Grid Trading Explained
Understand the strategy behind grid trading.
What is Grid Trading?
Grid trading is a strategy that places a series of buy and sell orders at regular price intervals within a defined range. When the price moves up and down, the bot automatically executes trades — buying low and selling high.
It's designed for sideways or ranging markets where prices oscillate within a band rather than trending strongly in one direction.
How It Works Visually
When price drops to $190, the bot buys. When price rises back to $200, it sells what it bought — capturing the $10 difference minus fees.
The Process
Set Your Grid
Define a price range (e.g., $180-$220) and number of levels. The bot divides this into a grid of price points.
Price Drops → Bot Buys
When price drops to a grid level, the bot executes a buy order at that price.
Price Rises → Bot Sells
When price rises back up to a higher grid level, the bot sells — capturing the difference.
When It Works Well
Ranging Markets
Price bounces between support and resistance. The bot captures profit on each swing.
High Volatility, No Trend
Price swings wildly but doesn't break out. More swings = more trades.
Strong Uptrend
Price may leave your range. You'll hold more of the quote token (USDC) as price rises above.
Strong Downtrend
Price may leave your range. You'll hold more of the base token as price falls below.
Key Concepts
Grid Profit
The profit made from buying at one level and selling at the next level up, minus fees.
Unrealized PnL
The change in value of tokens you're holding. Can be positive or negative depending on price moves.
Impermanent Loss
If price trends strongly outside your range, you may end up with less value than if you just held. Similar to providing liquidity.
Important to Understand:
- Grid trading is not guaranteed profit. It works best in ranging markets.
- If price breaks out of your range, the bot stops trading until price returns.
- You may experience unrealized losses if the token price drops significantly.
- Fees (swap fees, network fees) reduce your profits per trade.