Overview
This bot automates the popular "grid trading" strategy which seeks to profit from the 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.
Details
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 gridline 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.
How to configure Grid Trader
Strategy Settings
Total Cash to Spend: The amount of funds to allocate to the strategy.
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 3 days (+/- 2%). Number of grids used in automatic mode is 10. If the price exits the grid, the bot will wait for the price to return back within the range.
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:
Do nothing: 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.
Stop the bot: The bot will stop trading automatically. Any open orders will remain open until filled.