Let's talk about what a grid is? Why is it also called the "magic tool that lets you earn money while lying down"?
In today's live stream recap, let's start from scratch and clarify the role and principles of grids.
Friends with sharp eyes must have noticed that today's title has a (Part 1) — it's really because the content is a bit substantial, and I can't cover it all at once.
Moreover, in this live broadcast, we will be discussing from the perspective of a beginner, so the explanations will be relatively simple and basic, and the content may not be so "exciting". If you are a veteran who has been in the crypto space for many years, you can choose to watch selectively~ If I say anything incorrect, I welcome the experts to point it out!
First, let's open AiCoin and find "Strategy" in the left column.
For example, let's assume we have a capital of 10000 USDT, and the initial price is calculated at 30000 USDT/BTC, we can hold approximately 0.3333 BTC.
Next, let's set an interval price of 1%, and then determine the buy points (such as 29700, 29970) and sell points (like 30300, 31000).
When the price drops to the buy point we set, it will automatically buy more assets; when it rises back to the sell point, it will automatically sell a portion or all of it, and the profit will be in hand.
With that said, does everyone understand? The grid is actually a "trading robot" that can help us free our hands and capture every trading opportunity steadily, without having to stare at the screen for 24 hours.
This is simply perfect for the 7*24 hour continuous operation of the cryptocurrency circle. This is the most basic grid strategy.
After explaining the principles, let's return to the product page, where we will find the options "Contract Grid" and "Spot Grid". What do these two mean?
I summarized a few points about their differences and how to choose, but this is not the focus of our live stream this time, so feel free to take a look when you have time:
The core differences between spot grid and contract grid mainly lie in these aspects:
The trading objects are different. Spot grid trading is a real "physical transaction"; when you buy 1 Bitcoin, you actually receive 1 Bitcoin in your hands. Contract grid trading is a "long and short" model, somewhat like betting against the price of the currency using your chips (which is the margin), predicting whether it will rise or fall (deciding to go long or short), and ultimately earning profits based on whether your prediction was correct.
The efficiency of fund usage is also different. Spot grid requires a considerable amount of principal, as each trade needs to actually hold assets, which may not have a high capital utilization rate; contract grid can leverage to amplify the effect of funds, allowing small amounts of money to control large contracts, but the risks also increase accordingly.
The applicable markets also vary. Spot grids are more suitable for markets with high liquidity and relatively stable volatility; contract grids are particularly suitable for 24-hour trading and leveraged derivative markets, such as perpetual contracts for cryptocurrencies.
The characteristics of risk and return are also different. Spot grid risk is relatively easier to control, and the returns are more stable; contract grid may bring high returns, but high leverage can lead to greater volatility, and the risk also skyrockets.
The complexity of operations also varies. The spot grid strategy is simple and easy to get started with; the contract grid involves a lot of financial instrument knowledge, such as leverage and margin mechanisms, making it somewhat more complicated to operate.
As for which strategy to choose, it also depends on our own investment style. If you are a conservative investor, spot grid trading is more suitable, with lower risk and no threat of leverage; if you are more aggressive and want to pursue high returns, you can also try contract grid trading, but you must be wary of the high risks behind it.
The content is a bit long, so if everyone finds it hard to remember all at once, it's better to stop and take a look slowly. Let's continue chatting~
There is a filter here that can pick out a suitable grid based on parameters like long and short strategies and cryptocurrencies —— in simple terms, it's about selecting a handy "trading robot":
Let's take a look at the differences between the various grid strategies.
Just take a random screenshot as an example:
Still the old rule, look from top to bottom, from left to right:
Here, "neutral" is one of the three options alongside "long" and "short". Let's briefly discuss their differences:
Let’s talk about "going long" first. It means that we anticipate the market price will rise, so we buy the asset first and wait to sell it when the price actually goes up, making a profit from the difference in between. This strategy is generally used when one is optimistic about the future potential of a certain asset, for example, when one thinks a project has good prospects, or when the entire market is in a bull market. However, it is also important to mention the risk; if the price falls, one will incur losses, especially in leveraged trading where losses can be magnified.
Let’s talk about "short selling" again. This is when you anticipate that market prices will fall, so you first borrow assets and sell them, and then buy them back to return when the prices actually drop, earning a profit from this. This is usually used when you are not optimistic about a certain asset’s prospects, for example, when a company has financial issues or when the overall market is in a bear phase. However, this strategy carries significant risks; if the prices rise, especially if they keep rising continuously, it could lead to substantial losses. Additionally, short selling requires borrowing assets, which incurs extra costs.
