Grid Bots: What is it, and how does it work?

Understand the algorithm Grid Bots use to be profitable.

Updated over a week ago

What’s a Grid Bot?

A Grid Bot is a significant addition to the 3Commas Bot family.

Grid Bots are perfectly suited to trading cryptocurrencies that are without trend, for example, cryptocurrencies that are not moving up or down with any clear direction. This is also known as ranging, moving sideways, or even “chop”.

Grid Bots are the easiest bots to create and use and are perfectly suited to beginners, both to bots in general and also to Technical Analysis with charts.

If you choose your Grid Bot wisely, it can run for weeks, months, and possibly years, returning regular profits from the initial investment capital.

However, profits are not reinvested and are instantly released to your exchange wallet as soon as they are generated.

What Strategy does a Grid Bot use?

Grid Bots use a grid trading strategy that appears to have originated from the Forex markets. Essentially the strategy creates a series of buy and sell horizontal levels and the bot accumulates profit as price moves and “bounces around” within the grid.

The strategy is really very simple. You specify the upper and lower price limits of the grid and also the number of grid levels (or the % distance between the lines). Grid Bot will then work out the span of the grid by deducting the lower grid price level from the upper grid price level, it then divides this figure by the amount of grid levels, which becomes the grid width. Or if you chose the specific distance, the bot will calculate how many lines you will need to meet your requirements.

The Grid Bot will then create grid lines starting from the lower grid level and adds a new level, using the grid width, to space them out until it reaches the upper grid level.

Catch every movement in a range

The Grid Bot is designed to catch every price movement in the specified range. 

The bot splits the range into multiple Grid Levels and places a Buy or Sell Limit Order on every level, which allows one to buy every drop and sell every rise.

As the Grid Bot places both Buy and Sell orders at the same time, it requires both coins from the pair to trade. If you trade BTC against USDT, you need both BTC and USDT. Don't you worry, the bot will arrange by itself the needed amount of coins if you don't have enough on your balance.

Upper & Lower Grid Levels

These are the limits of the range where the bot trades. 

Let's say the BTC price is near $7000, and you want to trade the $800 range above and below the current chart price.

It makes $7800 as an upper limit price and $6200 as a lower limit price.

Create the Grid Levels

Now the bot needs to split the provided range into multiple levels. 

The Levels setting dictates how many Grid Levels the bot should create. The Automatic strategy determines the price levels automatically.

Let's set 9 Grid Levels to keep our example simple.

It is possible to specify up to 201 Grid Levels but be warned - exchanges have different limits for the maximum amount of orders you can create per chart.

We now have a Grid! Hence the name GRID Bot!

Avoid the closest level 

GRID Bots don't place any order at the nearest to the current price level. This is to prevent the bot from buying and selling coins for the same price and incurring a 0% profit trade (in fact, it could count as a loss as the trading fees will need to be accounted for).

In our example, the price is nearest to Grid Level #5, so the bot removes it.

This is represented on the chart preview as "Waiting":

Let's paint our Grid Levels!

The bot turns all levels below the current price into Buy orders, and these are represented as green lines on our Grid Bot chart.

All Grid Levels above are painted red as they are all Sell orders.

When the price rises

Whenever the chart price rises and crosses a Sell Grid Level, profit is made as the coin is sold (BTC in our example) as the Sell order fills. The bot then places a new Buy order one level lower.

Say the price reaches $7200 and fills your Sell order #6, then the bot places a new Buy order at level #5. 

Level #6 becomes inactive now as it's filled, and it's closest now to the current price:

When the price drops

Whenever the chart price falls and crosses a Buy Grid Level (e.g., #5), the Buy Limit Order created by the Grid Bot earlier is filled (USDT is used to buy BTC, in our example). The bot then places a new sell order one level higher (#6).

As per our example, the price reaches $7000 and fills Buy order #5, and the bot places a new sell order at level #6.

Level #5 is closest to the current price and is thus inactive now:

Buying and selling continue until you stop the bot

See the animated example in the GIF below, or use this link to open a bigger version:

Read more about GRID bot's capabilities:

Did this answer your question?