Gate.io Quantitative Column:Teach you how to play the contract grid by hand without fear of bulls and bears in quantitative trading

The article will start with the concept of contract grid， comparing and analyzing spot grids and contracts to help everyone better understand the product features, advantages and disadvantages, and best application scenarios of contract grids. Then, how to set the parameters, and finally share a practical methodology "Trend Grid Trading". The whole article is not only suitable for entry-level novice players,but also provides some inspiration for experienced traders. I believe you will gain something regardless of skill level.

1.The concept and principle of contract grid

2.Contract grid and spot grid, comparative analysis of contract

3.The parameter settings of the contract grid

4.The method of trend grid trading

The concept and principle of contract grid

1. What is a contract grid?

Contract grid is the application of grid trading strategy to contract trading. After choosing a long or short direction: If you go long, hold a long position according to the price range set by the grid, the number of grids and other parameters. When the price falls, buy long positions on dips; when the price rises. At the same time, selling on rallies and selling more flatly, so as to buy low and sell high to obtain deterministic grid profit. In the same way, if you go short, you will open a short position at a high position and close a short position at a low position.

The image above shows how the contract grid works when it is long.

2. Contract grid and spot grid, comparative analysis of contract

It shows that the contract grid overcomes the problem that the spot grid does not support short selling and the capital utilization rate is low, so that the contract grid can shine in a bear market.

First of all, we have to recognize that there is no right or wrong tool, and there is no simple comparison, it depends on whether the user's risk tolerance matches the risk attribute of the tool. What are the other characteristics of the contract grid without high risks and high returns:

（1). Passive position management

A. Initial position: The initial position may only be about 50%, which overcomes the habit of full stud

B. Add positions on dips

C. Lighten up on rallies and take profit in batches

（2). The attitude of holding positions is more Buddhist and peaceful

A. Callback to increase positions to help you lock in band profits

B. If the trend continues, it will help you lose the trend profit. Band profit + trend profit will not be delayed

C. The contract grid has higher tolerance for fault tolerance than the contract in choosing the wrong direction. Simply put, it is less prone to liquidation under the same conditions

（3). Forced to remove high leverage

Gate.io contract grid leverage multiples are adjustable from 1 to 10 times, which can achieve considerable gains under controllable risks.

3. The parameter settings contract grid of Gate.io

（1). Choose the right transaction target

A. Prefer the top ten trading targets of CMC market value, and prefer BTC, ETH, LTC, BCH and other large market value currencies.

B. Choose U standard or currency standard: It is recommended to choose U standard for bear market and currency standard for bull market.

（2). Choose the direction to open a position

According to the comprehensive judgment of the market, choosing the direction to open a position is long or short. This step is very important. It determines the decisive factor of whether the contract grid can make money. I will specifically introduce my actual combat method-trend grid trading.

（3).Set the price range

Regarding how to set the price range, you can refer to the method on the previous topic. Click to view: Gate.io Quantitative Column: Spot Grid with an annualized return of 1203%, from entry to proficiency

A. Find the upper and lower intervals of the Bollinger Band (boll) directly

B. Draw a trend line

C. According to experience, such as floating up and down 5000USDT based on the current price.

（4). Distinguish equal ratio and equal difference grids and set the number of grids

Long grid profit = (closing price-opening price) * number of positions-(closing price + opening price) * number of openings * handling fee rate, Gate.io contract grid maker handling fee is 0

Short-term recommendations: arithmetic grid (between districts): the difference between handicap orders is the same. If the price fluctuation interval is small, the arithmetic grid can get more grid profits

Long-term recommendations for running a large cycle: proportional grid (large interval): the ratios of buy and sell orders are equal, if the price is a volatile upward unilateral market, then the proportional grid can get more floating profit and loss

（5). Choose to invest funds, automatically calculate leverage, set triggers and stop losses

A. Total investment: Pull the slider and choose to invest funds

B. Leverage: The system automatically calculates the maximum leverage that can be used according to the lowest and highest price entered

C. Strategy trigger price: when the latest market price is less than or equal to the trigger price, the grid will start running; the trigger price configuration must be less than the latest price, and between the lowest and highest prices in the grid interval (long)

D. Automatic stop loss ratio: when the ratio between the average position price and the marked price falls below the automatic stop loss ratio, stop loss is triggered, the market price is closed, and the strategy is terminated

Finally, choose to create a strategy!

（6). View the operation details of the strategy

A. Click "Strategy in operation" to find the open trading pair and view the operation details of the strategy

B. Total income = signal income + floating profit and loss

C. The detailed data of current position, parameter configuration, and market situation are all visible

D. The replication strategy can be cloned or terminated at any time

4.The method of trend grid trading

(1). What is the starting point of the strategy

1. Grid trading will also lose money, what causes it?

A. The spot grid received a high position, and the market fell unilaterally

B. The contract grid opens in the wrong direction, and there is a loss

C. In the fluctuating market, the holding time is too short and not enough for long-term holding and patience like Buddhism, and the grid is stopped before it reaches the profitable position.

D. The grid parameters are set improperly, the price interval is too small, the grid is too dense, and profits are worn out by transaction costs

（2). Is there a solution?

We know that the result of the transaction = F (winning rate, profit-loss ratio, number of positions opened). Simply put, the transaction result is affected by the combined effect of the winning rate, the profit-loss ratio and the number of transactions.

A. Improve the accuracy of direction selection and increase the winning rate

B. Position management: reasonable allocation of positions

C. Set appropriate parameters: The parameter settings determine the speed at which the grid will makes money

(2) What is the logic of the strategy

1. What is the trend grid trading method

In contract grid trading, find the direction in a larger cycle, use simple and reliable technical indicators to track the big trend, and eat big profits. At the same time, using the characteristics of the contract grid to generate band profits in the volatile market, offset the shock and wear part of the trend tracking indicator. A brief summary is to use the trend tracking method to trade the contract grid.

2. The strategy logic of the trend grid trading method

Combination form of CTA strategy + contract grid, trend-seeking, contract grid resists shock and wear

3. Application scenarios

BTC/USDT trading pair, the entire trading environment does not require subjective judgments, shocks and is unilateral.

(3) How to operate

1. Use the CTA signal to track the double moving average strategy to choose the direction

Strategy parameters:

Express (MA): 5

Slow line (MA): 60

Moving average golden cross, contract grid open long

Moving average dead cross, contract grid open short

According to the indicator signal points, opening and closing positions in time, without subjective judgment, is the key to the effective operation of the strategy.

The above is about the sharing of trend grid trading, which is a high-level gameplay, using a strategy combination method.

Finally, let's make a summary: the contract grid overcomes many pain points in the spot grid and contracts, and it can be said to be a real money-making tool that is not afraid of bulls and bears.

However, no any strategy orand trading method isare perfect. The core of all transactions lies in direction selection and position management. Grid trading is a very effective alternative to manual position management. After choosing a trading system, you need to use and modify it for a long time to make it truly adapt to your own rhythm, and finally achieve the goal of controllable risks and stable returns.