Spot Grid Bot Explained: Automate Your Crypto Trades Profitably

While many investors think that there is no difference between different types of Grid bots available in the market, their efficiency, profitability, and risk style vary depending on the market there are deployed in. It is hugely important to differentiate automated trading systems based on which assets and markets they are dealing with.

For example, a futures grid bot has to be fine-tuned for the specifics of the derivatives market and carefully managed to avoid risks associated with margin trading. On the other hand, aspot grid bot is a straightforward automated system that does not expose your portfolio to the same level of risks as futures trading bots.

Many advantages of spot grid trading become apparent when you compare this approach to other types of bots that can be effortlessly deployed by retail traders using powerful automation platforms such as WunderTrading. However, it is still important to remember about some limitations of Grid trading.

How does a spot grid bot work?

Let’s start with the main difference between a futures and spot grid bot. The former operates with your margin account and can open short and long positions depending on the strategy you employ. While is can be slightly more beneficial for experienced investors to work within both bullish and bearish trends, the level of risk when trading futures is magnitudes higher due to the necessity of using leverage for short positions.

Since the spot market does not require you to use leverage and allows to trade relatively safely thanks to risk management tools, it is possible to find spot grid bot settings that produce consistent profits without exposing your assets to the risks of taking on debt.

The idea behind the grid system is quite simple. Here are some basic rules of the method:

• The bot makes trades according to the DCA approach. Distributed Cost Average is an investment system where retail traders split their bulk purchases into smaller positions to hopefully reduce the cost of buying assets. It is a good way to accumulate resources and make short-term positions slightly more profitable.
• Each market position has its own exit goals. The bot places sell orders for each of the opened market positions and liquidates them one by one to secure profits. Since all positions are usually protected by stop loss orders, lines on the chart form a net or grid giving the strategy its iconic name.
• Investors running bots can adjust settings as they like. It is crucial to change various parameters of the trading system to avoid unnecessary risks and reach profitability goals. Poorly optimized Grid system may underperform, deliver negligible profits, and even lose money in the long run.

The biggest difference between futures and spot grid bots is the fact that you don’t take on any debt when opening market positions and can reduce risks by using conservative ratios for delayed orders. It is possible to create bots that are very close to being risk-free while still producing a relatively small yet consistent stream of income.

The best crypto trading bots in 2024

In its very essence, any grid bot is a manifestation of the “buy low, sell high” crypto strategy that unfortunately works only for experienced professionals who can make good predictions about price dynamics. However, the DCA approach makes it safe for beginners allowing people without prior exposure to financial markets to create consistently profitable automated trading systems.

Many advantages of spot grid trading make it an excellent choice for people who simply want to generate some profits by trading cryptocurrencies. Thanks to their flexibility and reliability, spot grid bots are definitely among the best in 2024 for all retail crypto traders.

Here are other interesting automated trading systems you may find interesting:

• AI-assisted grid trading. Expert artificial intelligence can adjust market positions and timing to build better grids dynamically to benefit from local volatility. These systems are capable of suggesting good ranges for delayed orders and generating profits slightly better than unassisted bots. Right now, only a handful of companies experiment with the concept but it is a great idea to try it early.
• AI-controlled statistical arbitrage. One of the biggest new products rolled out by the WunderTrading platform is its brand new statistical arbitrage bot managed by an expert AI system that uses a massive volume of historical market data to make informed decisions about portfolio composition at any given moment. Again, the system is not perfect, but it can be used well by newcomers after some tweaks.
• Custom bots from WunderTrading. If you have a good technical analysis “buy low/sell high” crypto strategy, automating it with the toolkit available at WunderTrading is a great idea! The profitability of a system like that depends mostly on the quality of signals produced by your strategy, but it can be very beneficial to fully automate it.

Note that it is important to choose the best crypto exchanges for spot grid bots to ensure that your automated trading systems work with relevant market data and receive information as quickly as possible while being able to place orders without any connectivity issues. Many modern CEX platforms have fully functional API to allow third-party providers and individual pieces of software to operate user accounts efficiently.

Should you try using grid bots in 2024?

According to multiple market surveys, over 65% of all retail traders use automation to at least some degree. Simultaneously, over 99% of all trades conducted by large financial organizations are at least partially automated. Manual trading is a thing of the past.

Many contemporary investors think of automated crypto trading as if it was a one-dimensional tool, but you can use a crypto trading bot in a variety of ways. Grid trading is just another great way to generate passive income without exposing your portfolio to unnecessary risks. You can also engage in copy trading, run a massive statistical arbitrage system, and test unique analytical strategies.

Go to the WunderTrading platform right now and start building your perfect automated grid trading system capable of producing incredible results in the long run!