Let's Start From The Beginning... (Print this entire tutorial as a reference)
WHAT IS GRID TRADING?
- Grid trading is a type of trading, typically managed by a dedicated Grid Bot.
- In a nutshell, you select a range, you divide your range into equally spaced buy/sell grids (like trip wires, sorta).
- As prices up and down, your “trip wires” trigger buys and sells catching profits for you incrementally all along the way!
- If you start your grid as the market ranges sideways (which is 70% of the time) or when it is in a gradual upward ranging trend (15% of the time) then you are going to make money most of the time.
- Your goal in grid trading is to have price within your grid range as long as possible with a price exit from your grid out the top.
- About 15% of the time the market will ranging downwards but worry not, many times even if price exits the bottom of your grid, you may still earn a profit or at worst, have a minimal loss.
- Grid Trading requires far less skill and less management than most other types of trading -PLUS- it has far less risk.
- Many grid traders make better returns from grid trading than they do with any other trading strategy.
- Can you lose money grid trading? YES, but with a little knowledge losing money is hard. A consistent grid trader is a winning trader.
BIGGEST BENEFITS OF GRID TRADING?
- It reduces your addiction to chart watching.
- It allows you time to eat, sleep drink and be merry.
- It allows you to exploit trading opportunities around the clock
- It allows you to manage your risks without emotions
- It allows you to follow a predefined trading pattern that often beats the ROI (Return on Investment) you're getting from other hands-on trading strategies.
- It allows you to trade with less concern about price direction.
- It may be a faster way to that Lamborghini everyone is always talking about!
WHAT DO YOU TRADE EXACTLY?
- You may trade any cryptocurrency pair. For example, if you have QUOTE currency in USD (or USDT) you would use that to buy a BASE currency (like BTC ) within your grid range.
- It all starts with an initial investment to get the ball rolling
- Then your BOT will buy or sell an equal amount at each grid line
- Buy and sell gridline "hits" are replaced with new limit orders gridline-by-gridline as you go along.
- Buy and Sell fees are whatever your selected exchange charges (over 25 exchanges are available).
HOW DO YOU EXIT OR QUIT A GRID
- If prices exit out the top, you take your money and run! 100% profit.
- If prices exit out the bottom, give yourself a little wiggle room but you can pre-set a stoploss. Sometimes your earlier grid gains will equal or exceed any loss your stoploss might incur... like magic!
- Many grid traders only trade assets they don't mind holding (like BTC or ETH) and thus never use a stoploss.
- Remember: It is far better to take a smaller loss and move your grid to a new range than to get stuck in a coin you do not want to hold.
HOW MONEY DO I NEED TO GRID TRADE?
- $100 would be a good start on the lower end.
- $1000 (or more) would allow you to run multiple grids simultaneously (which is a good idea).
- Regardless, you must follow good money management rules and avoid over investing in any one grid. 5% max of your investment capital per grid and never more than 50% of your capital across all grids will keep you in the game so you can maximize your profits.
- Remember, the Wright Brothers were NOT shooting for the moon at Kitty Hawk. They merely want to get off the ground!
10 REASONS MOST TRADERS ARE NOT GRID TRADING?
- 1) It's a macho thing.
- 2) It seems too easy.
- 3) It seems too good to be true.
- 4) They've never heard of it.
- 5) They don't know how to automate the strategy.
- 6) They love watching charts all day, drawing and re-drawing their Waves.
- 7) They paid big money for a signal service and are waiting for the big winning signal.
- 8) They are waiting to catch the next blast off TO THE MOON!
- 9) They tried umpteen other strategies and are now flat broke.
- 10) They thought grids were a side dish often served with bacon and eggs.
12 QUICK TIPS FOR STARTING
- 1) Open a grid bot account to assist with your automation requirements.
- 2) Connect your bot to your preferred exchange.
- 3) Start with a cryptocurrency you trust ( BTC , ETH or a top 10 coin). Something you'd be ok holding (HODL) if worse came to worse.
- 4) Wait for a market where you expect or anticipate sideways or slowly upward ranging price action. Use my indicators to help you nail winning grid areas.
- 5) Keep your total grid range (lowest grid to highest grid) within 4% to 8%.
- 6) Select a grid count that renders your grid spacing (distance between each grid line) to a space comparable to typical zigzags you see in recent price action. Typically a .5% to .6% spacing between gridlines (as measured on your Tradingview chart) is a good place to start.
- 7) After your settings are enter in your bot, click the BACKTEST button. Double check settings, make tweaks, backtest again until you are happy.
- 8) Invest MINIMALLY on your first few bots (say $100 or something you can afford to lose). Think of your first grid bot as a "learning experience."
- 9) Set a stoploss below your grid (there is a setting within the bot for this). If you don't mind holding the coin if prices temporarily drop, then you can forego a stoploss.
- 10) Don't dream of riches, instead anticipate all goes well and you get a rather healthy ROI (better than a bank and perhaps better than your trading results/ ROI using other non-grid strategies).
- 11) If your first bot does not go well (worry not, remember the first time you tried to ride a bicycle?). Review what happened and try again. 3%, 5%, 8% gains might be just around the corner. Many people following my strategies are achieving 20% or more in gains over average 3 to 20 day periods.
- 12) Give your bot time to "do its magic" (perhaps 3 days, a week or longer)... as long as prices are within your range, you can leave your grid up and running. Move your grid if price range changes.
HOW DO I LEARN MORE?
- 1) Review my related IDEAS and TUTORIALS (linked below)
- 3) Explore my GRID INDICATORS (linked Below)
HOW DO I AUTOMATE MY GRID STRATEGY?
Explore further help and links at the bottom of this tutorial.
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Master Crypto Grid Trader
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@DanHollings on Tradingview.