At 3Commas, we’re always committed to providing our customers with the best trading tools to conquer one of the most difficult and confusing financial industries. Our “bread and butter” bot is our DCA (Dollar Cost Averaging) bot, which you can learn more about here. DCA bots are great for beginners using our service looking for a more conservative strategy to get the best possible price for an asset that they believe is eventually going to rise in value. Using our DCA bots can save a lot of time and help those with a long investment time horizon. However, DCA bots aren’t optimal for all market conditions. When the market is moving “sideways”, employing bots that take advantage of market volatility can be extremely useful, time-saving, and anxiety-reducing. Accordingly, we’re proud to introduce our new GRID Bots on 3commas!
GRID bots employ the Grid Trading Strategy, which in contrast to most DCA and Gordon bots, works best in a ranging sideways market with no clear direction. Instead of canceling out previous gains, GRID bots take advantage of the volatility to lock in profit more effectively. The more frequent and the bigger the price fluctuations are, the more profitable the strategy will be.
How does it all work?
GRID bots work by setting up buy and sell orders in a predefined price range, creating a grid-like formation. Choose a price range for the strategy you wish to employ and then decide how many grids you want to have within that range. By splitting your price range into a variety of smaller grids, you’re more likely to trigger a profitable trade. The more grids you make, the higher the trade frequency will be because the grid width is decreased. However, the profit earned with each order will also decrease. In effect, the user can choose to employ a strategy of placing many trades with small profit potential or fewer trades with larger profit potential.
Whenever a buy order is triggered, a new sell order will be placed (higher than the buy). Conversely, whenever a sell order is triggered, a new buy order will be placed (lower than the sell). Accordingly, whenever the price fluctuates between two grids so a trade is executed, a small amount of profit is locked in.
Here’s a few great reasons you should consider using GRID bots:
Best Strategy for a Sideways Market
The majority of trading strategies focus around correctly predicting a trend and betting on that prediction by trading accordingly. However, more often than not, the market just has no clear trend. Thus, traders using that strategy have to wait it out and stay flat most of the time.
Fortunately, with a Grid Trading strategy, you don’t need to wait for the perfect opportunity to anticipate the next move. If the trend goes downwards you buy cheap and then cheaper; if the trend goes upwards you sell high and then higher; if it doesn’t go anywhere you buy and sell and buy and sell, making a profit from all the small fluctuations it does until it changes into a trend.
The GRID strategy employs the most basic idea of trading (buy low, sell high, earn the difference), so it can be extrapolated to fit virtually any market and successfully earn a profit, regardless of the trend or market behavior.
By choosing the price range and the number of grids, you have the potential to actively define the frequency and period of the strategy.
GRID’s can be set up for the short term, making hundreds of trades per hour to catch micro profits from all small fluctuations of a day or for the long term by choosing a huge range, allowing it to run for months to earn profit from every greater trend change.
Improve Risk Management
The flexibility to choose your grid strategy gives you the ability to influence the risk/reward level even more actively than most other trading. You can choose if you want to use a GRID Bot to earn steady small profit with close to zero risks (e.g, by selecting a stablecoin pair like BUSD/USDT), or if you prefer to take bigger risks for potentially huge returns (e.g., with a low market cap coin that has high fluctuations).
With all of the amazing benefits of using GRID bots, we’re so excited to introduce a new line of products that will add versatility to our existing line of bots. Although everyone loves living in a bull market, the 3Commas team strives to insure that our users do well in any market.
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