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In today's video, I want to give you a complete tutorial on grid trading bots, both for futures and for spot trading. I want you to really understand how a long, a short, and also a neutral grid trading bot works. Which risks this is.
Complete tutorial on grid trading bots for futures and spot trading, covering setup, risks, and profit strategies with practical examples.
Ask about this video. Answers come from its transcript only — with the timestamp, so you can check them.
Generated from the transcript and can be wrong — check the timestamp.
Key Takeaways
- Grid trading bots can be profitable but carry significant risks if not used properly.
- Understanding the difference between arithmetic and geometric grid settings helps optimize profits.
- Manual settings are preferred over AI presets for better control and risk management.
- Covering the entire price range with the correct asset allocation is crucial for bot operation.
- Leverage in futures grid bots increases both profit potential and risk, requiring careful management.
What the video covers
- Explains how long, short, and neutral grid trading bots operate in both futures and spot markets.
- Details the risks involved with grid trading bots, emphasizing the importance of correct usage to avoid losses.
- Compares arithmetic and geometric grid settings and their impact on profit per grid.
- Demonstrates setting up grid trading bots using BitGet as an example platform.
- Shows how to select price ranges, number of grids, and investment amounts for bots.
- Explains the internal mechanics of grid bots, including how individual grids operate and generate profits.
- Discusses the importance of covering the entire price range with the appropriate asset for long bots.
- Highlights the differences and additional risks when using leverage in futures grid trading bots.
- Provides tips on avoiding liquidation and managing coin losses in volatile markets.
- Includes promotional information about bonuses for using BitGet and additional resources.
Chapters
- 00:00Introduction to Grid Trading Bots and Risks
- 01:40BitGet Bonus and Campaign Details
- 03:14Neutral Grid Bot Setup Overview
- 04:33Setting Investment and Grid Parameters
- 06:12Why the Bot Buys Ethereum Initially
- 07:37How Grid Bots Operate with Example Trades
- 09:18Profit Generation and Market Behavior
- 10:48Risks of Large Price Ranges and Bot Stoppage
- 13:43Arithmetic vs Geometric Grid Profit Comparison
- 15:29Combining USDT and Coins in Grid Bots
Full Transcript — Download SRT & Markdown
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The most important thing, and it's the one that's mentioned the least, is what risks are involved with these bots? Then you'll actually know the difference between arithmetic and geometric. What does this setting mean in grid trading bots? Above all, what's really important
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is how do you use them correctly? Because a lot of people out there, and I've already seen quite a few, have suffered massive losses with grid trading bots. And if you don't use them correctly, that can unfortunately happen
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very quickly. And I want to help protect you from that a little bit. That's why I'm giving you a tutorial where I explain everything to you in detail: how to use it, how it works, and most importantly, what you need to watch out
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for. There's also a timeline below the video. That means if you're particularly interested in a specific topic, you can jump straight to it. That way, you don't have to watch the entire video, which does take a bit longer, but I've packed
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in all the details about grid trading bots here that you need to know. Before we start, I'd really appreciate it if you haven't subscribed to my channel yet, that you hit the subscribe button and definitely leave a comment and a
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like for this video. At the end, I'll also link you to more resources or put them in the video description. And a bit of self-promotion: if you're not on BitGet yet, today you'll get a tutorial from me specifically about BitGet. Of
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course, you can implement what I'm showing you today on any exchange, but you can also get up to a 600 USDT spot grid trading bot coupon. That means simply sign up using my link and make a deposit between $100 and $5,000. And for
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that, there's a bonus of $80 to $600 for a spot grid trading bot. Be sure to also check the campaign rules to see when and how this bonus is distributed. And now let's jump right into the tutorial.
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We'll now go through the different grid trading bots. We'll do long, short, and also neutral strategy ones in the spot section and once in the futures section because I want to explain everything to you in detail. No matter which exchange
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you're on, you'll find a section for trading bots everywhere. I'll show you this now using BitGet as an example. You go to the trade section, then you have the bots area. And within bots, you can also choose either the spot or the
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futures grid trading bot. Here we'll stay in the spot section. Once you've selected that, you'll enter this area here. Next, you have the option to select some AI suggestions here. These are preset grid trading bots, but I personally wouldn't use them. Why? How
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come? Here we have a reverse bot that was tested over the last 30 days and achieved 61.44%.
