What is grid trading and its benefits

Published: 28 апреля 2023
5 min

What is grid trading and its benefits What is grid trading and its benefits

What is grid trading?

Grid trading has become a popular strategy in cryptocurrency trading lately. It differs from regular trading in that it uses automatic orders that are placed at a certain distance from the current price.

Grid trading is a strategy that uses the mechanism of automatic orders to make money on the difference between the buying and selling prices of a cryptocurrency. Grid trading uses multiple order levels that are placed at a certain distance from each other. If the price of the cryptocurrency falls, new buy orders are placed on the lower level, and if the price rises, new sell orders are placed on the upper level. Grid trading is useful when trading volatile markets.

What trading strategies exist in the crypto market 

There are many different trading strategies. Let's take a look at the most popular ones:

Scalping is a short-term trading strategy where the trader closes his position within a few minutes or even seconds. It requires a quick reaction to the market and maximum use of price changes.

Intraday trading (intraday), unlike scalping, involves closing positions at the end of each trading day. This strategy allows the trader not to be tied to a screen, but also requires quick decision-making.

News-based trading. Traders use news and events that affect prices to make buying and selling decisions. This strategy requires up-to-date knowledge of the market and the ability to react quickly to news.

Trading based on technical analysis. In this strategy, traders use charts and other technical tools to predict prices. It requires an in-depth knowledge of technical analysis and allows a trader to predict prices based on past trends and patterns.

Long-term investing is a strategy that requires a trader to invest in long-term positions and wait for the market to develop. It requires patience and trust in one's investment decisions. As a rule, an investor holds such positions for several months or even years.

Each of these strategies has its advantages and disadvantages and can be effective depending on your goals and trading style.

Advantages of grid trading

Grid trading allows investors to minimize risk because it places orders at a certain distance from each other. If the price of a cryptocurrency falls, new buy orders are placed at the lower level, allowing you to buy the cryptocurrency even cheaper. If the price of the cryptocurrency rises, new sell orders are placed at the top level, which allows you to sell the cryptocurrency at a higher price.

One of the strategy's chips is automatic control. Grid trading uses automatic orders, which allows investors to intelligently manage their portfolio. This simplifies trading and allows them to focus on other issues.

Grid trading, with the right approach and portfolio management, can lead to significant profits. However, algorithms do not always cope with market volatility, and the depth of drawdown may be unacceptable.

Disadvantages of grid trading

Like any other form of investing, grid trading in cryptocurrencies has its drawbacks. 

If there are algorithm errors, as well as unplanned price movement scenarios, investors risk losing their entire deposit.

Grid exchanges charge high commissions for trading cryptocurrencies. This greatly reduces a trader's profits and increases losses.

Grid exchanges can encounter technical problems that lead to trading disruptions and loss of traders' funds.

Some cryptocurrencies may have low liquidity on grid exchanges, which can lead to difficulty selling or buying cryptocurrencies.

These disadvantages do not mean that grid trading in cryptocurrencies is unsuitable for investing. However, in order to invest successfully in cryptocurrencies, you must have a good understanding of the risks and know how to manage your portfolio.

How to Start a Grid Trade

To launch a grid strategy, you need to create your profile on the exchange and set up a strategy. 

Determine the price levels at which positions will be opened and closed. A special bot can be used for this purpose, which will automatically create a grid with the set parameters.

Next, you need to determine the step between the levels, the size of the lot and other parameters, depending on your strategy.

Setting up manual grid trading

The strategy can be used for trading without automatic trading support.

As an example, let's consider setting up grid trading using the AWEX cryptocurrency exchange as an example:

  1. Select a cryptocurrency pair on the spot market. Study the price dynamics of the selected pair, analyze the charts, take into account fundamental and technical factors that may affect its price;
  2. Calculate the prices for opening buy and sell orders at a given distance from each other. For example, you can choose a price step of 2%. Create a table with prices and volumes for each order;
  3. Place buy and sell orders at the specified prices with the corresponding volumes. For example, if the current price is $1000, you can place buy orders for $980, $960, $940, etc. with a volume of 0.01 BTC for each order. Similarly, you can place a sell order for $1020, $1040, $1060, etc. with the same volume for each order;
  4. Monitor price movement and adjust orders as necessary to match the current market situation.
  5. Plan your actions on a long-term basis and be aware of risks. Determine your money management strategy and loss limits to avoid large losses;
  6. When using grid trading, a stop loss can be a useful tool to minimize potential losses. Set your stop loss at a level that protects you from large losses;
  7. Regularly monitor your trading results and analyze them. This will help you understand which aspects of your strategy are working well and which aspects need improvement.

Manual grid trading is time-consuming and requires a lot of time and effort, so assess your capabilities and risk appetite before you start trading.


Grid trading is a profitable strategy for any trader who wants to make profits while minimizing risks. Its advantages are obvious: the ability to create an automatic strategy that will trade for you, reducing the risks associated with human error and improving overall trading profitability.

Now that you know what grid trading is and what benefits it offers, you can start planning your strategy. The AWEX cryptocurrency exchange gives customers the opportunity to try out this strategy to improve their trading.

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