Grid trading is an automated trading strategy that places buy and sell orders at regular intervals around a set price. Think of it as a fishing net that catches profits as prices move up and down.

How It Works:

• • Buy orders placed below current price
• • Sell orders placed above current price
• • Profit from price oscillations
• • Automatic execution without emotions

Volatility measures how much a price moves up and down. It's the key to successful grid trading because more volatility = more trading opportunities = more profits.

Volatility Levels:

• • Low (0-2%): Stable, tight grids work best
• • Medium (2-8%): Balanced approach
• • High (8%+): Wide grids needed

Grid spacing is the percentage difference between each buy and sell order. It determines how often your trades execute and how much profit you make per trade.

Spacing Rules:

• • Tight spacing: More trades, smaller profits
• • Wide spacing: Fewer trades, bigger profits
• • Optimal spacing: Based on volatility

Understanding how to calculate potential profits is crucial for successful grid trading. Here's the step-by-step process with real examples.

Profit Formula:

Example Calculation:

• • Buy at $100, Sell at $102 (2% spacing)
• • Gross profit: $2.00
• • Trading fees: $0.20 (0.2% of $100)
• • Net profit: $1.80 per cycle

1. Dynamic Grid Adjustment

Adjust grid spacing based on changing market volatility. Tighten grids in low volatility, widen them when volatility increases.

2. Trend-Following Grids

Place more buy orders below current price in uptrends, more sell orders above in downtrends.

3. Multi-Pair Correlation

Run grids on correlated pairs (BTC/ETH) to hedge risk and increase opportunities.