Grid trading is a strategy that sets up a series of buy and sell orders at predetermined price levels, below and above a price that you pick.
As the price moves up and down within your range, these orders are triggered, enabling you to profit from small price fluctuations.
In this tutorial, we also implement a trailing stop condition that enables us to lock in profits in the event of a sudden market decline.
The below example demonstrates what happens if we initiate a bot at a $100k Bitcoin price level that executes a trailing stop anytime profits fall below 5% of the initial investment.
Getting Started with Futures Grid Trading
First, we make sure there’s enough funds in our futures wallet. The available balance shows 6059 USDT, which provides more than enough cushion for a 1000 USDT initial investment.
We generally recommend at least a few thousand USDT, or several multiples of the intended initial investment/margin, to help hedge against liquidation. Please follow the tutorial here for more info on how to move money to your futures wallet.
To get started, we go to https://www.btse.com/en and go to the top left corner “Trade” and select “Futures.”
This time, we are using BTC-PERP, settled in USDT, as an example; on our platform, you can choose from over 100 different cryptocurrency futures to trade.
Then, we go to the right side of the screen and select the Robot icon that is located at the top right side of the screen.
We then land at the “Futures Grid” page, and need to fill out “Range Settings,” “Grid Settings,” and “Investment.”
This time, the current market price is 87,209, but we expect both a small dip in the short term and a longer rally in the 1-2 week time frame.
So we set our range settings at 95,000 for “Upper Price” and 85,000 for “Lower Price.”
For the “No. of Grids”, we pick 100, which means the bot will line up 50 buy and 50 sell orders within the range we designate above.
For the “Investment” setting, we start with 1000 USDT as our initial margin, or investment.
After pressing “Create (Long)”, we get a confirmation prompt, and press Confirm.
Now, we check the “Bot” tab to see if we placed our order successfully.
In short, the bot will place 100 trade orders between the $85-95k range, buying when the price dips and selling when it nears the top of the range.
Next, we explain how setting a trailing stop order can help lock in profits in the event of a sudden market decline.
What is a Trailing Stop?
A trailing stop is a type of stop-loss order that automatically moves with the market price to lock in profits and limit losses. It helps traders to lock in winning positions and prevent big wins from turning into losses.
To add a trailing stop, press “Add” under the “Trailing Stop” category of an existing grid bot.
After you press “Add,” you will land on the page below.
We input $2,000 for “Distance” and $92,000 for “Activation Price”.
In a non-grid trading scenario, we assume that Bitcoin will rally to $95,000, and want to lock in our gains if it drops by $2,000 or more.
The activation price refers to when the bot will start tracking the price.
- Good Scenario: If the price of Bitcoin hits 94,000 but drops to 92,000, the bot will execute the trailing stop order and lock in profits (92,000 − initiation price of 91,939).
- Great Scenario: If the price hits 96,000 and drops to 94,000 after, the bot will execute and lock in profits at (94,000 − initiation price of 91,939).
- Bad Scenario: If the price hits 92,000 and drops to 90,000, the bot will execute, and your profits may potentially be negative (90,000 − initiation price of 91,939)
In a grid-trading scenario, the process is similar, but you will have small, profitable orders executed throughout the period; the trailing stop will close all positions and the bot once it dips $2,000 below the peak price of Bitcoin.
Now it is set with the “Activation Price” as 92,000.
Once the Futures Grid Bot stops, we can find our history by clicking on “Trading Bot History.”
In the Trading Bot History, we can press the icon that is circled in red to find the details for our account and the orders we’ve made.
Here it shows that our bot returned roughly 197 USDT in profits – or 20% of our initial 1000 USDT investment.
Judging from the graph, most of the profits were generated on December 13 when the price of Bitcoin spiked.
Then we see a gradual decline, and can make an educated guess that the trailing stop took effect when the price dropped to $91,132, in order to lock in the gains we had already made.
Now let’s look at the orders to see what happened.
At the top it shows roughly 199 USDT in matched profits. If you look at each pair of trades, it matches each buy order with a sell order that is proportionally inverse of its buy order price, securing small profits with each matched trade.
In this scenario, each matched trade generated 0.08 USDT in profits.
Over time, these small trades accrued profits that eventually added up to the 197 USDT profit total.
In short, grid trading executes a large number of trades within a small range to reduce downside risk and secure profits. This helps in markets that may not see large price swings but do go up and down within a certain range.
Want to learn more? The best way is to start trading yourself. Start automating your trades with Futures Grid Bots on BTSE today.
