1.What is a Spot Grid Bot?
Spot Grid bots are automated trading bots designed to sell high and buy low in swinging markets.
A bot will work for you once you have completed the parameters setup.
Once started, the bot will divide your investment into several parts, buying in stages when the prices are declining and selling in stages when prices are rising, continuously taking advantage of market fluctuations to achieve gains through buying low and selling high.
2.Explanation of Spot Grid
Advantages:
The newbie-friendly Spot Grid bots don’t have human emotions like fear or greed, avoiding panic selling that emotional decision-making causes in volatile markets. The bot operates around the clock, making sure no trading opportunity is missed.
1.In volatile and rising markets: users can achieve double profits from rising coin prices and volatility arbitrage.
2.In volatile and falling markets: users can reduce losses through volatility arbitrage.
Disadvantages:
However, Spot Grid trading is not always helpful, as it can only go long. A one-way downward trend can lead to being stuck in positions, lower capital utilization, and potential deviations from the set range.
Which Trading Pairs are Suitable for Spot Grid Trading?
If you are new to trading, it is recommended that you choose mainstream coins with good consensus and high liquidity, such as BTC_USDT and ETH_USDT. You can refer to the trading situation of the Top 100 digital assets on the CMC rankings on the Gate platform. If you have a deeper understanding of Spot Grid trading, you may try other highly volatile trading pairs to earn higher profits.
3.Spot Grid Parameters Explanation
Spot Grid Terminology:
Auto: In this mode, AI Smart Grid uses historical data from the past 7 days to backtest and automatically calculate the grid parameters that yield the highest returns: upper price limit, lower price limit, and number of grids. Users only need to choose the investment amount ratio (the selected investment amount must be greater than or equal to the minimum).
Fill AI Data: Automatically retrieves and fills in the data for the AI Smart Grid.
“Clear All” Shortcut: If users need to clear multiple data sets, they can use this shortcut to avoid deleting each one manually. After clicking, simply reset the parameters.
Lower Price Limit: The minimum buying price. The bot won’t buy in if the market price falls below this price. Additionally, the lower price limit cannot execute selling.
Upper Price Limit: The maximum selling price. The bot won’t sell out if the market price exceeds this price. Additionally, the upper price limit cannot execute buying.
Number of Grids: The number of grids to execute is limited to 2 to 1000.
Grid Spacing: Assuming the grid spacing is q, the upper limit price is a1, the lower limit price is a2, and the number of grids is n, the arithmetic grid spacing q can be calculated using the following formula:
The formula for calculating the actual floating ratio q of the geometric grid is as follows：
Return per Grid
Assuming the grid spacing is q, the upper grid price is a1, the lower grid price is a2, and the number of grids is n,
Return per Grid for Geometric Sequence:
Return per Grid for Arithmetic Sequence:
Buy/sell qty per grid: the quantity of the chosen crypto for each buying and selling.
Quantity Increment: The quantity increment is off by default. When enabled, you can increase the buy and sell quantity for each grid by quantity or percentage, as shown in the image.
When the HODL Mode is enabled, users can see the trading history of profits exchanged to coins in the HODL record.
Note: when the profit from a grid arbitrage (buy and sell) is insufficient for the system’s minimum order amount, the profit will be temporarily stored. They will only buy the currency at the market’s latest price once the profit reaches the minimum order amount.
Warm Reminder: you can select “Sell the Currency When It Terminates” and “HODL Mode” simultaneously.
4.How to Create/Terminate Spot Grid
4.1How to Create Spot Grid
There are three methods:
1.Copy a backtesting bot: A newbie can choose a 7-day/30-day/180-day backtesting bot in the Recommended section. A backtesting bot has parameters set based on historical market conditions and intelligent algorithms;
2.Follow a bot provider: If a backtesting bot does not meet your needs, you can filter out top performers in the Recommended section and follow a provider to trade;
3.Customize your own bot: You can set parameters according to your judgment of market movement, and invest funds to start your own grid bot.
Creation Process:
Web:
Bots - Bot Pool - Create a Bot - Select Spot Grid - Create Bot - Choose Trading Pair - Auto/Customize - Create
APP:
Bots - Create a Bot - Spot Grid - Select Trading Pair - Recommended/Customize - Create
4.2 How to Terminate Spot Grid
You can terminate Spot Grid Bots at any time, but please note:
1.Spot Grid Bots should be stopped when they do not match current market conditions.
2.Spot Grid Bots are not ultra-short-term strategies; most grids will achieve expected returns after running for some time.