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But in this case, that's actually related to the price drop we experienced. And now you can see, for example, if we were to open this one down here and the Bitcoin price, like now, is only going up, then it wouldn't be
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profitable. That's why we do everything with manual settings. And here in the next section, you already have the option to select the coin. After that, you have the standard grid trading bot. Here only USDT is used. That means this is a
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long grid trading bot. Then you have the reverse. This is a short grid trading bot. Here the coin itself is used. You can see that here you can use Bitcoin or whichever coin you choose and put it in.
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And with a neutral one, you use both a portion of coins and in addition USDT. I'll show you later how to set that up because if you want to start this grid trading bot in neutral mode and you enter a certain amount of coins,
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it will automatically calculate how much USDT you need for it. Or if you say I have this much USDT, it will automatically calculate how many coins you need. But for now, we'll start with the regular ones. That means the long
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grid trading bot, which we use when we're in a bullish market. A quick example: I wouldn't go long on Bitcoin right now. That's because Bitcoin is currently at a new high again. For this reason, as a small example, I'll use Ethereum. Now, I've
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been looking at Ethereum overall. If we zoom out, there's actually a lot of room up to the all-time highs. And our last low is not as far away as the highs. And that brings me to the explanation of how
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to start a long grid trading bot. Let's say I want a price range from $1,400 up to, let's say, $4,000. That's very large. It's a very wide price range.
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Normally, you wouldn't use it like this, but you can do it this way as well.
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However, this gives you a long price range that you can take advantage of. Then we have the selection of grids.
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Now, I have 100 grids set here. I'll explain in a moment how that works. And then I can also choose my investment.
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For example, I can say I want to enter $100 USDT. But in this case, BitGet specifies how much USDT you actually have to use as a minimum amount. And here we can also say 200 USDT. And what it does next, you can
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already see here, is that we make between 0.45 and 1.65% per grid. That means 0.0014 USDT to 0.018 USDT. But why does it fluctuate? Because we have set it to arithmetic here. What does that mean? The grids that are closer to our
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opening price now have a larger gap. If I can show it like this here, for example, there it's 1.12% or rather 1.04%.
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But the grids that come towards the end have a smaller gap. I can show you that too, only 0.56%.
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And that's why you have a price fluctuation here between 0.45 and 1.65% profit per grid. How could I change that? Now, if I say I want to have a fixed amount for each grid, can I switch from arithmetic to geometric here? And
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then we'll do the same thing again. We'll set it from $1,400 to $4,000. Again, we'll use 100 grids. And then you can see I have a fixed 0.84% profit with the fees already deducted per grid. And here, all the grids are now of a
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consistent amount. Before we continue with this, I want to explain to you how this works in detail. What does it look like?
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How does a grid trading bot operate? Let's assume we're starting the grid trading bot here. I want to show you this in advance. Why? And for what reason? If I start this grid trading bot and select grid bot, it gives me the
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information that it would now buy 0.0429 Ethereum. Why is it doing that already? I'll explain that to you. Because we need to cover this entire price range up here with Ethereum for a long grid trading bot so that they can be sold off
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gradually. And the USDT that remains will be used here for repurchasing. But what does this look like in detail?
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Let's switch to an even smaller time frame. I'm now in the 15-minute chart because I know it's just easier to explain this way.
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And now we'll go through this in detail as well. What we have here is simply that each of these individual grids you see here is connected to one another.
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That means this lower grid is connected to this upper one, but at the same time also back downwards. And right in this price range, if I zoom in a bit more, there's a single trade that's working independently. It's the same if we look
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at a grid above it. And right here, we have the same situation again. That means here too, this grid is only responsible for itself. And you can imagine it as if many small individual trades are being opened and closed here.
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And to help you understand how it works, we'll now go through it in detail. So how does a grid trading bot actually operate? If we assume, for example, that a purchase is made here because buying always happens in the lower grid and
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selling in the upper grid. If the upper price range is triggered, then a sale will take place again in the lower price range. But if, for example, we bought here, then a sale was made up here and the
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first profit was already generated. Then for a while, nothing happened because we were at this level.
