HOW-TO GRID TRADE: How Grid Automation Works (Tutorial #2)HOW-TO GRID TRADE (Tutorial #2):
How a Crypto Trading Bot Automates Your Trades +PLUS+ Quick Set-Up Tips
OK - TUTORIAL #2 - LET'S UNDERSTAND WHAT WE'RE DOING
Automation via a trading bot will help you execute your grid trading strategy. (The bot I recommend is linked below and connects to your choice of 25+ various exchanges. My instructions are specifically for "my recommended grid bot" though the concepts should work anywhere.)
CHART NOTE: If chart above does not display illustrations properly, please expand window or adjust scaling so you have THREE clear and separate examples. Or, scroll down for a screenshot image of these illustrations.
Did you miss Tutorial #1? ( Go Here )
SET-UP IN MINUTES
Your grid bot can be set-up with your range, grid spacing and capital investment amount within minutes. Your grid trading bot will initiate a start-up BUY, layout your future orders in a grid and continue placing and filling orders as price fluctuates, so you can benefit from any sideways and ranging market.
You can grab a coffee, a beer or some spring water, sit back and watch (or better yet, spend time with your family!) In the meanwhile, cha-ching, cha-ching… one zig, one zag at a time, your odds of making money are good. Of course this assumes you’ve done your homework, set things up properly and picked an optimal time. Your only risk is a sudden price plummet (and yes this happens from time to time) but with a stoploss or counter strategy in place, you’re pretty much in hands-free mode and can check your progress once or twice a day.
Next, let's explore in details of how the Crypto Grid Trading Bot actually works. In our random example, I'll use BTC/USD pair and the following bot settings:
ILLUSTRATION SETTINGS:
Price range: $16,000 - $24000
Quantity of grids: 9
Amount per grid: 1 BTC
NOTE: Please focus on the concept, not the random range or investment levels in this illustration. This example is not meant to be a real signal or set-up! Just grasp the concept.
1. GRID BOT CREATED
Once your grid bot is created, it will distribute buy and sell orders based on your investment settings, range and equal grid spacing (or grid profit targets) . The BUY orders will be placed below the current market price, while the SELL orders will be placed above the current market price. If needed, bot will automatically buy or sell currency to create grid. You will be prompted to confirm every step in the process. It’s fast, easy and fun.
Remember, in this example we are only placing LONG buy orders and selling when price moves up one grid (there is NO SHORTING involved).
Also remember, you can NOT edit (change settings) on a running grid bot. But you can stop your bot thus opening up the option to create a new one.
STOPPING YOUR GRID BOT
If for any reason you want to stop your bot (perhaps you messed-up, perhaps you change plans, perhaps the market starts looking negative, perhaps you want to take your profits, perhaps you want to move grid to a new range)... you can cancel your bot at anytime. I’ll cover this in greater detail in a later session of this tutorial series, but for now just be aware that upon bot cancellation - when you stop your bot - you may have open positions remaining that must be dealt with manually on your exchange or trading platform.
CANCELLATION RULE: Every time you stop a bot, check your exchange for open positions and either sell, set limit order(s) or perhaps hold the crypto your bot has bought. The bot will automatically remove standing buy and and sell orders (you can double check your exchange to confirm this if you like).
2. PRICE MOVES UP
You’ve started (in our example) at $20,000. When the price moves up to $21000 the first sell order is executed. The bot will place a new buy order one grid below at $20,000.
3. PRICE MOVES DOWN
When the price moves down to $19,000 your bot will execute BUY orders at both grid lines ($20,000 followed by $19,000) . During that price drop , your bot will place new SELL orders at $21,000 and $20,000) after each executed buy order. And so it goes… your bot buys, your bot sells and grid lines are replaced with new open orders as the next grid line (up or down) is hit. Simple as that.
4. YOUR RESULTS
This trading method will generate profit as the market ranges up and down. It works as long as the market movement stays in your predefined range. The “recommended grid bot” (see footer below) will automate this strategy for you and provide accurate reporting on your profit results.
12 QUICK TIPS FOR STARTING
In future sessions of this tutorial series, I’ll cover important areas such as: how to find sideways markets, slowly trending ranges, and optimal grid bot starting points. I’ll even cover indicators that can help you with your grid trading strategy -AND- our Discord community specifically dedicated to future “Grid Masters."
For now, please follow these basic steps:
1) Get your grid bot account.
2) Connect your bot to your preferred exchange.
3) Start with a cryptocurrency you trust (BTC or ETH or a top 10 coin) . Something you’d be ok holding (HODL) if worse came to worse.
4) Wait for a market where you expect or anticipate sideways or slowly upward ranging price action.
5) Keep your total grid range (lowest grid to highest grid) within 4% to 8%.
6) Select a grid count that renders your grid spacing (distance between each grid line) to a space comparable to typical zigzags you see in recent price action. Typically a .5% to .6% space between gridlines (as measured on your Tradingview chart) is a good place to start.
7) After your settings are enter in the bot, do click the backtest button. Double check setting, make tweaks, backtest again until you are happy.
8) Invest MINIMALLY on your first few bots (say $100 or something you can afford to lose) . Think of your first grid bot as a “learning experience.”
9) Set a stoploss under your grid (there is a setting within the bot for this) . If you don’t mind holding the coin if prices temporarily drop , then you can forego a stoploss.
10) Don’t dream of riches, instead anticipate all goes well and you get a rather healthy ROI (better than a bank and perhaps better than your trading results/ROI using other non-grid strategies).
11) If your first bot does not go well (worry not, remember the first time you tried to ride a bicycle?) . Review what happened and try again. 3%, 5%, 8% gains might be just around the corner.
12) Give your bot time to “do its magic” (perhaps 3 days, a week or longer) ... as long as prices are within or very near your range, you can leave your grid up and running.
Why not? You’re making money!
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HOW DO I LEARN MORE?
1) Review my related IDEAS and TUTORIALS (linked below)
2) Explore my GRID INDICATORS (linked Below)
As always, I appreciate your support. Please share with others.
ENJOY!
Dan Hollings
Master Crypto Grid Trader
Please Explore My Other Indicators, Scripts, Grids and Educational Ideas.
@ DanHollings on Tradingview.
