How Small Retail Crypto Traders Are Using Automated Grid-Bot Trading Strategies To Gain Profits And An Edge

Small retail traders are using automated grid-bot trading strategies to help them profit from the ups and downs of crypto price fluctuations and gain an edge over manual traders.

A grid bot is an automated trading algorithm that helps carry out the grid trading strategy. It schedules or sets up buy and sell orders in a predefined price range, creating a grid-like formation.

The algorithm allows small retail traders to place a string of purchase and sell orders within a given price range. Once a sale order is fully executed, the bot instantly places another purchase order at a lower grid level, and vice versa.

Grid trading is mostly associated with the foreign exchange market.

It works well in a competitive market with regular price variations and is best used while there is no clear-up or downtrend for a longer period. The more frequent and bigger the price fluctuations are, the more profitable the strategy will be.

To begin, one needs to choose a price range for the strategy and then decide how many “grids” should be inside. The price range is basically split into multiple smaller ranges (grids) to increase the likelihood of trades to trigger.

More grids increase the trading frequency because the grid width is decreased, but at the same time, the profit earned with each order will decrease. Traders must choose between many trades which earn only a small profit at a time, or a few trades that make a big profit each time.

An advantage of grid trading is that it requires little forecasting of market direction and can be easily automated.

Grid trading is a reliable strategy in the crypto market. It is a proven, time-tested, and profitable trading strategy. There are many examples of successful traders actively using it over decades on all kinds of markets.

Due to its high fluctuations, the crypto market, in particular, turned out to be one of the most reliable spaces for grid trading strategies.

An automated trading system allows traders to establish specific rules from both trade entries and exits, that, once programmed, can be automatically executed through a computer. Automated trading systems are also known as algorithmic trading.  

Crypto trading relies on algorithms — a set of instructions used to solve a computational “problem”, like the way social media uses algorithms to tweak user feed to their preferences. 

Trading bots use application programming interfaces (APIs) — software intermediaries — that can allow different applications to communicate. These bots can use a trader’s account to carry out trades using the available assets.       

Using the grid trading bot helps a trader to avoid emotional decisions and to lock up small profits all the time, while the price keeps fluctuating. It makes it easy to gain a stable, passive profit with low risk in the volatile crypto market.

Before running a grid bot, find the best pairs and market circumstances and learn how to read the market, look through charts, and acquire a feeling of what to search for. Look for charts with a sideways or modest uptick, making sure that there are not any indications of a long-term downturn.

Here are some different types of trading bots:

1. KuCoin Trading Bot

KuCoin is a trading tool that allows users to gain passive income with automated trading strategies. It is built to be a zero-cost, time-saving, and simple-to-use trading tool for all classes of investors in a variety of market conditions, whether bullish, bearish, or volatile.       

KuCoin celebrated the first anniversary of its trading bot product in January 2022. Since the launch, more than 5.5 million bots have been created and about $150 million in profit has been made by KuCoin users.

Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?

2. Pionex

Unlike other platforms, Pionex has the most advanced grid bot features including stop-loss, take profit, and trigger price. It offers five very advanced, modified versions of grid bots for free. All of them can be used for different kinds of market conditions and various situations.

The Pionex grid bot helps the user to catch volatilities in a ranging market (low volatility or flat vs. high volatility or up and down) by putting continuous buy and sell orders repetitively in a grid fashion.

This enables a trader to catch the market volatility inside a certain price range. The bot places buy and sell orders, which enables it to buy low and sell high for the user if the price fluctuates within the set price range.

On Pionex, there is the advantage of the “leveraged grid bot” or “margin grid bot”. These are special kinds of grid bots where traders can adjust the risk they are willing to take and multiply any profit or loss made by doing so.

3. Binance spot grid trading

Binance spot grid trading performs the best in volatile markets when prices fluctuate within a specific range.  To use the Binance spot grid trading strategy, a trader must have a Binance account.

The spot trading feature is still new on the world’s largest crypto exchange and is expected to eliminate fear of missing out (FOMO) and make strategic, informed, and rational trading decisions on behalf of the traders.

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