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more profits. Now the price has gone down here, bought again, but wasn't able to recover to the next grid. Instead, it continued to fall because this grid would have to reach up here first in order to generate a profit for itself
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again. And now it has dropped even further, opening a new order here. This means we now have one order plus a second order open with this price recovery. This grid has generated profits for itself again. So from here
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to here and now this grid which was still open earlier has generated profits up here again and sold its order here.
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And that's how a grid bot works all the time. Of course, you have to be careful because there are situations like here where a grid just keeps going down, buys, buys again, buys again, but these individual recoveries for the separate
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trades here don't get triggered. That can happen. But in this case, there was eventually a recovery. Profit was taken, profit was taken, and this one took a bit longer. That one wasn't taken right away, as you can see here. And that's
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something you definitely have to keep in mind with grid trading that there are such possibilities for example that the buy orders in this price range just as a small example this one but also this buy order we had haven't been triggered yet
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but that's not a huge problem because if the price recovers upwards then these will be sold again. But in the meantime, as you can see here, it kept generating profits here, generated profits here again, generated a profit here, and then
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generated another profit here. It didn't quite manage that as they went further down. But as I just showed you, in this case, it kept generating profits the whole time, even if there are still open orders up here and exactly in situations
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like this one. But there are also much bigger situations like this one which I want to show you now to demonstrate how you can actually use a long grid trading bot to generate as many profits as possible. Of course, it's not a
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guarantee, but let's say we start a grid trading bot right at this price range.
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If you now open a grid trading bot as a small example, if I click on create bot again, you'll see that I first have to buy 0.0429 Ethereum and this 0.0429 Ethereum will be stored up here. The problem you have
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now is that if the price drops immediately, the grit trading bot will show you a loss. Specifically, a coin P&L because we bought Ethereum at a higher price here than the price actually is afterwards. And all the Ethereum stored up here and ready to be
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sold would currently bring a coin loss with them. A long grid trading bot should really only be started if you are truly bullish over the long term. But how do you actually use such a grid trading bot? And here it's important to
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make sure that you absolutely do not set it up at a very high price. And if we now open the chart again and take a closer look, for example, on the daily chart and do an analysis here, it would
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have made little sense to start a long grid trading bot in this area or price range where Ethereum is very overheated because here Ethereum would be bought for the price range above. But the coin has only dropped and gone down since
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then. That means you would have taken a very large coin loss because you would have bought Ethereum at around $4,000.
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and those I say would be waiting above to be sold. For this reason, if you are running a grid trading bot as in this case and you want it to cover a very wide range, then you should ideally do
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this at a low point and also start the grid trading bot at a low point. Why?
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Because, for example, if I start the grid trading bot here and had bought all my Ethereum at a price of around $1,795 and these are ready to be sold up here, then the grid trading bot would actually only go into the negative if the price
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fell below this entry point. That's the very first and most crucial thing you should carefully look at when opening a long grid trading bot. The second equally important thing is that you should meticulously choose a specific range where you genuinely think the
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price is highly unlikely to fall significantly below in the foreseeable near future. Because if the price actually falls out of this grid, then you've taken on the entire loss or perhaps generated a few profits in between with the individual grids. But
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as long as it's running outside the grid, it won't generate any more profits and you'll have to wait until it moves back into its grid. And that would of course be suboptimal.
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This means setting up a long grid trading bot at a point that's as low as possible, but of course also securing it with grids extending as far down as you think a low could be. This could be this
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low here because as soon as it moves out of these grids, the bot also stops working. And that's also the big risk with grid trading bots. It's not common to do this within such a large range.
