Grid Trading is a type of quantitative trading, designed for a fluctuating market, allowing users automatically to buy low and sell high to claim a steady passive income. The Grid Trading tool developed by Bibox is perfectly suitable not only for novice investors but also experienced investors, for whom this tool spare trouble of software programming and maintenance.
I.How to use grid trading?
1.Click "Trading Bot" button on the homepage of the APP to enter quantitative product center. Select "Grid Trading" and click Create.
*Bibox grid trading provides two modes: "AI Recommended Strategy" and " Customized Strategy".
2.AI recommended strategy; one-click order placement. AI will automatically fill in appropriate parameters based on historical 7-day data. The user only needs to select a trading pair and drag "input assets". Then, a trading strategy will be automatically generated. Click "Set up" to run grid trading.
*AI filling instructions: Fill in the strategy with the highest profit based on the calculation of the trend of the transaction pair in the last 7 days to ensure that users can obtain greater profits when executing the grid.
3.After the order is placed successfully, you can view the details on "In operation-Bot- Grid" page.
*The grid list contains grid trading and infinite grids.
3.1 Click "Details" to view the specific order details.
3.2 Click "Executing" and "Completed" to view the current status of pending orders and the status of completed pending orders.
4.Click “Stop” to terminate the grid strategy.
II.Grid trading advanced instructions
Customized strategies: set parameters and generate trading strategies.
1.Click "Customized Strategy", select a trading pair and enter the lowest price, highest price, and price interval, drag "Invest assets", and click "Set up" to run grid trading immediately.
2.If you are interested, you can also try the "Advanced setting" and "Single token mode".
III.Introduction to the principle of grid trading strategy
3.1 Terminology Explanation
Lowest price: Lowest price (Pl) is the lowest buying price for executing grid trading, and no further buying will be made if it is lower than this price.
High Price: High Price (Ph) is the highest selling price at which the grid trade is executed, above which no further selling will occur.
Users should note that the highest price must be greater than or equal to 1.1 times the lowest price.
Entry Price: The entry price (P0) is the real-time price of the currency you selected when creating the grid.
Width: Bibox grid trading tool is a proportional grid. The width is the distance between grids, ranging from 0.2% to 20%.
Amount of buying and selling per grid: The system will divide the assets invested by the user on all grids according to the current market price.
3.2 Grid quantity and buying and selling price
The system will calculate the order quantity and the corresponding price according to the above parameters.
Pl*(1+width)^n=P0, the value of the nth power is rounded down to the initial buy order quantity (n_bid) of the grid.
Ph/(1+width)^n=P0, the value of the nth power is rounded down to the initial sell order quantity (n_ask) of the grid.
Total number of grids (N)=n_bid+n_ask+1
Buying and selling price
The buying price of the nth tranche is: Pn_bid=P0/(1+width)^n
The selling price of the nth gear is: Pn_ask= P0×(1+width)^n
3.3 Example: Take the BTC/USDT trading pair as an example
If you enter the market when the BTC price is 18909.21USDT: the entry price P0=18909.21USDT (the blue line in Figure 1)
The lowest price (Pl) is set to: 18303.05
The highest price (Ph) is set to: 20135.56
Width is set to: 0.5%
Then the grid initial buy order quantity:
18303.05*(1+0.5%)^n=18909.21, solve n=6.5325, then the initial number of buy orders in the grid is 6 (the green line in Figure 1)
The corresponding buy price for each grid is:
The first tier buying price: P1_bid=18909.21/(1+0.5%)=18815.13
The second tier buying price: P2_bid=18909.21/(1+0.5%)^2= 18721.53
The third tier buying price: P2_bid=18909.21/(1+0.5%)^3= 18628.38
So on and so forth.
Grid initial sell order quantity:
20135.56/(1+0.5%)^ n =18909.21, solve n=12.5990, then the initial number of sell orders in the grid is 12 (the red line in Figure 1)
The selling price corresponding to each grid is
The first tier selling price: P1_ask=18909.21*(1+0.5%)=19003.76
The second tier selling price: P2_ask=18909.21*(1+0.5%)^2= 19098.77
The third tier selling price: P3_ask=18909.21*(1+0.5%)^3= 19194.27
So on and so forth.
In this example, the total number of grids is N=6+12+1=19. If the user invests 380USDT to enter the market, the system will calculate the number of BTC purchased by the user at the entry position and the number of pending orders per grid. Each grid has an equal number of pending orders. Users should note that when viewing ongoing transactions, the system displays a maximum of 10 buy orders and 10 sell orders. The part with more than 10 pieces will be placed after the previous pending order is filled.
After that, if the price falls to the first buy price, a fixed amount of BTC will be bought at this price (18815.13). Every time a buy order is filled, the system places a sell order on the grid above it. Therefore, at this time, the system will place a sell order at 18909.21 (the entry level). If the price falls to the second buy price of 18721.53, the system will do the same. That is, buy BTC at the price of 18721.53 and place a sell order at 18815.13 on his previous grid. At this time, the initial entry price and the first bid price are all pending sell orders. When the price rises to the initial entry price, the system will sell and place a buy order at the grid below him (18815.13). Similarly, if the price continues to rise to the first bid price (19003.76), the system will sell and place a buy order at (18909.21). If the price continues to rise to the second level of buy (19098.77), the system will also perform the same operation, that is, sell here and place a buy order at 19003.76. As the price of BTC increases, the system begins to sell Bitcoin at a higher price and place a buy order at a corresponding low price, selling high and buying low. With the continuous fluctuation of the BTC price, except for the highest selling price and the lowest buying price, all other prices can place buy or sell orders.
In a volatile market, grid trading can automatically complete selling high and buying low. The size of the grid spacing determines the relative position of high and low. The choice of entry level and price range determines the number of coins bought at the entry point and the distribution of the initial grid between buy and sell orders. Hope the above content can help traders better understand grid strategies and play with grid trading tools.
- Grid Trading is only a trading assistance tool and does not constitute any investment endorsement or return promise. Bibox shall not bear any responsibility for any realized or unrealized profit and loss.
- Cryptocurrency investments are highly risky. Please make investments wisely according to your own risk tolerance.
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