April 1, 2021 Update: This document refers to Grid Trader V2 (beta).
This bot automates the popular "grid trading" strategy which seeks to profit from volatility of the market by placing multiple buy and sell limit orders on grid lines around the current price. As the price moves up and down within the grid, profit is realized from each buy-low, sell-high cycle completed.
How the strategy works
Unlike strategies that rely on technical indicators to generate buy/sell signals, grid trading makes use of simple price action of the market to consistently buy low and sell high on every opportunity. This is accomplished by placing multiple orders on both sides of the book and cornering the price.
As the price moves up and down within the grid, filled orders are automatically replaced with the appropriate buy or sell orders to continue trading. If a buy order is filled, a corresponding sell order is placed on the grid line above, and conversely if a sell order is filled, a buy order is placed on the line below. The distance between these lines is the incremental profit made on every buy/sell roundtrip. The longer the price stays within the grid, the more opportunities for profit exist.
Sufficient balance is required for both the base asset and the quote asset. The amount needed can be calculated per following example:
Amount Per Order: 20
Buy orders = 10/2 = 5
Sell orders = 10/2 = 5
BAT balance required: 5 x 20 = 100 BAT
USDT balance required: 1 x 5 x 20 = $100 USDT
Note: Balance requirements shown above apply when the current price is in the middle of the range to be traded. Because the current price can be on the top or bottom end of the range, the amount required for either asset will vary. Insufficient balance in either asset will result in bot stopping with an error. If the balance becomes insufficient while the bot is running, the exchange will reject your orders. It is advisable to additional balance as a buffer for both assets.
- Configuration Name: A name/label for this configuration. You can copy and modify a configuration to run this bot on multiple markets simultaneously.
- Exchange: The exchange to run this bot on.
- Market: The pair (symbol) to trade. Quadency's standard convention is Base/Quote.
- Amount Per Order: Enter the amount or quantity of base currency to use for limit orders. For example, if you are trading BAT/USDT, enter the number of BAT for each buy and sell order.
- Mode: In automatic mode, the bot will automatically calculate the upper and lower boundaries of the grid by using the highest and lowest price from the trailing 7 days (+/- 2%). Number of grids used in automatic mode is 10. If the price exits the grid, the bot will cancel all open orders and stop trading.
Manual Mode Settings
- Upper Bound Price: Price at which to place the topmost (highest) order
- Lower Bound Price: Price at which to place the bottommost (lowest) order
- Number of Grids: Enter the number of grid lines to use. Number of grid lines is equal to the number of total initial orders that will be placed. Generally higher is better if you have sufficient balance for good coverage of the trading range for the market being traded.
- When Price Exits Grid: Indicate what to do when the price leaves defined grid boundaries. The boundaries are between the highest sell and lowest buy, plus one additional grid distance for buffer. If the price continues moving in one direction and leaves the grid, we have a choice between the following:
- 1) Cancel all orders and stop bot
Use this option if you want to cancel all remain open orders and stop the bot.
- 2) Cancel all orders, close all positions and stop bot
Use this option if you want to close all positions in addition to cancelling any remaining open orders. A position is open if the bot has bought quantity but has not sold the same amount or conversely if it has sold but has not bought back the same amount. Positions are closed with market orders and may experience significant slippage on low liquidity markets.
- 3) Do nothing
Use this option if you would rather wait for the price to return back within the grid boundaries. As the price reenters the grid, the bot will resume trading. However, if the price never re-enters the grid, the orders will remain open indefinitely until manually cancelled.