3.The “buy low and sell high” pattern of Spot Grid Bots means the grid yield curve should ideally show a decline followed by an increase. Suffering losses at the beginning is theoretically normal under this strategy.
5.How to View/Withdraw Spot Grid Profit?
Web:
Enter “My Bots” - Active Bots - Spot Grid, and enter the Spot Grid orders to view/withdraw Spot Grid profits.
APP:
Trade - Bots - My Bots - Active - Enter the Spot Grid orders to view/withdraw spot grid profits.
6.How to Increase Spot Grid Profits
Spot Grids divide funds into several equal parts by setting price ranges and grid quantities. They strategically buy in increments during declines and sell in increments during upswings, continuously extracting grid profits in volatile markets. So, how can spot grid profits be increased? Generally, the return of Spot Grids is closely tied to factors like grid quantity, grid range, and trading fees. Therefore, optimizing grid quantities and range settings and minimizing trading fees can maximize grid profits.
6.1 Setting Grid Range Appropriately
Grid range refers to the fluctuation range of prices over a period, defining the upper and lower limits of prices. If the price range is too narrow, it allows for fewer grids to be set, increasing the risk of price fluctuations breaking through outside the range and making the grid strategy ineffective. On the other hand, if the price range is set too wide, it may lead to missing arbitrage opportunities in the short term, as small price fluctuations are harder to capture, thus missing potential profits.
To solve the problem, one can utilize Bollinger Bands and ATR channels, or opt for longer-term candlesticks (typically daily or weekly) to set indicators for assistance in judgment. Taking Bollinger Bands as an example, its upper and lower ranges correspond to the grid’s upper and lower limit prices. Bollinger Bands incorporate the concept of Gaussian distribution, assuming that prices will fluctuate around the upper and lower bands in the future. There is a low probability for these bands to break through. Once prices break through, they will likely return to within the bands easily. The probability of prices moving towards the edges of the bands is also low. Using the upper and lower bands of Bollinger Bands as the upper and lower limits of the grid range is a relatively simple and direct method.
However, in a unilateral uptrend market, the lower band of the Bollinger Bands may have a significant gap, resulting in a large deviation of the entire grid range. This ultimately lowers the utilization of funds and reduces profitability. At such times, one can also consider using ATR channels as an indicator for determining the grid range. The chart below shows that ATR channels do not exhibit as large a gap as Bollinger Bands. Typically, a weekly ATR channel can be used as the upper and lower limits of the grid range.
Two Methods to Determine Grid Range:
1.Using Bollinger Bands
Bollinger Bands consist of three lines: the upper and lower bands, which can be seen as resistance and support levels for prices, with a middle line representing the average price. Typically, the price line oscillates within the band-shaped region formed by the upper and lower bands, and the position of these bands adjusts automatically with price movements. Narrowing bands often precede sharp price movements, while crossings of the band boundaries followed by immediate retracements indicate potential reversals.
Method: Directly identify the upper and lower ranges of the Bollinger Bands (boll) and select them as references for the upper and lower price limits based on the corresponding period. Generally, the larger the standard deviation of the Bollinger Bands, the wider the price range involved. The application of Bollinger Bands under conditions of 2 and 3 standard deviations is shown in the figure below. It illustrates that the price range covered by 3 standard deviations is larger than that covered by 2.
Image 1: 2 Standard Deviations
Image 2: 3 Standard Deviations
2.Using Average True Range (ATR)
ATR is the moving average of price volatility over a specified period. A higher ATR indicates a higher potential for trend changes, while a lower ATR suggests weaker trend movement. It is primarily used to assess buying and selling opportunities.
Method: use the upper and lower limits of ATR within the corresponding period as the upper and lower limits of the grid range. For example, ATR(7) represents the average true volatility over the past 7 days, and these upper and lower limits can be used as the grid range boundaries. As shown in the diagram below:
6.2 Setting Grid Quantity Appropriately
Grid quantity refers to the number of price intervals between upper and lower price limits. Typically, grid quantities range between 2 and 200. The grid profit is calculated as grid price difference ×, the quantity of grids bought ×, the quantity of filled sell orders.
The number of grids affects the trading frequency. Setting too many grids can lead to overly frequent trading, while setting too few may result in fewer trading opportunities.
Specifically, more grids mean denser intervals and higher trading frequency, capturing minor price fluctuations more frequently. However, this can reduce profitability per grid due to smaller trading amounts, lower capital utilization, and increased fees from frequent trades.
Conversely, fewer grids mean sparser intervals and lower trading frequency, missing out on minor price movements. However, it can increase profitability per grid, improve capital utilization, and reduce trading fees from fewer trades.