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Normally people say, "Okay, we've just had a nice pump here and we think we're now entering a small sideways phase." But in the long term, we're bullish. In that case, you can generate an incredible amount of profit here because
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you can see it now on the daily chart. But if you look at it, for example, on the 5-minute chart and zoom into exactly this price range, you can actually see how often and how much it has worked
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here and how they have consistently been price increase. Show the price dropped and then rose again. and it just kept doing this the whole time during this sideways phase which I just showed you on the daily chart. That's why you
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shouldn't let a grid trading bot running long run continuously. But rather once enough profit has been generated, you might want to close it, wait until there's another price thumb and then you could open a new one. But now let's
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continue with the short grid trading bot. It's similar here. Exactly the same thing happens as I just explained to you here too. We're now going to enter a price range. For example, let's say from $1,300 to $4,000. This is just a small
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example. Now, why we don't start the grid trading bot at a lower price range like before? Instead, the short grid trading bot is suitable for entering at a high price level because you believe the price will go down. But what does a
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short grid trading bot actually do? It actually increases the amount of the coin. And here you also have to include Ethereum itself. That means you're not trading with US Tether, but with Ethereum. If I go in here now and say
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I'm including one Ethereum, it already tells me I'll make between 0.740 and 1.780% with the arithmetic method. But if I say I'm going with the geometric method like before, let's enter that again here with the 100 grid trading bots. Then we now
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know that you make 0.91% per grid, right? But that's not on the total budget you put in here, but rather on the allocation among these individual grids I showed earlier. But what does the short grid trading bot do? If I now
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also click on create bot here, you can see that it immediately says it would now sell 0.6 Ethereum right away. Why does it sell them? Because it would now need US Tether for the lower price range here in order to buy back. And here in
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principle, it does exactly the same thing only with Ethereum. That means it sells Ethereum at higher prices. The higher the price goes, the more expensively it sells each individual Ethereum. But if the price range goes down then it buys back the Ethereum at a
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lower price. And overall the system is basically the same only it happens with Ethereum. And here Ethereum is being accumulated. Just so you understand that as well. And here too the risk is that if the price moves outside the grid then
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this bot will also stop working. That means I wouldn't set up a short Ethereum bot here either because there's actually so much room to the upside that we would just be selling the whole time. Of course, you would generate profits from
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the individual sales you make here, but overall, you would simply have more profit if we say, "Hey, we're in a bullish market and I hold on to the Ethereum and then sell them all together." And then we also have the
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neutral grid trading bot. This one is very, very interesting because if you hold coins and US Tether at the same time and you say, "Okay, I wouldn't sell these coins anyway." For example, I say I wouldn't sell Ethereum for less than
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$4,000. then I can now use it to work for me but in combination with US tether. And here I also say I'll set a price range from 1,300 to let's say 4,000 US. And I'll include say 100 grits
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as well. And it already tells me that I need to use at least 0.04 Ethereum or here it also says that you should put in a bit over $500.
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For example, I'll enter one Ethereum and then it automatically suggests that if I use one Ethereum, I will also need 1,386 US Tether to be included here. What happens with a neutral grid trading bot?
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In this case, it's set up so that you don't end up buying new Ethereum at a price of $2,418.
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No, in this case, you use the Ethereum you already have, which you might not even be using until you want to sell them, and you can put them to work here.
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This means the US tether will be used down here and the Ethereum I put in will be used up here so that all the individual grids are filled.
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Basically, it works very similarly to a long grid trading bot. But here you don't need to buy new Ethereum at the market price if the price happens to go down. Because as a small example, if you start this grid trading bot now and the
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price drops, it would show a negative coin P&L here. I'll show you that in a moment with a live example I have open here. But the coin P&L I have here, since I wouldn't sell my Ethereum anyway, doesn't really matter to me. In
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this case, I'm actually only interested in the grid profit. You can see here, I currently have a coin P&L of -49.
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But that's not a problem at all because I would have that loss even if I had just held Ethereum. But what we have here, the grid profit, is very interesting. And we've now generated almost 1% in US Ted from my investment
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in US Ted. And all of that in just 6 days. That means if we extrapolate this over four weeks and it continues to perform like this, you can expect around 4% depending on volatility, possibly even more, which is what a neutral grid
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trading bot can deliver. That means for me always keeping in mind, even if I'm currently in the negative, it doesn't bother me at all because I know what I'm doing. As soon as the price drops further and the bot operates here, it
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simply buys Ethereum with my USDT and sells it again. And if the price goes up, it sells my Ethereum and buys again.
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That's just a bonus for me if the bot works a bit more with my current Ethereum, which I would be holding anyway and generates some extra returns.
