1. What is Spot Grid?

Spot Grid is a subdivision of grid trading, embodying the characteristics of grid trading, with the limitation that it can only go long. Spot Grid is a trading strategy suitable for volatile markets, allowing for profitable high selling and low buying. By setting parameters such as the price range and the number of grids, funds are systematically divided into various portions. During price drops, purchases are made in stages, while during rises, selling occurs in stages. The strategy repeatedly profits from selling high and buying low in a fluctuating market.

2. Advantages and Disadvantages of Spot Grid Trading

Advantages

• Spot Grid Trading embodies the characteristics of buying more at lower prices and selling at higher prices, making it naturally suited for fluctuating markets. As cryptocurrency markets tend to fluctuate, with studies showing that 70% of the time, prices are in a range. This provides a natural trading environment for grid trading.

• There is no need for constant monitoring as it operates as a 24-hour automatic arbitrage machine.

• It’s beginner-friendly, with a very low learning curve. Users can use AI to recommend grid setups or replicate the strategies of other signal providers.

• With over 1000 trading pairs to choose from, opportunities abound.

• Transaction fees are low, and users can use Point Cards or GT for deductions. Some trading pairs even have zero transaction fees.

Disadvantages

• Unfortunately, Spot Grid is not all-powerful. As it can only go long, it can get stuck in one-way downtrends, and its utilization rate of funds tends to be low. It also runs the risk of moving out of the designated range.

3. Which Cryptocurrencies are Suitable for Spot Grid Trading?

If you are new to trading, we recommend starting with well-established cryptocurrencies with high liquidity, such as BTC_USDT and ETH_USDT. You can reference the top 100 digital assets ranked on CMC trading on the Gate.io platform. If you have a deeper understanding of Spot Grid Trading, you can try trading other highly volatile pairs for higher profits.

4. How to Use Spot Grid?

On the web: Bots > Bot Pool > Create a Bot > Select Trading Pair > AI Smart Recommendation/Manual Grid Configuration + Parameter Setting > Create

On the App: More - Financial - Bots - Create - Select Spot Grid - Select Trading Pair - Recommended/Customize - Create

Explanation of Spot Grid Terminology

AI Smart Grid: The AI Smart Grid uses the past 7 days of historical data to conduct backtests. It automatically calculates the highest return grid parameters: upper price limit, lower price limit, and the number of grids. Users only need to choose the investment amount ratio (the chosen investment amount must be greater than or equal to the minimum investment amount).

Fill AI Data: This function automatically fetches and fills in the AI Smart Grid data.

Clear All Shortcut: If users need to clear multiple data entries, they can use this shortcut to avoid deleting them individually. After clicking, you can reset the parameters.

Lower Price Limit: This is the lowest buying price. No buying will occur if the market’s latest price is lower than this price. At the same time, sales can’t be executed at the lower price limit.

Upper Price Limit: This is the highest selling price. If the market’s latest price is higher than this price, no selling will take place. Similarly, purchases can not be executed at the upper price limit.

Grid Quantity: This refers to the number of grids that will be executed, with a limit range of 2 to 200.

Grid Spacing: Assume the grid spacing is q, the grid price upper limit is a1, the grid price lower limit is a2, and the grid quantity is n. The formula for calculating the arithmetic grid spacing q is:

The formula for calculating the actual floating ratio q in a geometric grid (the actual calculation price ratio is 1+q) is:

Single Grid Return Rate:

Assume the grid spacing is q, the upper limit of grid price is a1, the lower limit of grid price is a2, and the number of grids is n, then, the geometric single grid return rate is:

The arithmetic single grid return rate is:

Single Grid Base Trading Quantity: The quantity of cryptocurrency chosen for buying and selling in each grid.

Quantity Increment: Quantity increment is turned off by default. When turned on, you can choose to increase the buying and selling quantity of each grid either by a fixed amount or by a percentage, as shown in the figure:

Example: If the single grid base trading quantity is 1 and the quantity increment is 2, this means that the first grid will buy or sell 1 BTC, the second grid will buy or sell 1 + 2 = 3 BTC, the third grid will buy or sell 1 + 2 + 2 = 5 BTC, and so on.

Advanced Settings: The above are some basic parameter settings, which users must fill out. To maintain a clean page design, not all advanced settings are displayed. They become visible only when the user clicks to view them. The advanced settings include some optional fields that users can fill out according to their own needs.

Advanced Settings Parameter Explanation

Strategy Trigger Price: The grid will start running only when the latest market price is less than or equal to the trigger price. The trigger price configuration must be less than the latest price and within the range between the lowest and highest prices in the grid.

Stop-Loss Price: This is triggered when the latest market price is less than or equal to this price. It must be less than the lower limit price.

Take-Profit Price: This is triggered when the latest market price is greater than or equal to this price. It must be greater than the upper limit price.

Settlement Options (Optional)

Sell all held cryptocurrencies upon termination: When enabled, after the strategy ends, all held cryptocurrencies will be sold at the market price and converted into USDT.

Hoarding Mode: When enabled, the grid earnings from this strategy will be instantly converted into the selected cryptocurrency. Spot grid hoarding mode refers to a long-term bullish outlook on the appreciation of the cryptocurrency. During grid trading, the arbitrage profits generated by buying and selling are used to purchase cryptocurrency at the latest market price. This way, profits are converted into cryptocurrencies, which are held over the long term.

Kind Reminder: The “Sell all held cryptocurrencies upon termination” and “Hoarding Mode” options can be selected simultaneously.

5. Spot Grid FAQs

5.1 Can spot grid trading have a stop-loss?

Yes, it can. You can set a stop-loss price in the parameters to maintain the safety of your assets promptly. When the trading target price falls below the stop-loss price, the quant product will automatically sell the trading target for you.

5.2 Could the fee expenditure exceed grid profits?

No. The spot grid guarantees only opening orders when grid profits are higher than the fees, so there won’t be a situation where the fees surpass grid profits.

5.3 How should I choose between the “AI Smart Grid” and “Manual Grid Configuration” of the spot grid?

If you are a beginner, we recommend using the “AI Smart Grid.” The AI Smart Grid uses the past seven days of historical data for backtesting and automatically calculates the highest-yielding grid parameters: upper limit price, lower limit price, and the number of grids. Users only need to select the investment amount proportion (the chosen investment amount must be equal to or greater than the minimum investment amount). If you are experienced, you can use the “Manual Grid Configuration,” allowing you to configure the parameters according to your own needs.

6. Conclusion

The spot grid is a powerful tool for capturing profits in fluctuating markets. Although it isn’t omnipotent—for instance, its feature of only allowing long positions can make it easy to become trapped in a one-sided downtrend—overall, the benefits outweigh the drawbacks. There are no perfect tools in this world; every tool has its place to maximize its value. It’s only through continuous learning, understanding the tool itself, familiarizing oneself with the market, and recognizing personal risk preferences that we can find the most suitable money-making methods for the current market conditions.