In this article, you will find the detailed introduction into grid trading strategy, best market conditions, and how you can take advantage over the price fluctuation using coin-bits.
Grid Trading Strategy
Trading bitcoins and other cryptocurrencies with an automated solution is becoming very popular because it guarantees 24/7 trading activity. It allows traders to manage their risks without emotion and to follow a trading pattern. predefined.
However, it is essential to know that the network trading strategy does not guarantee a stable income under all market conditions. If you want to successfully use the crypto grid trading strategy, you need to understand the fundamentals of trading and the current phase of the market.
Grid trading is a type of strategy that generates gains from market movements in a specific price range. It loses its power in a strong commercial market when the pump or landfill occurs. The network trading technique explores to benefit from the natural price volatility in the markets by opening purchase and sale orders regularly at fixed intervals above and below a market price.
The advantage of grid trading is that it requires little forecast of the market direction. In addition, it is easy to automate this strategy and execute it continuously. The biggest drawback is the sudden drop in prices if stop loss orders have not been executed. However, grid trading offers one of the simplest and most proven trading approaches if the parameters are set correctly. In the long run, it can deliver substantial results.
Grid uses the hedging method by opening long and short positions. The general idea is that with continuous buy and sell orders, all negative businesses can be covered by profitable businesses.
To understand the advantages and disadvantages of the Grid trading method, let’s look at two typical market conditions. First, when the market is in a strong phase of negotiation, and the other, when we can see an established range.
There is no 100% confirmation of the current market condition because it may be different from the individual perspective. For example, the market condition within 5 minutes on a 1-hour chart may be different from the price movement within the 1-day period of last month.
The best results of grid trading can be obtained in an oscillating market or in consolidation where the price continues to fluctuate within a specific price range.
If the price starts to fall, this approach loses its power. The combined losses of all open positions will grow exponentially more if the downtrend continues with few setbacks.
Establishing a timely exit strategy for comprehensive stop loss will prevent your account from experiencing uncontrolled losses.
Why should you do grid trading with Coin-Bits?
Coin-Bits is currently serving in more than 60 countries worldwide with the great knowledge, experience and know-how of providing crypto traders with all the tools and market insight that they need to perform the successful trades. Coin-Bits is successful in creating a safe, secure, and user-friendly environment. The exchange’s ongoing mission is to provide traders with the best trader experience yet.