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And now you might say, okay, if the price is going up and all my profits are no longer in Ethereum, but I actually wanted to sell my Ethereum at $4,000, then down here with the advanced settings and in the advanced settings,
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you have the option to select do not sell at termination as number one. And then you have the hold mode and it's also explained there. If you're bullish on crypto or specifically on the coin you're using, then every profit the bot
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takes would be used to buy Ethereum at the market price. This means that the profits generated here step by step as the price goes up would simply increase your Ethereum holdings. And that's why it buys Ethereum. And that means overall
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at the end of the day, I have more Ethereum here if the price goes up. And I actually want to sell all my Ethereum at $4,000. What I also wanted to show you is that with the normal grid trading
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bot, you also have the option for various advanced settings here. And that means here there is the trading mode.
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And with trailing mode, if you activate it, there is a moving average. If you now set for example five, then as soon as the moving average for Ethereum rises by 5%, the entire grid which we saw earlier and which looks roughly like
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this would move along with the price. Of course, this has an advantage. If you are very very bullish on a long grid and also very bullish on your coin, then the grid will automatically follow and move upward with the price. But the problem
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is if the price falls below, it won't move down anymore, right? That means you really have to be careful here. And I would actually recommend keeping the grid as it is because what's the worst case scenario if it breaks out to the
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upside? You've simply generated all the profits from this gridbot and it just keeps rising and that's it. breaking out to the downside is much worse because in that case, for example, you've bought all the Ethereum, but the price keeps
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falling and you're in the red with all your buy orders and actually have to wait until the price returns to the grid range before you can start generating profits again.
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Now, let's take a look at all of this in the context of futures. So, with a futures grid, you can do all of this with leverage. Using leverage makes it even more exciting, but also much riskier. And you really have to keep in
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mind that the risk is massively increased when using a futures grid trading bot. For this reason, it's really important that if you set up a wide-ranging grid trading bot like I just showed earlier with Ethereum, one that spans from $4,000 down to $1,300,
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you're going to run into some problems if you use too much leverage. However, if you say you just want to take advantage of a sideways range, then you can increase the leverage a bit. Why is it such a big problem if you choose to
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higher leverage here? Let's take once again a long grid trading bot ranging from $1,300 to $4,000.
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Let's just enter 100 here as well. It doesn't matter. And select the margin. He said we would need at least more than $3,000. In this case, the minimum investment for such a large number of grids would be 2,800.
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The problem we have now is that with a 5x leverage, you get liquidated at around a 20% price drop. And I want to show you that again. A 20% drop from the current price can happen pretty quickly.
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And what is this really about? If you were to start such a wide grid trading bot, if you really say from a long-term perspective, then the problem is that you can quickly hit liquidation. But what actually causes liquidation as
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mentioned earlier, it would actually hit these individual orders. Here we have an order that goes long. Basically, nothing else is happening here except that you're going long. It gets sold then goes long again with 5x gets sold again
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goes long again with 5x and gets sold again. You can imagine if we look at this again on a small time frame how often you can actually generate good profits here when it gets bought sold bought sold in other words long long
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close in this case long long close. And of course quite a bit of profit can be generated this way. But if the first order drops 20% then you can no longer use that first order because it has already entered the liquidation zone.
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That's why you do this with a wide range just as I showed. You have to be very careful with this and you need to calculate where is my low point. And at 47% we really shouldn't fall any further
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here. A maximum leverage of one or two times would be appropriate. That way about 50% liquidation is possible so that this order doesn't get liquidated.
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But now there's another risk. If the price keeps rising here and you're somewhere around here and then Ethereum starts to reverse and doesn't recover the way it's supposed to and it doesn't pick up this order again, then you face
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the risk again that you can only go down 50% from here and then it would already run out of this grid if it really doesn't recover. And in that case 50% would be roughly here. and this order would then actually not be picked up
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anymore. Or rather, this long order would then go into liquidation. And that absolutely must not happen. That's why when you open a futures grid trading bot, it is by no means advisable to use such a large price range. Instead, a
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futures grid trading bot should actually only be used for a certain period of time and then you should close it again as quickly as possible with profits and wait until the market perhaps makes a new pump or enters a consolidation
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phase, maybe a summer lull. During the summeral, it's very often the case that these grid trading bots work very well, but you really have to be careful and pay attention. There is another way you can avoid liquidation even with a
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futures grid trading bot. And here we're talking about the autoreserved margin. That means I've set this up again now with $5,000.
