The Good, The Bad and The Ugly (Tutorial #5)
DID YOU KNOW?
The cryptocurrencies you’re holding right now could be generating passive income. Even if you have small holdings or limited capital THIS can become very profitable with a little known strategy called GRID TRADING.
EXAMPLE: 11-DAY GRID TRADE EARNS 19.27% PROFIT
EASY TO LEARN, LOW RISK & HIGH RETURNS? WHAT'S THE CATCH?
If you have not read my previous tutorials on grid trading, I’ll summarize the concept quickly. Grid trading is a type of trading, typically managed by a BOT which sounds a lot more complicated than it is.
In a nutshell, you select a range, you divide your range into equally spaced buy/sell grids (like trip wires, sorta). And as price zigzags up and down, your “trip wires” trigger buys and sells - catching profits for you incrementally all along the way! If you are able to start your grid as the market ranges sideways (which is 70% of the time) or when it is in a gradual upward ranging trend (15% of the time) then you are going to make money most of the time. That leaves about 15% of the time when the market is ranging downwards (and even then, many times grid trading can still produce a profit).
Grid trading requires far less skill and less management than most other types of trading -PLUS- it has far less risk. Not to mention, most grid traders make better returns on their money with grid trading than they do with any other trading strategy.
Can you lose money grid trading? YES, but with a little knowledge, losing money is hard!
OK IT'S EASY PEASY, BUT HOW DO I DO THIS?
You'll need a gird bot automation platform to manage this, but once you've got that... there are only a few parameters you must setup to get started with your grid bot trades. And if you start with a small investment, the learning process is rather fun. Once you get the hang of it, you can increase your investment. The sky is the limit.
- 1) GET YOUR GRID TRADING BOT (recommendations below)
- 2) PICK THE CRYPTOCURRENCY PAIR which you plan to trade.
- 3) SELECT YOUR RANGE. It's called your “trading channel” - and while this can vary depending on the crypto asset you select, it can also vary based on your trend bias and available capital. Just as a thumbnail guide, you might trade a top 10 cryptocurrency pair within a 4% to 8% trading channel, whereas a low cap coin pair might merit a 1% to 50%+ trading channel.
- 4) DETERMINE A GRID SPACING or GRID COUNT which basically divides your range into a series of buy and sell grid lines. As the price of an asset moves up or down within your range, the bot will execute trades. Each time the price moves up over a grid line the bot will execute a sell order. Each time it moves down over a grid line it executes a buy order. As long as the price stays within the upper and lower price limits that you have pre-set, you will profit from the of the market.
- 5) A STOP LOSS is optional and may not be needed at all, but it is a parameter you must think about and set, if you feel you need it. If you are trading a coin that you don’t mind holding, a stoploss is not needed. Advanced strategies can reduce almost all possibility of loss!
NOTE: Trying to grid trading manually is near impossible. It is highly recommended you use a trading bot to carry out your grid trading strategy.
NO BOTS ABOUT IT...
Grid trading bots automate the process and maximize your potential profits. Your bot will automatically place buy and sell orders at pre-set price points you map out upfront. As you go along, your bot will replace grid line open orders as each previous grid level (line) is executed. You simply need to set your upper and lower price limits (your range) for your trading channel, decide how many grids you want, and how much of the asset you’ll invest in. Once your parameters are entered, your bot can be started and you can sit back and watch profits add up.
For example, if you chose to trade BTC/USD, then you'll start by buying BTC and you'll simultaneously place limit sell orders along your grid. This is easy because your bot will automate the entire strategy.
You can of course get very good at this type trading and make an impressive income however, at the most basic level, all you need to know to start Grid Trading today, is what you’ve just read, perhaps a few more tips from my other grid trading tutorials and if you're smart, you'll try grid trading indicators.
Additional resources are found below.
HOW DO I LEARN MORE?
- 1) Review my related IDEAS and TUTORIALS (linked below)
- 2) Explore GRID INDICATORS (linked Below)
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Master Crypto Grid Trader
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@DanHollings on Tradingview.