The differences caused by grid quantity are illustrated in the example below under similar conditions. Suppose a user opens a grid order for BTC/USDT with an upper limit price set at 7000 USDT, a lower limit price set at 1000 USDT, and initial positions at 6800 USDT.
Image 1
In Figure 1, grid orders are placed with 5 grid lines set between upper and lower limits at intervals of 2000, 3000, 4000, 5000, and 6000. Buy orders are placed at 6000, 5000, 4000, and 3000 when BTC prices fluctuate, and sell orders are placed at 3000, 4000, 6000, and 7000.
This pattern continues, with each sell order placed below the current price. The strategy pauses when BTC prices exceed 7000 or fall below 1000. The strategy resumes trading when BTC prices return to the grid price range.
From Figure 1, it’s observed that the price curve of grid trading fluctuates up and down, intersecting with the set grid lines a total of 27 times. This signifies 27 buy and sell operations, capturing 27 price fluctuations and profiting from 13 of these movements. However, due to the available capital per grid being 1000U, the profit per grid is lower compared to Figure 2, and there are transaction fees incurred for all 27 trades.
Image 2
In Figure 2, there are 2 grid lines between the upper and lower limits, that is: price of 3,000 and 5,000. Buy orders are placed at BTC prices of 5,000 and 3,000, and sell orders are placed at prices of 3,000, 5,000, and 7,000. Similarly, each sell order will be accompanied by a buy order.
The strategy will pause when the BTC price rises above 7,000 or drops below 1,000. The strategy resumes trading when the BTC price falls back into the grid price range. As shown in Figure 2, the price curve intersects with the grid lines 13 times, meaning grid trading executed 13 buy and sell operations, capturing 13 price fluctuations and earning 13 fluctuations’ profits. However, since the available funds per grid are 2,000 USDT, the return per grid is higher than that in Figure 1, but the strategy incurs 13 trading fees.
Comparing Figures 1 and 2, it is evident that fewer grid lines capture fewer market fluctuations. In Figure 2, due to the large grid spacing, it has missed the opportunities to capture fluctuations at price levels of 2,000, 4,000, and 6,000, resulting in missing some fluctuation profits. On the other hand, Figure 1 shows lower fund utilization per grid and higher trading fees due to frequent trading, resulting in lower returns per grid. Thus, both fewer and more grid lines have their pros and cons. Therefore, the number of grids needs to be balanced and adjusted based on the time period and trading objectives.
6.3 Reducing Fees
Grid Yield = grid arbitrage rate - trading fees x 2
Grid arbitrage profit is just the gross profit and must exclude the trading fees incurred from the arbitrage. The remaining amount is the net profit from the grid strategy. Therefore, users should minimize trading fees to enhance their net/grid yield.
Trading fees can be reduced in the following ways:
1.Choose cryptocurrencies with lower fees. For example, Gate offers some currencies with zero fees, such as BTC-USDT.
2.Upgrade your VIP level to lower trading fees.
3.Trade Perpetual Futures with good liquidity instead of spot trading.
4.Effectively manage the grid range and quantity to reduce unnecessary trades. The grid range, grid quantity, and trading fees are interconnected, so setting an appropriate range and quantity is crucial.
7.Spot Grid Has Added Trailing Grid Functions
Gate Bots has added an important new feature: Spot Grid now has included a new function in advanced settings, that is Trailing Grid, which allows the bot to automatically move the price range up or down to adapt to market changes.
Explanation of Trailing Grid
After running the grid, if the price breaks through the grid range, the bot will activate the grid’s “Trailing Function”. This means that as the average price increases, both the upper and lower limits of the grid range will automatically move upwards, effectively avoiding missed opportunities in a rising market or being trapped in a downtrend.
Features of the Trailing Grid
First, the movement of the grid range’s highest and lowest prices is consistent. For example, if the highest price of the grid moves up by 10%, the lowest price will also move up by 10%.
Second, after the grid moves, the number of grids remains unchanged.
Third, since the number of grids does not change when the grid moves, the profit rate per grid remains the same, which can be calculated according to the current formula.
Trigger Conditions for the Trailing Grid
When the bots open a position (or adjusts the price range), it will automatically adjust the price range upwards or downwards whenever the latest price is outside the grid range and the percentage change of the 720-minute moving average reaches the set ratio. An upward change in the 720-minute moving average will trigger an upward adjustment of the grid, while a downward change will trigger a downward adjustment.
How to Activate the Traling Grid?
Bots Homepage - Spot Grid - Click on “Bots” - Grid Bots - Spot Grid - Customize - Advanced Settings - Fill in the parameters for the Trailing Grid
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