Finally, there is "Neutral". It means neither leaning towards buying nor selling, and is usually used with hedging strategies to balance market risks. It is generally used when market trends are uncertain, and can reduce the risks brought by volatility, such as simultaneously buying and selling related assets or futures contracts. The benefit is that it can diversify risk, but it may also miss out on opportunities from rapid market changes. So here, "Neutral" actually refers to a grid robot with a hedging strategy, or a strategy tool that can automatically hedge risks.
Next, we look at "Monthly Profit"
This is the profit that this grid strategy can bring. However, we must remember that there are always risks in investing. The performance displayed on the page is the historical record of this strategy, but it doesn't mean that we can achieve the same results just by using it casually. Whether we can ultimately make a profit depends on factors such as the chosen cryptocurrency, the timing of entry, and the parameters set.
Continue reading:
The "recommended maximum running time" here suggests how long this bot should help us "stay online". After all, the cryptocurrency market changes too quickly, and keeping it running all the time can easily cause issues. Most grid strategies are designed for short-term fluctuations of a specific cryptocurrency, and over time, the grid operation may deviate, leading to less effective results.
Speaking of "every grid profit", let me explain why this automated robot is called "grid".
The name of grid trading actually comes from its graphical appearance. If you plot the price and time axis on a coordinate system, the grid trading strategy will form a layout similar to a "grid" on the graph, and this strategy can be terminated at any time.
Specifically, it involves setting multiple evenly spaced buy and sell points within a price range. These points resemble intersecting lines, and when gathered together, they form a "grid". It's roughly like this:
These intricate buy and sell points form individual zones, or "grids," which is where the name "grid" comes from.
Each interval can be seen as a "grid". For example, if you divide the price range into multiple intervals of 50 or 100 yuan, each interval is a "grid".
In this way, "expected profit per unit" is easy to understand: the profit that can be made after completing a buy and sell transaction in one "unit."
For example, if you set the interval for each grid to be 50 yuan, then when the price rises from 100 yuan to 150 yuan, the profit for each trade will be 50 yuan (excluding fees and such).
Did everyone understand this here~
Reaching this point, we should have a clearer concept of "what a grid really is." We just discussed the "external" aspects of each grid strategy, and now let's open up these grids to see how to choose a grid strategy that suits ourselves.
Just casually open a grid strategy:
Still look from top to bottom and from left to right.
First is "the annualized rate of the grid for the past three days", which is the annualized rate. This term should be familiar to everyone, so let's briefly explain its meaning.
The annualized rate is the ratio that calculates the interest rate, yield, etc., over a period of time on the basis of one year. It is primarily used to "standardize" data of different durations, making it easier for everyone to compare and analyze.
In simple terms, the annualized rate is the assumed return or interest obtained in the short term that can be sustained for a whole year, and then it is converted into an annual percentage.
The calculation formula is: Annual Rate = (Actual Return / Actual Time) × 365 days (or other benchmark period).
This term is commonly seen in stocks, bonds, and funds. Simply put, the higher the annualized rate, the more returns you can get.
Next, look at "Investment Amount" here.
You will find a prompt "greater than or equal to 29".
This means that to start this grid, you need to invest at least 29 USDT. Why is there a minimum purchase amount limit? The main reason is that if the transaction amount is too small and is frequently bought and sold, the accumulated transaction fees will keep increasing. Even if you make a small profit with each transaction, high fees may lead to an overall loss in the end.
Moreover, there may also be "slippage risk," which means that if the trading volume is too small, in certain market conditions, the actual transaction price may differ significantly from the expected price, affecting profits and "eating" away the money that should have been earned.
Therefore, it is stipulated here that at least 29 USDT is required, but different grid strategies have different minimum investment limits.
Let's talk about "leverage" again. It is a method of magnifying the investment amount by borrowing funds. Simply put, leverage allows traders to control larger positions (or holdings) with a small amount of capital. Leverage is usually expressed in multiples, such as 2x, 5x, or even over 10x. It is also possible to leverage up to 50x.
For example, if you have a principal of 1000 dollars and use 5x leverage, you can actually control a position of 5000 dollars. Because leverage amplifies the scale of the trade, the profits from market fluctuations will also be magnified. For instance, if the price of the underlying asset rises by 1%, your actual profit could be 5% (because of the 5x leverage).
But conversely, losses can also be magnified. If the price drops by 1%, you may actually lose 5%. So for us beginners, it's best not to use too high leverage when starting out.
Alright, let's click on the "Strategy Details" below:
We'll leave the details on how to use grids, how to buy grids, and how to choose grids for our next live stream.
This article only represents the author's personal views and does not reflect the stance and views of this platform. This article is for informational sharing only and does not constitute any investment advice to anyone.
This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.
