1.What is Futures Grid?
Futures Grid is a trading bot that trades in Perpeptual Futures markets. The bot helps users profit from trends and fluctuations and is suitable for short-, medium-, and long-term investments in volatile markets.
Compared with the Spot Grid, which typically has a low capital utilization rate, low returns, and only allows trading with what is held, the Futures Grid empowers users to trade on margin, thus increasing capital efficiency and potential profits. You can let the Futures Grid work for you by setting parameters such as sides, leverage, price range, and number of grids.
2.Futures Grid Introduction
Advantages
In volatile markets, you can prioritize the Futures Grid.
1.Greater Capital Efficiency: The bot amplifies trading equity through leverage, thus increasing users’ capital utilization.
2.Suitable for Multiple Markets: Long grids are suitable for volatile and rising markets; Short grids are suitable for volatile and falling markets; Neutral grids are suitable for users who are unsure about the direction of price movements in volatile markets.
3.Lower Fees: Futures Grid enjoys lower trading fees. Compared with Spot Grid, Futures Grid has a higher return percentage per grid.
Types of Futures Grid
Currently, there are three categories for Gate Future Grid: long grid, short grid, and neutral grid. The long, short, and neutral grids give users more choices and flexible profits. Users with experience and mature trading skills can predict the market’s direction through subjective judgments. If they predict a rise, they can choose to go long, otherwise, they can choose to go short. Those who are relatively inexperienced or have difficulty in market forecasting and judgment can choose a neutral grid. This way, profit is possible regardless of whether the subsequent price rises or falls.
Long Grid vs Short Grid vs Neutral Grid
Neutral Futures Grid Introduction
Principle of Neutral Grid
From the perspective of purpose, the main purpose of neutral grid trading is to “hedge investment risks, realize arbitrage, and stabilize returns,” which is suitable when the market is volatile and the price trend is unknown. It is to create a buy and sell order with a grid but without position, usually opening/closing short above the market price when the bot runs and opening/closing long below the market price. Users do not need to preset price fluctuations, the system will automatically place short or long orders according to the real-time price to arbitrage by buying and selling. If it falls, the neutral grid will automatically go long in batches; if it rises, it will go short in batches. It is a model used to make easy money, with low risk.
However, the neutral grid also has its disadvantages. The essence of the neutral grid is counter-trend trading, that is, buying at low prices and selling at high prices, which will cause users to buy bottoms or sell in the middle of the price, that is, when the market is in a unilateral market, the neutral grid will lose money. However, it must be emphasized that users don’t need to fear floating losses. If the market enters a unilateral downtrend, the neutral grid will keep buying bottoms for you, reducing your costs, and then make a profit with only a small rebound. At the same time, due to market fluctuations, floating losses will be smoothed out by grid arbitrage. Therefore, during a reasonable range, the unilateral market may become a profitable market in the end.
When to Create Neutral Grids?
Usually, users will start the neutral grid when the market is volatile or unclear, to realize arbitrage. As we all know, the long grid will only start and close long, which is suitable for the volatile upward market, which means that if the market drops sharply, it will be at a loss because it will continue to buy, reducing your holding cost. While short grids can only start and close short, which is suitable for the market that fluctuates downwards. If the market rises sharply, it will lose money.
Therefore, users need to have an accurate prediction of the market. When predicting that the market will fall, they can choose to start a short grid. Short grids will help you clear part of the current tokens, that is, sell them when the real-time price is high and help you buy when the market falls. That is, selling high and buying low to earn profits through price differences. And when the user predicts that the market will rise in the future, he can choose to start a long grid. Long grids will help you buy tokens, that is, buy them when the real-time price is low, and sell them when the price rises. That is, buying low and selling high to make a profit.
It can be seen that long and short grids are used when users have a certain judgment on the future market trend. So when the user cannot predict the trend, how do they choose the grid direction? This is where neutral grids come in handy. In short, the neutral grid combines the advantages of long and short grids while hedging the risks brought about by these two strategies. Due to the ups and downs of cryptocurrencies, it is difficult to judge where to start. Investors sometimes make mistakes in market judgments, resulting in losses. The neutral grid allows investors to go long and short after the future price occurs, reducing the risk of loss caused by market misjudgment and achieving stable returns.
