As technology advances, the financial market has continued to evolve, but human weaknesses persist, and emotional factors like greed and fear influence almost everyone. Sometimes, everyone pushes their luck. In recent years, quant trading has gained popularity as it replaces subjective decision-making with advanced math models. Increasingly, investors are turning to machine learning and artificial intelligence (AI) to develop trading strategies that promise high returns.
In the crypto space, where opportunities and challenges abound, CoinEx’s spot grid brings new dynamics to strategic trading. Every crypto veteran knows that compared with stocks and bonds, the crypto market remains in its infancy, with significant price volatility. In the crypto market, “cutting losers and letting winners run” is a mistake that almost every investor has made. In this respect, spot grid will be a great tool for CoinEx’s four million global users to make the right calls.
What is spot grid?
Based on the estimated price movements in spot markets, spot grid implements users’ trading strategies to place orders automatically. With the feature, users can allocate funds to multiple price levels and set buy and sell triggers at each level.
- When the price falls, the target asset will be automatically bought at the trigger point;
- When the price rises, the target asset will be automatically sold at the trigger point.
In a nutshell, spot grid taps into price swings to average costs and lowers the cost base via repeated buy-low-sell-high operations, thereby yielding comparatively stable returns.
Advantages of spot grid
Automatic operations: Spot Grid is time-saving and easy to use. The new function automatically executes trading strategies, which reduces users’ workload. By setting up the parameters of those trading bots, users can benefit from the automated execution of grid trading strategies, saving both time and effort.
Rational trading: The grid strategy, immune to fear of missing out (FOMO) or key opinion leader (KOL) calls, can make decisions faster and more rationally than traders.
Designed for fluctuating markets: The crypto market is frequently volatile. From a long-term perspective, the market remains volatile more than 70% of the time. Naturally, grid strategy caters to the demands of crypto traders.
Potential users of spot grid
Long-term investors: Grid trading strategies allow long-term investors to improve the value of their portfolio, thereby earning steady profits in the long run.
Short-term traders: With grid trading strategies, short-term traders can take advantage of market volatility and earn short-term returns.
Risk controllers: Grid trading strategies can be used to control risks. Specifically, trading risks can be mitigated by setting a fixed price range and stop-loss/take-profit points.
Market conditions for adopting spot grid
Aside from frequent price swings, the market may also appear to be bullish or bearish in the short term.
Spot grid is suitable when prices fluctuate within a certain range and may move back and forth within the range. In that scenario, spot grid can tap into the price swings to capture more profits for investors.
When the market turns bullish, users should switch to other trading strategies because the grid strategy would keep selling the positions accumulated. This means that traders would miss out on the bullish growth, which will significantly reduce their expected returns.
Grid strategy should also be terminated when the market turns bearish. This is the case because the grid strategy would continue to stock up on more cryptocurrencies, which would lead to substantial losses as the market keeps plummeting.
It should be noted that grid strategies come with lower capital efficiency and require large funds in the early stage. CoinEx advises users to account for all factors, including market conditions and risk appetite, before using spot grid.
Spot grid provides users with another great tool in strategic trading. The new feature also demonstrates CoinEx’s commitment to providing first-class trading services and user experiences.
As technology continues to advance, users demand more product upgrades. CoinEx is well aware that developing user-friendly products that meet market expectations is the only way to survive and flourish in a highly competitive market. Going forward, CoinEx will continue to perfect its products and services through tech innovation, facilitate industry-wide progress, and provide users with easy-to-use products and fast, convenient trading experiences as their gateway to the world of crypto.