[Newbie专场] A live broadcast teaching newbies how to play with grids (Part 1)
Let's talk about what a grid is? Why is it also called the "magic tool that lets you earn money while lying down"?
In today's live stream recap, let's start from scratch and clarify the role and principles of grids.
Friends with sharp eyes must have noticed that today's title has a (Part 1) — it's really because the content is a bit substantial, and I can't cover it all at once.
Moreover, in this live broadcast, we will be discussing from the perspective of a beginner, so the explanations will be relatively simple and basic, and the content may not be so "exciting". If you are a veteran who has been in the crypto space for many years, you can choose to watch selectively~ If I say anything incorrect, I welcome the experts to point it out!
First, let's open AiCoin and find "Strategy" in the left column.
For example, let's assume we have a capital of 10000 USDT, and the initial price is calculated at 30000 USDT/BTC, we can hold approximately 0.3333 BTC.
Next, let's set an interval price of 1%, and then determine the buy points (such as 29700, 29970) and sell points (like 30300, 31000).
When the price drops to the buy point we set, it will automatically buy more assets; when it rises back to the sell point, it will automatically sell a portion or all of it, and the profit will be in hand.
With that said, does everyone understand? The grid is actually a "trading robot" that can help us free our hands and capture every trading opportunity steadily, without having to stare at the screen for 24 hours.
This is simply perfect for the 7*24 hour continuous operation of the cryptocurrency circle. This is the most basic grid strategy.
After explaining the principles, let's return to the product page, where we will find the options "Contract Grid" and "Spot Grid". What do these two mean?
I summarized a few points about their differences and how to choose, but this is not the focus of our live stream this time, so feel free to take a look when you have time:
The core differences between spot grid and contract grid mainly lie in these aspects:
The trading objects are different. Spot grid trading is a real "physical transaction"; when you buy 1 Bitcoin, you actually receive 1 Bitcoin in your hands. Contract grid trading is a "long and short" model, somewhat like betting against the price of the currency using your chips (which is the margin), predicting whether it will rise or fall (deciding to go long or short), and ultimately earning profits based on whether your prediction was correct.
The efficiency of fund usage is also different. Spot grid requires a considerable amount of principal, as each trade needs to actually hold assets, which may not have a high capital utilization rate; contract grid can leverage to amplify the effect of funds, allowing small amounts of money to control large contracts, but the risks also increase accordingly.
The applicable markets also vary. Spot grids are more suitable for markets with high liquidity and relatively stable volatility; contract grids are particularly suitable for 24-hour trading and leveraged derivative markets, such as perpetual contracts for cryptocurrencies.
The characteristics of risk and return are also different. Spot grid risk is relatively easier to control, and the returns are more stable; contract grid may bring high returns, but high leverage can lead to greater volatility, and the risk also skyrockets.
The complexity of operations also varies. The spot grid strategy is simple and easy to get started with; the contract grid involves a lot of financial instrument knowledge, such as leverage and margin mechanisms, making it somewhat more complicated to operate.
As for which strategy to choose, it also depends on our own investment style. If you are a conservative investor, spot grid trading is more suitable, with lower risk and no threat of leverage; if you are more aggressive and want to pursue high returns, you can also try contract grid trading, but you must be wary of the high risks behind it.
The content is a bit long, so if everyone finds it hard to remember all at once, it's better to stop and take a look slowly. Let's continue chatting~
There is a filter here that can pick out a suitable grid based on parameters like long and short strategies and cryptocurrencies —— in simple terms, it's about selecting a handy "trading robot":
Let's take a look at the differences between the various grid strategies.
Just take a random screenshot as an example:
Still the old rule, look from top to bottom, from left to right:
Here, "neutral" is one of the three options alongside "long" and "short". Let's briefly discuss their differences:
Let’s talk about "going long" first. It means that we anticipate the market price will rise, so we buy the asset first and wait to sell it when the price actually goes up, making a profit from the difference in between. This strategy is generally used when one is optimistic about the future potential of a certain asset, for example, when one thinks a project has good prospects, or when the entire market is in a bull market. However, it is also important to mention the risk; if the price falls, one will incur losses, especially in leveraged trading where losses can be magnified.
Let’s talk about "short selling" again. This is when you anticipate that market prices will fall, so you first borrow assets and sell them, and then buy them back to return when the prices actually drop, earning a profit from this. This is usually used when you are not optimistic about a certain asset’s prospects, for example, when a company has financial issues or when the overall market is in a bear phase. However, this strategy carries significant risks; if the prices rise, especially if they keep rising continuously, it could lead to substantial losses. Additionally, short selling requires borrowing assets, which incurs extra costs.