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You can see here that 3,350 are taken as margin for the grid trading bot and $1,650 as reserve margin. In this case, the $1,650 are actually used for that. If it moves out of the range and you are about to be
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liquidated, then exactly this balance here would be used to significantly lower your liquidation price. And despite a 5x leverage, you can see that you now have a liquidation price of 561.09.
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But if I uncheck this now and say I don't want to have any reserve margin in there, you can see that my liquidation is at $1,397.
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even though my price range is set down to 1,300. And that's definitely something you should pay attention to when you start a futures grid trading bot. The same applies of course for shorts. It then shorts each individual coin and collects
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profits again. But here, no Ethereum is used. No, here US Ted is also used in the short grid trading bot. The only difference is that instead of going long, it uses a short order. And then we also have the neutral grid trading bot.
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And that's of course very very interesting because it opens long and short positions at the same time. I'll quickly set this large price range again just so you can see it once. Again, we'll set up 100 grits and I don't know
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$10,000 here. I think what's good here is what happens. It does nothing else except that it actually goes long in this grid and then goes short here again. Here it goes long again and here it goes short again. And it just keeps
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doing that the whole time. And that means you generate profit with a long order and you generate profits with a short order. That means there can be twice as much profit coming out of this.
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And now we have the following problem. For example, we've had a price drop here. And if we include this price range now, let me make this a bit bigger. It opened the short order here. It opened another short order here. And here
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again, the price recovered a bit, but the grid wasn't triggered. The grid wasn't triggered. Instead, the price kept rising and another short was opened. That means this grid also hasn't been triggered yet. Then it kept going up. So here it opened another short
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order. This one also hasn't been triggered yet. Here another one. Then there was the first profit from this grid as the price moved down. And if we keep looking, we have here if I may draw it again in this price ranger short
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order here, another short order here. And only this next one was actually closed again. Now, we have one and two short orders here that are still open without a takerit being generated. And the price would have to fall back down
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to 2,163 or $2,137 for Ethereum in order to close these short orders. And that's why this is also a neutral grid trading bot here. A wide price range just as I have shown you now is absolutely not okay. Of
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course, that's good because I have only shown short orders here. Naturally, it also goes long everywhere. We got a short order here, but above that a long order. Here again a short, then here again a long. It does open the long
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orders with this, but the individual short orders that were no longer picked up, that's the big problem here with a neutral futures grid. That's why it's extremely important to have at least some understanding of the market because we should never start a short grid
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trading bot at a lower level or open a long grid trading bot in a very overheated market when there's a lot of opium in the market. No matter how many influencers out there say, "Hey, we're going up. We're going up. We're going
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up." We always have pullbacks and they're never that small. So, you can take advantage of those as well. A neutral grid trading bot, for example, is a similar option that companies could use here for a grid trading bot intended
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to run for a longer period. Here, I'm really talking about a wide price range.
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Otherwise, it's actually the case that a grid trading bot is typically used in small price ranges where consolidations occur h regardless of whether it's neutral, short, or long. But if you say the market momentum is currently more sideways, you might let it run for a
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bit, but not really long term. Grit trading bots are not suitable for this. Normally, you wouldn't let them run longterm unless you say, "Hey, we've now reached an all-time high and I believe we're going to drop significantly." Then, of course, you can let a short run
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for a very long time or a long as well. But otherwise, it's better to set a price range over a shorter period. If the price moves out of that range, you stop it, take your profits. And for example, if we've had a good price drop,
Speaker A
you start a new long grid trading bot. Or if we've risen again, you start a new short grid trading bot. I hope you enjoyed the video. Now you have a bit more understanding of grid trading bots.
Speaker A
Feel free to leave a like and subscribe if you haven't already subscribed to the channel. I'll also link you to this video about my Martingale or DCA bots, which I also run on BitGet and which work incredibly well in the long term,
Speaker A
more or less hands-off. Of course, they're not risk-free either, but um that's what I've been using all this time and working with to make profits and but that's what I've been working with all this time and generating profits. With that said, see you next
Speaker A
time. I
Topics:grid trading botspot tradingfutures tradingBitGetarithmetic vs geometric gridscrypto trading botstrading bot riskslong grid botshort grid botneutral grid bot
