Crash course on Futures Grid
Bitget
2023-06-13 03:45
What Is Futures Grid Trading? Web Version
What Is Futures Grid Trading? App Version
You can consistently buy low and sell high with the futures grid bot to take advantage of market volatility as marke t prices fluctuate. Ride the market trends and profit!
1. What is futures grid trading?
The futures grid is designed to apply grid trading bots to futures trading. Traders can choose to go long or short in the futures grid. When going long, a long position will be opened in a pre-defined price range with pre-set parameters (number of grids), to profit from the grid through buying low and selling high. The chart below shows how a long futures grid works. The principle is the same for the opening and closing of short positions.
2. Futures grid applications
The core function of the futures grid is to take advantage of market fluctuations. If you expect to find yourself in a volatile market for a long period of time, putting the futures grid feature to work might be a good idea. A futures grid can also carry a certain long/short bias. Specifically, a long grid will only open long and close long, which is suitable for an upward market, and a short grid will only open short and close short, which is better utilized in a downward market. A neutral grid is designed to open/close short above and open long/close long below the current price. You are advised to choose the grid with appropriate attributes based on the specific market conditions you are facing.
• Futures long grid: Used when the price is estimated to rise in the midst of fluctuation. Enter with long positions, close them when the price hits high, and continue to open more when the price goes down.
• Futures short grid: Used when the price is estimated to drop in the midst of fluctuation. Enter the market with short positions, close them when the price hits low, and continue to open more when the price goes up.
3. Futures grid features
Let’s take a look at the main differences between futures grid, spot, and futures:
Futures grid:
• Direction: Both long and short whether or not it's a bear or bull market
• Market condition: Prices dropping or rising with fluctuations
• Fund utilization rate: ★★★
• Risk: Lower risk than futures
• Profitability: Considerable profit with controlled risks
Spot:
• Direction: Long only
• Market conditions: Prices rising with fluctuations
• Fund utilization rate: ★★★★
• Risk: Low
• Profitability: Less profitable than futures grid
Futures:
• Direction: Both long and short
• Market condition: One-sided market
• Fund utilization rate: ★
• Risk: High
• Profitability: High return with high risks
What are the advantages of the futures grid?
1. The futures grid poses less risks than futures trading — passive position management of the futures grid keeps risk in check. The initial position may only be about 50% of total funds. This is to avoid the high risk associated with the full investment of funds. Users can add positions at low prices, reduce positions at high prices, and take profit in batches. In the event of a loss, the use of the futures grid results in much reduced loss when compared to futures trading.
2. Futures grid trading is essentially a bot designed to trade cryptocurrency derivatives on Bitget, allowing you to trade systematically without the need to predict market movements.
3. Setting up a futures grid bot will free you from the tedious work of watching the market and analyzing all kinds of information, which saves you time and effort.
Prices tend to correct in short periods even in trending markets. You must make informed decisions before setting a bot to avoid being on the wrong side of a trending market. It is highly recommended to implement appropriate risk management measures, decide on and be aware of how much leverage you can use, and set conservative stop-loss and take-profit orders.
Possible reasons for losses
• A position in the futures grid was opened in the wrong direction, resulting in a floating loss.
• A grid was terminated before the order reached its profitable price in a volatile market.
• The grid parameters were inappropriately set; price interval too small, grids intervals too dense, or profits were eaten away by fees.
What type of users is futures grid trading most suitable for?
• Users who want to practice grid trading while maximizing their profits through leverage may find futures grid trading appealing.
• With this tool, users can enjoy all the functions of traditional futures trading without the need to monitor the market. Transactions are conducted automatically based on pre-set parameters to earn more stable profits through arbitrage in volatile markets.
• Those who are bearish on the market and choose to go short can set up shorting bots to earn profit through quantitative trading when the coin price falls.
Disclaimer
Futures grid trading is a transaction tool. The abovementioned information should not be considered financial or investment advice from Bitget. Profits fro m futures grid trading may be impacted by one-sided market conditions or improper price intervals. You can adjust your futures grid trading strategy according to market conditions. Your use of this tool is subject to your unconditional acceptance of all of Bitget's Terms and Conditions. You should be fully aware of the risks associated with cryptocurrency investments and proceed with caution. You agree that all investments on Bitget.com reflect your true investment intent, and you unconditionally accept the potential risks and gains of your investment decisions.
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