Crypto markets are constantly on the move, and to trade 24/7 is a tedious task – this makes the importance of sophisticated trading strategies and automation tools even more profound. Automated trading in particular, is a tool that every trader should be given the opportunity to look to, in order to maximise efficiency and profit when trading 24/7 in markets like crypto.
One such automated trading strategy that has gained popularity is grid trading – a way to set orders at several points above and below a reference price for an asset.
Whether you’re hearing about it for the first time, or wish to polish your current knowledge, let’s dive in.
What is Grid Trading?
Grid trading is a popular trading strategy designed to place a set of orders at several points above and below a reference price for an asset.
The primary purpose of grid trading is simple: to buy the low (buy the dip) and sell high (sell the top). The price points above the current asset price are considered sell orders, while the price points below the current asset price are to trigger buy orders.
When the asset’s price reaches one of these designated points in the grid, the respective order is then executed.
Below is a hypothetical example of a simple 4-price grid for Bitcoin, with the asset current priced at $60,000.
What are Grid Trading Bots?
The beauty of grid trading lies in its simple rule-based structure, making it an ideal candidate for automation through trading bots. With a set of predefined order rules and triggers, all traders need to do is insert their desired strategy in motion, and let the bot handle the rest.
This hands-off approach to trading eliminates the need for constant monitoring and decision-making, allowing traders to focus on other aspects of their portfolio.
How do Grid Trading Bots Work?
Let’s say you wish to trade the BTCUSD contract via Trading Bots on BitMEX. You believe it will go up in the next week, so you decide to start an Oversold Scalper (Intraday: 1h) for the contract.
This reference will use the same 4-point price grid shown above. You choose to configure your bot to reflect this strategy, which requires you to change the default Grid Count to 2. Grid Count refers to the number of orders you wish to place on either side of the reference price (e.g. 2 above and 2 below). Below is an example of how this would look like on one’s BitMEX trading interface.
Why Use Grid Trading Bots?
Grid trading bots offer a range of advantages, with automation being the most notable. By automating your trading process, you can:
- Eliminate the emotional aspect of trading decisions
- Avoid impulsive choices based on short market fluctuations
Grid bots allow you to set your order rules and sit back while the bot executes your strategy with precision. A bot is able to adjust itself depending on market conditions, meaning you get exposure to potentially higher profits without the need for complex, manual forecasting.
Perhaps the most notable here is that grid bots are the best choice when looking to generate consistent profits in sideways markets. These bots are a reliable tool for navigating volatile market conditions and maximising trading opportunities.
How to Use BitMEX Trading Bots
Every Trading Bot on BitMEX is displayed on the Bots Marketplace.
1. Understand the different types of bots available
You will find six tags for every bot:
- Author: The creator of the bot
- Directional strategy: Whether the bot is long, short, or neutral
- Time intervals: The intervals (based on candle size used to calculate RSI) at which the trades are placed (1m vs. 15m vs. 1hr)
- Technical Analysis (TA): Specific technical indicators or strategies used by the bot (e.g., Bollinger Bands, RSI, or Grid)
- Contract: The contract that the bot trades (e.g. BTCUSD)
On the Bots Marketplace, you will find a list of Grid bots available on BitMEX. They are divided into several categories:
- Oversold Scalper: These are long grid bots that only place buy orders (bids) and require a Take Profit (TP) level to close the position.
- Overbought Scalper: These are short grid bots that only place sell orders (asks) and require a Take Profit (TP) level to close the position.
- Mean Reversion Scalper: These are neutral grid bots that place both buy and sell orders, aiming to profit from price fluctuations in both market directions.
2. Keep track of your trading bots
Any bot you start to run, or have run in the past will show under the ‘Your Bots’ tab in your trading interface. You can also save your favourite trading bots by clicking on the star icon on the left side of the specific bot, as shown below.
3. Configure any trading bots to your liking
Once you select a trading bot that you’d like to start using, you can click on the edit icon on the right side of each bot to configure them with your specific parameters.
Once you click on the icon, you will be led to your Bots Order form, where you will be able to specify the following parameters:
- Grid Count: The total amount of limit orders you wish to place on either side of the reference price (bid or ask).
- Grid Spread: The distance between each limit order in terms of basis points (one basis point is equal to 0.01%).
- Initial Position Size: The initial position size that the bot should take when starting to run, as a percentage of the maximum order size.
- Max. Order Size (optional): The maximum order size that can be placed at a particular price. You can choose to enable configuration for this parameter.
- Price Max Buy: The maximum long or short position size the bot can take for a particular contract. Can be configured in terms of number of contracts, in notional terms (in terms of underlying currency), or in USD terms.
- Stop Loss % (optional): The stop loss set as a percentage distance away from the average entry price.
- Take Profit % (optional): The take profit set as a percentage distance away from the average entry price.
There will be default parameters set for every trading bot. You can choose to configure some or all of the trading parameters depending on your strategy.
Once you’re comfortable with the parameters you’ve set, hit the ‘Next’ button. This will lead you to a summary of your trading bot’s parameters. You can then click ‘Start bot’, which will start executing orders in real-time.
The Bottom Line
BitMEX Trading Bots are an invaluable tool for crypto traders of all kinds who wish to reap the benefits of automated trading and 24/7 market accessibility. With simple execution and an intuitive trading interface, BitMEX Trading Bots are for those who wish to maximise their profit opportunities regardless of whatever market condition.
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