Grid Strategy Tuning
A guide to understanding grid trading mechanics and fine-tuning your bot parameters for different market conditions.
What is Grid Trading?
Grid trading places buy and sell orders at regular price intervals (the "grid") around the current market price. When price oscillates within the range, the bot automatically buys low and sells high, capturing the spread as profit.
For example, with a grid from $90,000 to $100,000 and 10 grid levels, the bot places buy orders at $90k, $91k, $92k... and sell orders at $93k, $94k, $95k... When the price drops to $91k and triggers a buy, a corresponding sell order is placed one grid level above. Each completed buy-sell cycle captures the grid spacing as profit.
Key Parameters
| Parameter | Description | Example |
|---|---|---|
| Lower Price | Bottom of the grid range. The bot places buy orders at this level and below. | $85,000 |
| Upper Price | Top of the grid range. The bot places sell orders at this level and above. | $105,000 |
| Grid Count | Number of grid levels between lower and upper price. More levels mean tighter spacing. | 20 |
| Grid Spacing | Price distance between each grid level. Calculated as (Upper - Lower) / Grid Count. | $1,000 |
| Direction | Trading direction: Both (neutral), Long Accumulate, or Short Accumulate. | Both |
| Capital per Bot | Total capital allocated to this grid instance. Determines order sizes. | 0.5 BTC |
| Leverage | Multiplier for your capital. Higher leverage increases both potential profit and liquidation risk. | 3x |
Choosing Grid Spacing
Grid spacing is the most impactful parameter. It determines how frequently the bot trades and the profit captured per cycle.
More trades, smaller profit per trade. Best for stable, range-bound markets with low volatility. Requires more capital since more grid levels are active simultaneously.
Balanced approach. Good for moderate volatility markets. This is the recommended starting point for most traders.
Fewer trades, larger profit per trade. Suitable for volatile markets or when you want less active management. More resilient to sudden price moves.
Rule of thumb: Grid spacing should be approximately 2x the typical 1-hour price range of the instrument. For BTC with a typical 1h range of $200-$400, a grid spacing of $500-$800 works well.
Direction Modes
The direction parameter controls the bot's market bias. Choose based on your outlook for the instrument.
Both (Neutral)
The bot places both buy and sell orders on the grid. When a buy fills, a sell is placed above. When a sell fills, a buy is placed below. Profit comes purely from the grid spread.
Best for: Range-bound markets where price oscillates without a clear trend. This is the default and most commonly used mode.
Long Accumulate
The bot only places buy orders on the grid. It accumulates a long position as price drops through grid levels. No sell orders are placed, so profits are realized only when you manually close or when the position is liquidated.
Best for: Bullish markets where you expect price to recover. Acts as a dollar-cost-average (DCA) strategy, accumulating at lower prices.
Short Accumulate
The bot only places sell orders on the grid. It builds a short position as price rises through grid levels. Profits are realized when price drops back or when you manually close.
Best for: Bearish markets or hedging an existing long position. The bot sells into rallies, capturing higher entry prices for the short.
Capital Allocation Strategies
How capital is distributed across grid levels affects risk and return characteristics.
Fixed (Equal)
Each grid level gets the same order size. Simple and predictable. Total capital divided equally among all grid levels.
Equal size at each level
Inverse (Bottom-heavy)
Lower grid levels get larger order sizes. Allocates more capital to better prices (lower buys), resulting in a better average entry price if the market drops significantly.
Larger orders at lower prices
Linear (Progressive)
Order size increases linearly from the current price outward. Middle levels are smaller, outer levels are larger. Captures more profit from large price swings.
Larger orders further from current price
Risk Management Tips
Start Small
Begin with a small amount of capital to understand how the grid behaves. Observe a few cycles before increasing your allocation.
Avoid Over-Leverage
Higher leverage amplifies both gains and losses. For grid trading, 1x-3x leverage is recommended. Above 5x, sudden price moves can trigger liquidation before the grid can profit.
Set the Range Wider Than You Think
If the price moves outside your grid range, the bot stops trading. Set the range to cover at least the expected 30-day price range to avoid missing opportunities.
Monitor Liquidation Price
When using leverage, always check your estimated liquidation price. Make sure it is well outside your grid range. The FM Portal dashboard shows this information for each bot instance.
Use Post-Only Orders
The bot uses post-only (maker) orders by default. This ensures you always receive the maker fee rebate instead of paying taker fees, improving profitability on each trade.