The grid tool is currently the hottest oscillation artifact, automatically setting buy and sell orders in a specified range to take advantage of market volatility for buying low and selling high. However, despite the convenience and efficiency brought by grid trading, it also comes with certain risks and challenges. This article will discuss in detail the advantages and disadvantages of grid trading, analyze how to set up an efficient trading grid, and the key factors to pay attention to in actual operation, helping everyone to have a deeper understanding and reasonable application of grid trading strategies.
Recommended reading: "Nanny-level tutorial, quickly understand AICoin grid tool"
I. Advantages and Disadvantages of Grid Trading
Advantages:
1. Automated Trading
Grid trading can trade 24/7 without interruption, taking advantage of all fluctuation opportunities.
2. Buying Low and Selling High
In the set range, the grid strategy automatically executes buy and sell orders with arithmetic or geometric progression.
3. Low Maintenance Requirements
Once set, the grid strategy can run automatically without the need for continuous manual monitoring.
4. Zero-based Operation
Directly set parameters in the program and input the amount to run.
Disadvantages:
1. Large Drawdown
In highly volatile or strongly trending markets, the grid strategy may lead to losses, especially when the price breaks through the highest or lowest grid.
AICoin optimization measures: Moving grid, see below
2. Low Capital Efficiency
A large number of orders within the grid may lock up funds for a long time, reducing liquidity.
AICoin optimization measures: Active grid quantity, see below
II. Methods for Setting Up an Efficient Grid
1. Selecting Suitable Cryptocurrencies
- Prefer mainstream cryptocurrencies with good liquidity and active trading.
- Choose cryptocurrencies with obvious oscillation ranges. The more frequent the oscillations, the greater the opportunity for grid profit.
2. Determining a Reasonable Grid Range
Choosing a suitable price range is key to setting up the grid. The following tools and methods can be used to select a suitable price range:
- Small A Analysis
- Support and Resistance Levels
- Bollinger Bands (BOLL)
- Historical Volatility Range
- Candlestick Patterns
3. Setting the Appropriate Number of Grids
Determine the number of grids (price intervals) based on market volatility and personal trading strategy.
4. Using Moving Grids
Moving grids are an advanced tool that can effectively guard against the risk of grid breakage and have the following advantages:
- Improve strategy flexibility
- Increase capital utilization
- Seize opportunities in volatile markets
5. Effective Capital Management
Reasonably allocate funds for each grid to ensure there is enough capital to support opening positions while leaving room to cope with adverse market movements.
III. Precautions for Running Grid Trading
1. Watch Out for Grid Breakage Risk
Once the price exceeds the grid range, trading will stop. You can control losses by setting stop-loss and dynamically adjusting the grid (i.e., moving grid) to adapt to new market conditions.
2. Control Emotions
Avoid letting short-term losses or profits affect decision-making and maintain consistency and a long-term perspective for the strategy.
3. Pay Attention to Trading Costs
Trading costs can eat into profits, especially in high-frequency trading grid strategies. It is recommended to choose a platform with lower fees and set a reasonable number of grid intervals and quantity.
IV. Common Issues in Grid Trading
Will the AI grid run normally after the computer shuts down or goes to sleep?
Shutting down or hibernating the computer may cause the grid to malfunction, so it is necessary to ensure that the AICoin client is running normally and the network is unobstructed.
Is the grid tool for market orders or limit orders?
The grid tool is for limit orders.
- How many AI grids can be created at most?
There is no upper limit for running AI grid strategies, and users can run multiple strategies simultaneously.
- Is the start of a new grid order in AI grid trading automatic or does it require manual intervention?
It will run automatically if the program is not stopped.
- How to replenish funds for running grid strategies?
It is not supported temporarily, but a new grid can be opened.
- Will contract grids be liquidated?
If the coin price suddenly fluctuates significantly and exceeds the range covered by the grid trading strategy, it may lead to liquidation of the contract grid strategy. This risk can be mitigated by setting stop-loss or using low leverage and maintaining sufficient margin.
- After manually closing a grid trading strategy, how will the trading profits be calculated?
All profits will be settled at market price immediately, and the investment funds and profits will be automatically transferred to the user's fund account.
- If the market price exceeds the grid range, is it necessary to terminate the strategy?
The grid trading robot will only operate within the set price range. If it exceeds the range, trading will stop until the price returns to the grid range. Currently, when the grid strategy is running, users cannot modify the grid parameters. It is recommended to set up a moving grid, where the upper and lower limits of the grid range will automatically move upward with the average price increase.
- What is the difference between total profit, floating P&L, and grid profit?
Total profit: Net profit after deducting fees Floating P&L: The latest floating loss of the current position Grid profit: Cumulative profit realized from each buy and sell transaction in the strategy
- Why is the grid profit positive, but the total profit shows a loss?
The grid profit is the cumulative profit from each completed buy and sell order in the trading strategy, including the latest floating P&L. The total profit is the realized profit after deducting fees.
V. High Win Rate Grid Strategy Recommendation
Strategy: AI Neutral Grid
Introduction: The grid range is 50,000~65,000. Short above the benchmark price and long below the benchmark price, with 10 grids above and below (20 grids in total).
Usage: Go to the "Community Indicators" on the APP or PC end, search for "AI Neutral Grid," click subscribe to use, supports live trading (automatic order placement). Subscription link: https://www.aicoin.com/link/script-share/details?shareHash=JYrOv33K6JrrvdW1
Note: Backtesting returns and win rates do not represent future returns, data is for reference only
VI. Limited Time Benefits
AICoin, in collaboration with OKX, has launched a strategy experience fund activity, providing novice users with the opportunity to experience high-quality strategies at a low threshold. The experience fund amount is 20 USDT. After receiving and activating it successfully, you can set the investment amount and choose the desired strategy for investment in the "Arbitrage Robot" and "AI Grid" modules on the AICoin PC end.
For specific participation instructions, see: "OKX & AICoin Strategy Experience Fund Activity Participation Instructions"
Activity ends: October 26, 2024
For more AI grid tool questions, please go to the APP or PC end group chat to consult AICoin customer service: Customer Service Yingying, Customer Service KK
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