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Signal bot use cases: Dynamic Grid bot
Signal bot use cases: Dynamic Grid bot
Updated over a week ago

What if we told you that you can create a Grid bot, but a usual, but a special one? The one that can place additional orders and close them, not just by a certain deviation but with a signal that relies on your favorite indicator. That means that the next orders will be placed according to the deviation+signal, making your bot stronger and more selective.

This bot can be created for Long, Short or even both directions with Hedge mode turned on your exchange account. With Hedge mode ON, the bot will trade both Long and Short positions simultaneously for the same pair.

Let's create an example Long Signal bot with the "Dynamic Grid bot" settings, where the signal will come from the RSI indicator (but you can choose any other indicator that you prefer).

In this example, our aim is for our bot to create a Buy order every time the RSI parameter drops below 30 and crosses this level from the bottom to the top when the candle is closed. In this case, bot will open a Long position. The bot will do the same after the conditions with RSI parameters are met again. Thus, the bot will create new "grid lines" not just with a certain deviation but with an indicator filter, making it open the trades in better places and times. We'll do the same with the opposite closing signal, so the bot will close the trades with the same logic - deviation+indicator filter.

1. Set the RSI indicator on the signal provider side and create a Signal bot - Indicators type

2. Copy the webhook URL and click I have set webhook URL

3. Choose an exchange, a pair and set other parameters

Also choose the leverage value, then in the field “Max. initial margin” enter the amount of funds, that the bot will not exceed including all orders opened by this bot. Let's say, we want a bot to create max 10 orders with 10 USDT each. If the leverage is 10x, the Max initial margin should be 10 USDT, because if we multiply by the leverage 10x we will have 100 USDT, and if this amount is spread between 10 orders, we will have 10 USDT per order. And finally, give your bot a proper name and click Next.

4. Choose Entry long

5. Adjust the settings

In the Volume per order field enter 10 USDT (the amount we want to be as each order size). To prevent the bot from opening orders randomly or higher than the previous open orders, enable and enter -1% (or any other value) in a Price deviation from the same order in past option in the Options section. Save the settings by clicking on Done.

6. Copy JSON message and create an alert with it

Go to the signal provider website and create an alert. Enter the copied previously webhook and JSON message. While creating an alert adjust the settings for the indicator you use, in our example it's RSI.

7. Set up the Exit long signals

Back on 3Commas enable Exit long tool:

8. Adjust the Exit long settings

In the Volume per order field choose USDT and enter 10 USDT (the same amount as per Entry long settings). In this case the bot will sell the exact same sizes as it bought previously. The same as with Entry signals, Exit signals will also be limited by the deviation 1% in Price deviation from the same order in past field in addition to the indicators filters. Save the settings by hitting the Done button.

9. Copy JSON message

The same as in Step 6 you need to create an alert with copied webhook URL and JSON message. Make sure to set the indicator to give you Sell signals, not Buy.

10. Finishing the settings

Take profit and Stop loss settings can be ignored as the needed settings are already adjusted. Now when all settings are set you can start your bot. Whenever a signal arrives, the bot will open a position and keep opening and closing the orders according to the signals. If there is no open position and the Exit signal is received, the bot will ignore it and wait for the Entry signal first.

Please note!

  • This method opens one position, that will be increased with Buy signals and decreased with Sell signals. If the price would go far below the opening price, the Sell signals will close in profit, but on exchange you will see negative PnL, because the exchange thinks the position is being reduced at the price lower than the positions was opened. More details about this behavior can be found in this article:
    Grid bots: FAQ

  • If the price continues declining and bot opened initial 10 orders you might want to let the bot open more orders. In this case you need to increase the Max. initial margin to the amount that complies with your risk management.

  • This method is a long-term intention when you open the bot and it will work by itself constantly moving the grid lines depending on the market condition.

  • In this method you can use any indicator you favor and any conditions you think suit better to your strategy.

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