the most popular strategies for trading in crypto that involves placing orders above and below a set price by using the price grids of orders. It involves placing orders with incrementally increasing or decreasing prices.
In contrast to other strategies which typically rely on the technical indicators to generate any type of buy/sell signal this strategy makes use of the market’s price action to buy low and then sell high. This could be achieved by placing multiple orders both on the buy and sell side. When prices move up or down on the grid, orders are replaced automatically by the appropriate buy or sell order.
The sale will appear on the gridline when an order has been fulfilled. If a purchase order is fulfilled, another buy order will be added. The amount of profit earned from each purchase or sell order is portrayed in the spaces between the lines.
Trading bots generally employ this strategy when the market is swaying with no direction. Grid trading bots do not make gains that were previously made, but rather make use of the volatility in markets so that they can lock in profits and take advantage of opportunities. Bittrex Trading Bot is also using a grid strategies.
How does grid trading work
Grid traders place lower and higher limits on the grid, on which they execute their buy and sell orders. Buy orders are executed when the price is below the lower limit. How does it work? Let’s take an example: Let’s say the price of a cryptocurrency asset, for instance XYZ, 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. If the price is below $9,500, a purchase will be made, and if the price rises above $10,500 a sell is made. The traders can place multiple sell and buy orders in various grid points.
In each grid, traders have to manually set the price for the upper and lower limit. These orders then are executed by trading bots in accordance with the price intervals that have been predefined.
The bigger is the gap between the upper and lower price limits on the grid. the more could be the potential for profit.
Choose how many grids intend to use within the price range you pick. By splitting the price grid into smaller grids and allowing traders to trigger profitable trades. The more frequently you trade the greater the number of grids are available. You can perform this kind of trading in intervals like 1 minute five minutes or 15 minutes, 30 minutes, or 1 hour.