An Example
Suppose you hold 1000 BTC, and the price range is set at $5,000 - $10,000 with a single grid price range of $1000. Also, the price is $8,000 when the bot starts. Let’s say that if the price rises for every 1 grid range, 100 coins are sold; and if the price falls for every 1 grid range, 100 coins are bought.
Therefore, when the price rises to $9,000, 100 coins are sold, with 900 coins remaining. When the price falls to $8,000, it will buy 100 coins, with 1000 coins held.
3.Futures Grid Parameters Description
Long/Neutral/Short: If you are forecasting a rising market, you can choose to go long; otherwise, you can choose to go short. Or, if you are not sure about the trend, you can choose to go neutral.
“Clear all” Shortcut Button: If the user has multiple data to clear, this shortcut button can be used instead of manually deleting one by one. After clicking, the parameters can be reset.
Price Range: The lower limit price is the lowest buying price for executing grid transactions. No further buying is allowed if the token price is lower than this price. In contrast, the upper limit price is the highest selling price for executing grid transactions. No more selling is allowed if the token price is higher than this price.
Leverage: With a higher leverage set, you can devote a smaller amount of funds and gain more profit by increasing leverage, but the risk of liquidation will also increase.
Arithmetic: The price interval of each grid is the same. The calculation method:
(Upper limit price-Lower limit price) / (Number of grids-1)
Geometric: The price spacing of each grid is equal in proportion, and the calculation method is as follows:
Number Of Grids: The number of grids is the number of orders. Under the same price range, the more orders there are, the more grids there will be, and the more frequently you can buy low and sell high. (limited grids: 2 to 500)
Estimated Liquidation Price: Assuming that all long orders in the grid are realized, the estimated liquidation price of the maximum number of long positions can be set.
Advanced Settings: The above are some basic parameter settings, which are mandatory options for users. For the beauty of the page, not all the advanced settings are displayed on the page, and it needs to be clicked by the user to display it. There are some optional items in the advanced settings, which users can fill in according to their own needs.
Items in Advanced Setting：
Trigger price of the bot: The grid will only run when the latest price is no greater than the trigger price. The trigger price should be below the latest price and should be within the range of the lowest price and highest price.
Auto stop-loss ratio: When your position is losing value, and the percentage difference between the average entry price and the mark price is larger than the stop-loss ratio, the position will be closed at the market price, and the bot will terminate.
Base currency buy/sell qty per grid: In the Futures grids, the base currency buy/sell qty per grid=1
Quantity Increment: Quantity increment is off by default. When it is on, you can choose to increase the number of trades per grid by quantity or proportionally as shown below.
If the base currency buys/sells qty per grid=1 and contracts of increment per grid=2, then in the first grid, it will buy/sell 1 contract, and in the second grid, it will buy/sell 3 contracts(1+2). There will then be 5 contracts(1+2+2) for selling/buying in the third grid, and so on.
4. How to Create/Terminate Futures Grid?
4.1 How to Create Futures 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.Copy a bot provider: If a backtesting bot does not meet your needs, you can filter out top performers in the Recommended section and copy 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.
Tips: As the token price fluctuates, the higher the leverage, the higher the risk of liquidation.
Complete Process of Futures Grid Creation
WEB:
Homepage - Bots - Bot Pool - Create a Bot - Recommend - Futures Grid - Create a Bot - Set Parameters - Create
APP
Homepage - Trade - Bots - Futures Grid - Choose Markets - Recommended/Customize - Create
4.2 How to Terminate Futures Grid
You can stop the Futures Grid at any time. Please note:
1.The crypto market is highly volatile and bots might not always adapt quickly to sudden market changes. If a Futures Grid does not match the current market conditions, it should be terminated timely to mitigate potential loss.
2.A Futures Grid is not deemed to work as a day trading strategy. Instead, it requires a relatively long period of time to achieve its goal.
3.Similar to the Spot Grid, a long/short Futures Grid typically buys low and sells high. Thus, its profit curve tends to decline first and rise later. Loss at the beginning is, therefore, theoretically considered normal.
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