Finally, there is "Neutral". It means neither leaning towards buying nor selling, and is usually used with hedging strategies to balance market risks. It is generally used when market trends are uncertain, and can reduce the risks brought by volatility, such as simultaneously buying and selling related assets or futures contracts. The benefit is that it can diversify risk, but it may also miss out on opportunities from rapid market changes. So here, "Neutral" actually refers to a grid robot with a hedging strategy, or a strategy tool that can automatically hedge risks.
Next, we look at "Monthly Profit"
This is the profit that this grid strategy can bring. However, we must remember that there are always risks in investing. The performance displayed on the page is the historical record of this strategy, but it doesn't mean that we can achieve the same results just by using it casually. Whether we can ultimately make a profit depends on factors such as the chosen cryptocurrency, the timing of entry, and the parameters set.
Continue reading:
The "recommended maximum running time" here suggests how long this bot should help us "stay online". After all, the cryptocurrency market changes too quickly, and keeping it running all the time can easily cause issues. Most grid strategies are designed for short-term fluctuations of a specific cryptocurrency, and over time, the grid operation may deviate, leading to less effective results.
Speaking of "every grid profit", let me explain why this automated robot is called "grid".
The name of grid trading actually comes from its graphical appearance. If you plot the price and time axis on a coordinate system, the grid trading strategy will form a layout similar to a "grid" on the graph, and this strategy can be terminated at any time.
Specifically, it involves setting multiple evenly spaced buy and sell points within a price range. These points resemble intersecting lines, and when gathered together, they form a "grid". It's roughly like this:
These intricate buy and sell points form individual zones, or "grids," which is where the name "grid" comes from.
Each interval can be seen as a "grid". For example, if you divide the price range into multiple intervals of 50 or 100 yuan, each interval is a "grid".
In this way, "expected profit per unit" is easy to understand: the profit that can be made after completing a buy and sell transaction in one "unit."
For example, if you set the interval for each grid to be 50 yuan, then when the price rises from 100 yuan to 150 yuan, the profit for each trade will be 50 yuan (excluding fees and such).
Did everyone understand this here~
Reaching this point, we should have a clearer concept of "what a grid really is." We just discussed the "external" aspects of each grid strategy, and now let's open up these grids to see how to choose a grid strategy that suits ourselves.
Just casually open a grid strategy:
Still look from top to bottom and from left to right.
First is "the annualized rate of the grid for the past three days", which is the annualized rate. This term should be familiar to everyone, so let's briefly explain its meaning.
The annualized rate is the ratio that calculates the interest rate, yield, etc., over a period of time on the basis of one year. It is primarily used to "standardize" data of different durations, making it easier for everyone to compare and analyze.
In simple terms, the annualized rate is the assumed return or interest obtained in the short term that can be sustained for a whole year, and then it is converted into an annual percentage.
The calculation formula is: Annual Rate = (Actual Return / Actual Time) × 365 days (or other benchmark period).
This term is commonly seen in stocks, bonds, and funds. Simply put, the higher the annualized rate, the more returns you can get.
Next, look at "Investment Amount" here.
You will find a prompt "greater than or equal to 29".
This means that to start this grid, you need to invest at least 29 USDT. Why is there a minimum purchase amount limit? The main reason is that if the transaction amount is too small and is frequently bought and sold, the accumulated transaction fees will keep increasing. Even if you make a small profit with each transaction, high fees may lead to an overall loss in the end.
Moreover, there may also be "slippage risk," which means that if the trading volume is too small, in certain market conditions, the actual transaction price may differ significantly from the expected price, affecting profits and "eating" away the money that should have been earned.
Therefore, it is stipulated here that at least 29 USDT is required, but different grid strategies have different minimum investment limits.
Let's talk about "leverage" again. It is a method of magnifying the investment amount by borrowing funds. Simply put, leverage allows traders to control larger positions (or holdings) with a small amount of capital. Leverage is usually expressed in multiples, such as 2x, 5x, or even over 10x. It is also possible to leverage up to 50x.
For example, if you have a principal of 1000 dollars and use 5x leverage, you can actually control a position of 5000 dollars. Because leverage amplifies the scale of the trade, the profits from market fluctuations will also be magnified. For instance, if the price of the underlying asset rises by 1%, your actual profit could be 5% (because of the 5x leverage).
But conversely, losses can also be magnified. If the price drops by 1%, you may actually lose 5%. So for us beginners, it's best not to use too high leverage when starting out.
Alright, let's click on the "Strategy Details" below:
We'll leave the details on how to use grids, how to buy grids, and how to choose grids for our next live stream.
This article only represents the author's personal views and does not reflect the stance and views of this platform. This article is for informational sharing only and does not constitute any investment advice to anyone.