It is possible to have the crypto assets you’re holding right now generate passive income through bot trading. Even small investments can be profitable.
TL;DR: Access free grid-trading bots here.
Introducing Grid-Trading Bots
The concept of a ‘grid-trading bot’ sounds complicated at first but it’s not hard to understand with some explanation.
Whether you have tried actively trading crypto assets or not, the thought of managing a trading account with multiple coins is too much for many. If you have observed how prices fluctuate you have likely realized that if you sell an asset when its price is high you can buy back in when the price goes down to get more of the asset at a lower price.
It’s a simple premise but hard to execute in practice.
Herein lies the value of Grid-trading bots.
What is Grid-Trading?
Grid-trading involves placing buy and sell orders at regular intervals (“grids”) between a specified high and low price of a given asset.
The range between the high and the low price is called a “trading channel.”
As the price of the asset moves up and down within the channel it will cross various “gridlines” and trigger buy and sell orders. As long as the price stays within the upper and lower price limits you have defined, you will be able to profit from the rhythms of the market.
Trying to do grid trading manually is extremely hard. Placing multiple orders and replacing them once they have been triggered takes significant time and energy.
Grid trading bots automate the process. They are tools that automatically place buy and sell orders at set price points and replace them when they are executed. You simply need to manage the upper and lower price limits in the trading channel, decide how many grids you want, and how much of the asset to use. Once these parameters are set the bot can be started and you can sit back and watch profits add up.
As the price of an asset moves up and down within the channel, the bot will execute trades. Each time the price moves up over a grid line the bot will execute a sell order. Each time it moves down over a grid line it executes a buy order.
At the most basic level, this is all you need to know to start using Grid-trading Bots.
Getting a Bot
There are various platforms that offer grid trading services, but I highly recommend BitUniverse. Why? It is the only service that is currently free to use.
Step 1: Sign up here
Step 2: Download the BitUniverse app from Google Play or Apple and create a new account. Make sure to use the same email address you used to sign up in Step 1.
Step 3: Link your exchange account with BitUniverse
The BitUniverse Grid-trading Bot supports the following exchanges: Binance, Bitfinex, Bittrex, Pionex, Poliniex, Coinbase, Gdax, Cryptopia, HitBTC, Kraken, Kucoin, Huobi with more being added regularly. To link your trading account in one of these exchanges, go to the portfolio screen (button on the bottom left).
Click “+” at the top right and choose your exchange.
Import your API Key from your exchange account (there is an in-app tutorial with instructions).
Step 4: Start the bot
Go to the trade screen (button in the center at the bottom of the screen).
Now you have two options. You can set your own parameters for a bot (manual"), or use pre-set AI-test bots. If you’re just starting out with grid trading it might be a good idea to use some of the bot templates available in the app. Just click “create" at the top of the trade screen to see the options available.
It is possible to set the parameters of the bot yourself. If you want to try setting your own bot parameters here’s what they mean:
- Upper limit: The top of the trading channel
- Lower limit: The bottom of the trading channel
- Stop-Loss: If you use stop-loss it *must* be set lower than the low price of your channel
- Grids quantity: The TOTAL number of gridlines. This includes the top and bottom price of the trading channel.
- Quantity per grid: The amount of the asset to use in each trade.
- Available balance: The amount of the base currency you currently hold.
- Required balance: The amount of currency you need to run the bot using the current settings.
- Profit per grid: The % profit you will make with each sell order.
Important! The profit per grid % must be higher than your exchange trading fee multiplied by two.
The exchange you use charges a fee on buy and sell orders. Some exchanges charge higher fees than others. It’s important to take these fees into account or else you could end up losing money with your bots.
Kucoin as an example:
Kucoin charges 0.1% for each sell and buy order. This is a total of 0.2% per grid trade (buy low/sell high). Therefore, profit % on one grid must be higher than 0.2%. If it is lower than the trading fee multiplied by two, the bot will slowly lose money. For example, if the Profit of one grid shows 0.40%, the actual profit using Kucoin will be:
0.40 — (0.1*2) = 0.40–0.2 = 0.2% per grid
Step 5: Click “create” and watch your bot profits trickle in!
Increase Profitability and Reduce Risk
Now you have a grid-trading bot to grow your account balance. If you want to earn BTC (for example) by trading ETH you would create a bot for an ETH/BTC trading pair. Once you click create, the bot will execute all of the buy and sell orders for ETH using BTC that correlate with the grids. All buy orders above the current ask price of ETH will be filled — effectively “buying low” against an upward move.
Limit buy orders will be placed below the current ask price at the gridlineintervals. Limit sell orders will be placed above the current ask price at the gridline intervals.
If the price of ETH moves up the bot will sell the base currency increasing your position BTC while reducing your position in ETH. If the price moves down your limit buy orders will be filled, increasing your position in ETH while reducing your position in BTC.
If your goal is to get more of the base currency it is important to set your trading channel wide enough to capture large price movements.
For example, the top grid line of your trading channel represents the final sell order. If the ask price of ETH exits this setting you will be left with all BTC while the value of ETH continues to increase. If the ask price returns down into the range of the trading channel the bot will resume trading.
If the ask price drops below the low price setting of your trading channel you will be left holding ETH. This isn’t a problem if you were planning to hold ETH anyway. You can use the BTC profits generated from the bot to buy more ETH at the lower price. If the bid price returns to the channel the bot will resume trading.
However, if you are using the bot to trade a currency you don’t want to be left holding you can set a stop-loss order that will immediately sell all of your ETH for whatever price you have set. It is important this price be below the bot’s low price setting.
Bot trading might seem overwhelming at first but it is not difficult. Here are my final tips for those starting with bot trading. A stop-loss order will result in a loss relative to the value of the quote currency. If you are a beginner to bot trading I suggest not using stop-losses and only use currencies that you already hold or intend to hold anyway.
Start with a small trading amount while you are learning. Small amounts of even $20 can still be profitable, and trading this way will provide valuable experience with less risk.
The small amounts of BTC you generate today may be worth a lot more in the future. BTC is out of reach for most of us but grid-trading bots present a low-cost alternative, not to mention an enjoyable hobby.
Disclaimer: Trading cryptocurrencies involves risk. This is article is not financial advice. I am not a financial advisor. I am just a member of the cryptocurrency community sharing my experience. Never invest anything you are not prepared to lose.
An earlier version of this article was published in Hackernoon.