What is Spot Grid Trading on Binance?
Grid trading is a type of trading strategy that is based on numbers. This trading bot buys and sells on spot trading automatically.
It is made to send orders to the market at set times and within a range of prices that you set.
Grid trading is when orders are placed both above and below a set price, making a grid of orders with costs that go up or down by small amounts.
In this way, it builds a grid for trading.
Binance Spot Grid Trading works best when prices change within a certain range in volatile markets.
Basically, grid trading tries to make money off of small changes in prices.
It helps you trade logically and avoid FO MO as much as possible by using quantitative trading.
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How Does Binance Spot Grid Trading strategy work?
- Go to the Binance website and sign in to your account. Then click [Trade] > [Strategy Trading] > [Spot Grid]. Choose a pair to trade.
You can also go to the Binance app and tap [Trade] > [Spot] > […], then choose [Spot Grid].
Before you can set up a strategy, you have to read the Risk Disclosure Statement and agree to it.
- Choose either [Geometric] or [Arithmetic] mode.
Set the grid’s parameters, such as the highest and lowest prices, the number of grids, and the number of coins to invest.
Based on the grid number and coin you chose, the system will figure out how much you need to invest at least.
Enter the amount you want to invest and click “Create” to place your order.
Please make sure that your Spot Wallet has enough money in it.
Binance Spot Grid Trading strategy on App
The rules for Binance Spot Grid Trading are:
2.1 Arithmetic & Geometric mode
- In arithmetic mode, the price difference between each grid is the same.
- In geometric mode, the price difference between each grid is the same.
- When you add more grids, you need to invest more money.
How does The Arithmetic mode work?
Arithmetic mode: The price difference between each grid is the same (e.g. 1, 2, 3, 4…).
The arithmetic grid divides the price range from Lower Price to Upper Price into as many grids as there are price differences.
The difference in price between each grid is:
Spread = (Higher Price – Lower Price) / Number of grids
Here’s how the prices will be divided:
Price 1 = Lower Price
Price 2 = Lower Price + Spread
Price 3 = Lower Price + Spread * 2 \s…
Price n = Lower Price + Spread * (n-1)
Upper Price is the price with the highest value, where n is the number of grids.
Arithmetic Grid = 100: 1000, 1100, 1200, 1300, 1400,… (the next price is 100 higher than the previous one)
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How does the Geometric mode work?
2.2 Lower Price and Upper Price
Lower Price: The lowest price in the trading range for the grid.
When the market price is lower than the Lower Price, the system will no longer carry out orders.
Upper Price: The highest price in the trading range for the grid.
When the market price is above the Upper Price, the system will no longer carry out orders.
Divide both the upper limit price and the lower limit price into equal parts.
2.4 Invested Coin
You can invest in a single cryptocurrency or in two different ones.
For example, if you choose to invest in BTC, the strategy will only use BTC from your Spot Wallet.
If you choose to invest by BTC+BNB, both BTC and BNB from your Spot Wallet will be used by the strategy.
Please keep in mind that the actual amount you need to invest for the Grid Trading strategy depends on the market and may not be the same as the amount you put in.
2.5 Available amount
The assets you can use from your Spot Wallet.
If your Spot Wallet doesn’t have enough money, your grid creation might fail.
Please note that you can’t place new orders with the frozen assets from other open orders.
You can cancel your open orders to use the assets you have, or you can change the number of grids to lower the amount you have to invest to open orders.
2.6 Trigger Price (Optional)
When the Last Price goes above or below the trigger price you set, the grid orders will be sent.
2.7 Stop Trigger (Optional)
Stop Trigger lets you stop trading when the market price reaches one of the set prices:
Stop Loss should be less than the lowest price, the last price, and the trigger price. The grid will stop working when the latest market price reaches the Stop Loss price.
Take Profit: this should be higher than the upper price, the last price, and the trigger price.
The grid will stop working when the latest market price reaches the Take Profit price.
For example, if you make a BTC grid order with no trigger price, a certain amount of BNB will be bought right away at the market price to start the grid trading.
If you set a trigger price, the system will wait for the market price to reach that price before buying BNB at the set price.
If your Spot Wallet has both BTC and BNB.
You can also choose to invest in BTC+BNB instead of buying BNB to avoid extra costs like transaction fees.
Check Out: How to trade in cryptocurrency.
To stop the grid from running, click [End]. Running orders will be canceled, and all profits will be paid out at the market price right away.
Spot Grid Trading works the same way as trading on the spot market. When you place an order, you have to follow the rules.