With its multifaceted approach and high chances of making a profit, grid trading stands out as one of the most popular strategies in automated trading. This also holds true for cryptocurrency, where buying and selling digital assets in any market trend proves helpful for the traders in question.
But if you have never used grid trading before or remain unaware of some important tips, you might not be making the most out of this strategy. While you may still be generating a little income, learning effective tips can help you take it to the next level.
To help you reap all rewards of this approach, here are 5 helpful tips to earn crypto with grid strategy. By keeping these suggestions in mind, you can increase your chances to earn a higher profit with your trading bot.
🤖 Choose a Proper Grid Trading Bot
First and foremost, it is important to understand that grid trading cannot be performed manually. Since the trading mechanism uses different price ranges and requires you to make quick trades, it can only be executed through a bot service.
Fortunately, you can find a variety of trading bots that allow you to execute grid strategy in an ideal manner. Many of these bots remain affordable, while others come with an array of user-friendly features. The key is to find a bot that helps you strike the perfect balance between these factors from the get-go.
To go through crucial requirements, your bot solution should support your primary exchange as well as a number of other popular exchanges. It should also offer a stable software build and an array of necessary trading options.
Additionally, it should let you trade through advanced settings and helpful stats. At the same time, it should come with the ability to launch several grids with different cryptocurrencies.
There are several bots that fit this description. But from hands-on experience, my recommendation points to Bitsgap as the perfect solution. The bot is not only renowned for its grid strategy mechanism but also fulfills all expectations on the user-friendliness front.
It also has excellent reliability, faces little to no performance issues, and performs all the actions you need from a trustworthy yet modern trading solution.
You can also move forward with many other cryptocurrency trading bots that are available in the market. You just need to ensure that the solution is backed by a strong support structure and doesn’t have a history of performance issues.
📊 Use Grid Strategy on the Sideways Markets
A sideways market occurs when a particular asset continues to trade within a specific range, but without any significant trends. This means that the asset price does not break its all-time high or all-time low-value record. Instead, it just continues to trade within a noticeable range that is not out of the ordinary for the cryptocurrency in question.
Considering the mechanism of grid trading, this makes for excellent conditions to execute grid strategy with your bot. Since the market does not offer higher risks on either scale, this gives you favorable trends to continue your trades and boost your profits.
Sideways markets in the cryptocurrency sector may seem hard to find at first. But they are not impossible to discover. You just need to observe market conditions against your primary exchange. More often than not, a couple of minutes of searching will do the trick and find you a sideways market to trade your desired cryptocurrency.
You can also look for the indications of these markets through different cryptocurrency forums. It is yet another benefit of keeping yourself informed on the latest developments of the digital asset sector.
Once you find an ideal sideway market that has all the makings for suitable trading conditions, you can go ahead with setting up and executing your grid trading strategy on it. This once again provides you with higher chances of increasing your income.
💰 Proper Profit per Grid
It is important that you keep an eye on the profit range of each grid on your trading radar. While even minute profit may seem like good news, minimal improvements indicate that you can definitely do better. On the other hand, having too wide of a profit range on a single grid means that it is not making enough trades.
When you look at this outcome with a lens of profitability, you can also compare it to actually losing higher income opportunities the more you settle with this state of affairs. In order to really make a difference with your grid trading, you need to be more active in modifying the settings.
Keeping this in mind, make it a point to observe the profitability of each grid on an ongoing basis. Needless to say, this aspect can be extremely tricky to handle. For many new traders, this can become one of the most challenging factors to manage while trying their hand at grid trading. But keeping a few points in mind can help you breeze through this requirement with ease.
To determine what sort of profit counts as being good enough, you can follow the experience and values recorded by other traders. This provides you with a guideline on what type of profit range you should accept for each grid and at what point do you really need to take action to adjust your trading bot.
According to my observations with grid trading, a profit range of less than 0.3% profit per grid is miserable and would be burned with trading fees. Whereas, a profit range of more than 1% is too wide and indicates that your grid is not making enough trades. By following this handy tip, you can easily adjust your grid trading bot to keep your profitability in check.
📈 Use a Wider Price Range
When using grid trading, you can set a price range according to your liking. This allows you to utilize the grid bot with your own preferences front and center. Many grid bot trading solutions make it easy for you to set these pricing factors. This is done by using adjustment options such as the upper limit price and the lower limit price.
As the grid bot continues to trade in both directions of the market, these pricing limits define the threshold of when it should stop trading. If your price limits are set over a narrower range, it can be constricting to the bot. While it provides you with a more careful strategy, it also means that there may not be that many opportunities for you to make use of in the first place.
If you are using a trading bot to set yourself free from checking it every now and then, it is important that you set a wider price range for your grid trading strategy. This not only provides your bot with the opportunity to make more trades but also boosts the chances of generating higher profits.
With that being said, this approach does come with the stipulation of some added risks. Due to this reason, you should make it a point to tread carefully. If possible, use the features of backtesting and see how this strategy may have played out with past market conditions.
This approach also ensures that you spend less time adjusting your bot and more time simply monitoring it, that too whenever you are free to do so. This provides you with the comfort of not having to make manual changes all too frequently and lets you enjoy the comfort of utilizing a trading bot.
💸 Use Fee Discounts When Possible
Some of the most challenging aspects of cryptocurrency trading are the associated fees that are charged by respective networks and exchanges alike. While network fee is something that is decided automatically and cannot be changed at your own discretion, the exchange trading fee that is set by each individual exchange provides you with some leeway.
Besides looking at different exchanges and comparing their upfront fees, you can also look for any discounts that are offered by them. This provides you with an even further price break and lets you enjoy premium services without paying a fortune for them.
In most cases, these discounts are delivered in the form of using the exchange’s own blockchain tokens for making trades. This is a way for these exchanges to improve their own financial ecosystem while also offering incentives to customers. In turn, these discounts do not diminish the quality of service in any way but still provide you with a more affordable way to trade.
A prime example of this mechanism at play is Binance, which uses its Binance Token (BNB) to facilitate its trades. This means that if you have BNB in your exchange wallet, you can pay the trading fee through it and earn some discounts to boot. Buying the digital token is easy. But the simple process provides you with a slew of money-saving opportunities over time.
This mechanism also applies to a variety of other cryptocurrency exchanges. You just need to make sure that you are selecting an exchange that offers its token through its own platform, remains credible, and most importantly, has a good discount to offer in the first place.
📢 Conclusion
The grid can be a stressful mechanism to adopt at first. But once you learn the ropes, it is not difficult to execute this trading strategy to your own comfort. By testing, you can easily master this form of trading and see your profits soar on a consistent basis.