Grid trading in crypto is a systematic trading approach that works well in a variety of market conditions, such as markets that are going in one direction or flowing sideways.
Grid trading is establishing a number of specified price levels at which purchase or sell orders are automatically implemented when the price reaches certain levels.
In further details, it is a trading method that takes leverage of cryptocurrency price movement by setting strategic limit purchase and sale orders.
Grid traders define lower and higher limits in a grid where purchase and sale orders are executed. A purchase order is issued if the price falls below the lower limit. A sell order is issued if the price climbs above the upper limit.
A good trader knows when to close a trade and take a profit. Profit-taking is necessary to reduce the risk of liquidation if the markets turn against you.
When you feel pleased with the profits you’ve generated on the whole grid, it’s time to say goodbye so you close.
Crypto-grid trading does not require human judgment because it is a systematic method, with the exception of setting the initial fixed price levels.
Once the price levels are determined, crypto grid trading bots offered by crypto trading platforms complete the chores, allowing the trader to just relax while the strategy runs itself.
What is the Process of Grid Trading?
Grid trading is done using short-time charts, like minute or hourly charts, which have far lower price volatility than daily charts.
Grid trading is generally done on 1-minute, 5-minute, 15-minute, and 1-hour charts.
While the price of cryptocurrency may seem steady over the long term, there is plenty of fluctuation in the short-term charts that can be exploited.
Benefits of Grid Trading
Grid trading in crypto is prominent among cryptocurrency traders since it is automated and helps traders to earn in sideways markets. It has several significant benefits, including:
Automation: Trading bots execute trades for you after you manually establish limits, including grid buy/sell orders.
Trading bots operate around the clock, allowing traders to benefit without having to monitor market movements themselves.
Profitability in volatile markets: It enables traders to benefit when there is no apparent trend in the market.
Cryptocurrency prices can trade sideways for months at a time, and this method capitalizes on those conditions.
Alternatives for grid density: A trader can program dozens or even hundreds of buy/sell limit orders. This helps them to reduce their risk while increasing their chances of profitability.
Grid trading is based on the principle of buying low and selling high temporarily. It allows for the execution of hundreds of alternative trading techniques depending on the number of grids, time charts, and crypto trends. Six buys and sell limit orders are usual in most grids.
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