What’s a Grid Bot?
A Grid Bot is a recent 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 Technical Analysis with charts.
If you choose your Grid Bot wisely, they can run for weeks, months and possibly years, returning regular profits from the initial investment capital.
Profits are not reinvested and are instantly released to your exchange wallet as soon as they are generated.
Prerequisites: In order to use Grid Bots on 3commas, you’ll need a Pro subscription to 3Commas. Currently Grid Bots support all variants of Binance (except DEX), Bitmex, Bybit, Coinbase and FTX exchanges.
Note: This guide does not cover creating Grid Bots with leverage, although may work with low leverage, eg: x2 or x3.
What Strategy does a Grid Bot use?
Bots need “strategies” or rules to tell them how to trade.
Grid Bots use a grid trading 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.
How does the Grid Bot Strategy work?
The strategy is really very simple, you specify the upper and lower price limits of the grid and also the number of grid levels. 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 specified, which becomes the grid width.
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.
Grid Bot options
Let’s explore the Grid Bot options and user interface.
First, let’s switch into ‘Paper Trading’ - there is no sense risking real funds when we can test without any risk!
Head to the Main menu, and click ‘GRID Bots’:
- Choose the ‘Exchange’ account you wish to create this Grid Bot for, and also the ‘Market’ (this is the currency you will use to initially fund the bot with and receive profit in) and finally, the cryptocurrency ‘Pair’ you wish to trade
- These are the controls where you can specify ‘AI’ or ‘Manual’ Grid Bot mode.
For ‘AI’ mode, the grid spacing and upper and lower levels are calculated automatically; you simply specify the amount of funds you wish to trade with. There are shortcut buttons that represent 10%, 25%, 50%, 75% and 100% of available funds.
For ‘Manual’ mode, you can specify the upper and lower grid level limits and also the number of grid levels, which adjusts the grid spacing and profit per trade.
- The chart display allows you to preview the cryptocurrency coin pair chart, and also the grid levels suggested by the ‘AI’ mode or those that you manually configured.
You can adjust the time frame at the top left corner of the chart window.
Please note, no strategy is “fool-proof” and trading cryptocurrency pairs does involve risk.
Creating your first “AI” Grid Bot
Ok, now you are in the Paper Trading account, let’s create a simple Grid Bot with the “AI” mode to handle the settings for you!
- Choose your currency pair, note that in the example, the chart time frame is set to '1 Day' (3) - we have BTC/USDT selected here, we will trade a USDT investment against BTC to create USDT profits.
- Currency pair information display.
- Chart time frame choice.
- Visualisation of grid levels using the currently chosen settings - “AI” mode handles all of this for you, you can see that BTC has been trading in a range for the last several days.
- Grid Bot settings panel, “AI” strategy is selection, the ‘Amount; displays your funds available, click this to get it to refresh with your latest balance.
Choose the amount of funds you wish to invest in total for this bot.
Click “Create” to complete the bot configurations and create the bot, you’ll see a pop-up message stating: “Success!” - if there are any errors with the bot setting, you’ll get a message telling you what is wrong and what you’ll need to change.
- For a Grid Bot to work, it must start with both currencies. If you only hold USDT at this point, the Grid Bot will offer to purchase these coins now with a Market Order at current chart price. It will need BTC for each ‘sell’ grid level above current chart price. You can choose to accept this, or choose to buy these coins yourself with a Smart Trade and return to start the bot once the coins have been purchased or transferred to the exchange account if you hold them on a hardware wallet or other exchange account - this is what this message will look like:
Congratulations! You have created your first Grid Bot!
Grid Bot Management and Statistics
Fortunately Grid Bots require little management when operating over a wide range, here is a breakdown of the Grid Bot progress indicator:
- Pair being traded, click here to view a chart of the cryptocurrency used with this Grid Bot and indicators when trades were made - please note, some charts are not provided by the exchange so unfortunately aren’t visible (FTX.US and Binance.US, for example - you can log into the exchange to view the status and order history).
- Current investment in bot, displayed for both currencies being traded.
- Net Profit generated by the Grid Bot deal, this includes exchange fees deductions.
- Grid Bot controls, Refresh the Grid Bot, Share a link to a friend to your settings, Stop (pause) the Grid Bot and delete the Grid Bot.
- Status display selection, change between live view of current chart price or weekly/monthly views of previous trades.
- Status display, shows current chart price and the neighbouring 2 buy and sell grid levels. The status of “wait” indicates the last “buy” level, a Grid Bot wouldn’t be any good if it kept buying and selling at the same price, so this is why it becomes “wait”.
- Recent Grid Bot transaction log - this holds a limited history of recent trades.
Do Grid Bots work?
You be the judge! This Grid Bot was created in March 2020 and stopped when price left the top of the grid for the 3rd time towards the end of May 2020:
You may notice a dark red and green triangle on the candle body (1) - this indicates that a buy (green) or sell (red) trade occurred on this candle.
Also, below the candles at the bottom of the chart (2), you can see a (B) for Buy or (S) for a Sell.
As this bot is stopped, all the grid levels are set to “waiting”.
Grid Bot Frequently Asked Questions
What happens when the price of the cryptocurrency exits the top of the grid?
The Grid Bot will automatically pause and wait for the cryptocurrency to return back to the grid and then resumes trading. This is also a great time to stop or delete the bot and reassess if you wish to continue this Grid Bot or replace it with a new range or different cryptocurrency pair to trade. All coins bought initially by the Grid Bot when it was first started have been sold.
What happens when the price of the cryptocurrency exits the bottom of the grid?
The Grid Bot pauses and will wait for the cryptocurrency to return back to the grid to resume trading. All of the currency used to initially fund the bot is now invested in the alt coin that was being traded. This is a time to reassess if you wish to continue this Grid Bot or replace it with a new range. If you feel the cryptocurrency being traded is likely to suffer a further drop in price, then you may wish to stop the Grid Bot and create a Smart Cover trade to sell the cryptocurrency at the current chart price and buy it back lower, when it has found a bottom, before creating a new Grid Bot with a different range to trade.
How does the AI determine the Upper & Lower Grid Levels?
- The Upper Grid Level is the highest price over the last seven days increased by 3%.
- The Lower Grid Level is the lowest price over the last seven days decreased by 3%.
Can a Grid Bot be edited once it has been started?
Yes, due to overwhelming user feedback, Grid Bots can now be edited!
Can I compound gains or automatically reinvest profit back into the Grid Bot?
Not automatically, if the Grid Bot is making strong returns, you can choose every week or two to edit the Grid Bot, and increase the amount of funds used per Grid Level.
Do Grid Bot displayed profits include exchange fees?
Yes, fees are included in the displayed profit statistics (profit is NET).
Can I view a table of orders the Grid Bot has created on my exchange?
Yes, click the Grid Bot number on the Grid Bot status display.
Can a Stop Loss or Trailing Take Profit be configured?
No, a Trailing Take Profit won’t work as when price leaves the top of the grid, all the cryptocurrency being traded has been sold.
Similarly a Stop Loss cannot be defined, the loss potential could be large, and there are better ways to manage the trade and limit loss (such as using Smart Cover).
Grid Bot Tips
For smooth running, easy reporting and clear visibility of profit generated, it is a great idea to create a new exchange account (using the referral code from your main trading account for trading bonuses) and transferring funds for the Grid Bot to use to the new account!
Real Time Reporting
Go to the “Settings” menu and configure 3Commas for Telegram integration, you can then get instant alerts when a Grid Bot starts, stops, fills orders and places new orders.