Ten Questions and Answers on Grid Strategy Trading
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1. How can beginners quickly start grid trading?
Users can use AI-recommended parameters to start the strategy with one click, automatically executing buy-low-sell-high to profit from market fluctuations. For first-time grid users, it is recommended to use AI-recommended parameters and start with small investments to familiarize themselves with the principles and mechanisms of grid trading. The specific steps are as follows:
(1) In the BitKan app, select the "Trading" tab at the bottom → "Strategies"
(2) Choose the grid type from the strategy library
(3) Select "AI Recommended Strategy" and the trading pair you wish to trade, input the total investment amount, and activate the strategy
2. I want to use custom grid trading but haven't found a method yet. How do I set the parameters?
After gaining experience with grid trading, users can choose "Custom Strategy" in the above image to independently set strategy parameters based on their market predictions.
Here’s a strategy tip for setting interval grid parameters for reference:
2.1 How to set the upper and lower intervals?
As shown in the image below, use the daily K-line Bollinger Bands (BOLL) as a reference:
Upper interval: Daily K / BOLL UB
Lower interval: Daily K / BOLL LB
2.2 How to set the number of grids?
ATR (Average True Range) represents price volatility within a unit of time. Refer to the hourly K-line to check the ATR (Average True Range).
Number of grids = (Upper interval - Lower interval) / Hourly K-line ATR (20)
From the above image, we can derive:
Upper interval: 0.003210
Lower interval: 0.002777
Number of grids: (0.003210 - 0.002777) / 0.000013 = 33
3. I selected the trading pair BTC/USDT, but the AI strategy says "short BTC." How should I interpret this?
Here, "short" and "long" are different from those in futures trading. For example, "short BTC" means you believe BTC will decline in the short term. By investing BTC, the first order will sell BTC, and after execution, you can buy back at a lower price to earn more BTC.
4. How to understand the midline price in infinite grid trading? Should it be set or left to follow the market?
Infinite grid trading has no limit on the number of grids, only intervals. If only the interval percentage is specified, the system cannot determine the exact price lines for each grid. However, once any price line is given, all other price lines can be determined accordingly.
Therefore, the midline price is used to determine one of the price lines in the strategy, which in turn determines the other price lines. In practice, users can choose not to set it, in which case the default is the mid-market price at the time of strategy activation. If users choose to set it manually, they can typically select an integer or the midline of the BOLL.
5. What is the difference between geometric and arithmetic grids in advanced settings?
For example:
Arithmetic grid 100: 1000, 1100, 1200, 1300, 1400, ... (each subsequent price is 100 higher than the previous)
Geometric grid 10%: 1000, 1100, 1210, 1331, 1464.1, ... (each subsequent price is 110% of the previous)
Generally, in arithmetic grids, the profit margin decreases as prices rise, eventually becoming insufficient to cover transaction fees, causing the grid to stall.
In geometric grids, the profit margin remains fixed, but as prices rise, the number of transactions may decrease because the grid intervals become larger, and the market may not fluctuate enough to trigger trades.
6. Are the target profit per grid and grid interval the same in advanced settings?
Grid interval: Determines the distance between opening price lines.
Target profit per grid: Determines the closing price for taking profits after opening a position at a certain price.
The grid interval determines the frequency of "opening" trades, while the target profit determines the profit margin after an order is executed.
By default, the target profit per grid and grid interval are the same, but they can be adjusted separately in advanced settings. Advanced settings are optional, and beginners can skip them for now.
7. How to understand the lowest and highest protection prices?
These are risk control parameters. If the price exceeds the highest or lowest protection price, no new orders will be opened.
For example, if the current price is 9000 and you believe it will drop quickly after reaching 10000, you can set the highest protection price to 10000. Once the price hits 10000, the grid will stop opening new orders.
8. During extreme volatility, could there be a large number of pending orders? Should I adjust my strategy parameters?
BitKan's grid strategy only places one order at a time. If a sudden drop breaches the lower grid limit, only one order will be executed before pausing. If the price continues to fall, it may trigger consecutive buy orders. To prevent this, users can set stop-loss and protection price functions.
In cases of extreme volatility, adjustments should be made based on the specific situation. Grid trading is a tool, and like any tool, its effectiveness depends on how it is used. A good trading tool can reduce the probability of losses but cannot guarantee 100% profitability.
9. Why hasn't my grid strategy executed any trades after running for a long time?
Check your parameters to see if the target profit per grid is set too high.
For example, the hourly ATR for ETH/USDT is 1.357, and 1.357/242.36 = 0.56%. After deducting the 0.2% transaction fee, the net profit margin is only 0.3%. This means the recent hourly volatility is only 0.3%. If your target profit exceeds 0.3%, it is likely that no trades will be executed for several hours.
(ATR: Average True Range. ATR (14) represents the average volatility over the last 14 periods. You can set and view this in the market indicators.)
10. How to improve capital utilization?
Capital utilization is a measure of how your funds are being used, and higher is not always better. If the grid parameters align well with market trends, utilization will fluctuate between 0-100%. If it stays close to 0, it means trades are rarely executed. If it stays close to 100%, it means your funds are being used too quickly, leaving no room for new orders.