Explanation of Key Spot Grid Parameters

1. Trading Pair Selection

• Definition: Select the trading pair for grid trading (e.g., BTC/USDT, ETH/USDT, SOL/USDT)

• Importance: This forms the basis of the bot, as the selected pair determines:

• Volatility: The higher the volatility within the range, the more trades may be triggered, increasing potential profits as well as risks. However, excessive volatility may also cause the price to quickly break out of the range.

• Liquidity: Low liquidity may cause orders to remain unfilled or incur significant slippage, reducing potential profits.
• Trend: Strong trend coins are more likely to break out of the grid range, which may cause the bot to fail (resulting in one-way positions).
• Fundamentals/personal preference: Your long-term view and confidence in the coin.

2. Price Range:

• Definition: The price range for the grid bot, defined by a minimum and maximum price.

• Importance: The bot’s core boundaries, which define the range where the grid operates.

• Setting criteria: Based on technical analysis (support/resistance levels, oscillation ranges), historical price volatility, and anticipated future price trends.

• Risk/return balance: The wider the range, the more price fluctuation the bot can withstand, making breakouts less likely. However, with the same number of grids, ROI per grid and capital efficiency may decline. Conversely, a narrower range can generate higher profit per grid and improve capital utilization, but is more likely to break out.
• Risk of breakouts: If the price breaks above the upper limit of the range, all holdings may be sold, resulting in missed upside potential. Conversely, if it breaks below the lower limit, available funds may be fully deployed, leaving the bot exposed to further downside risk.

3. Number of Grids:

• Definition: The number of grids within the preset price range. Each grid line represents a price level for placing and executing orders.

• Importance: Along with the price range, it determines both the grid density and the profit per grid.

• Grid density: A higher number of grids results in denser spacing, enhancing the ability to capture small price fluctuations and increasing trading opportunities. However, the profit per trade (per grid profit) decreases, and more capital is required to fill all grids (investment amount/number of grids).

• Profit per grid: Fewer grids lead to a sparser layout, generating higher profit per grid but reducing trading opportunities.
• Investment amount required: With a fixed total investment, the number of grids determines how much capital is allocated to each grid.

4. Arithmetic Grid:

• Definition: The price difference between grid lines is fixed. For example, with a range of 100 – 200 USDT and 10 grids, the price difference per grid is (200 – 100) / (10 – 1) ≈ 11.11 USDT. Grid line prices would be 100, 111.11, 122.22, …, 200.

• Features:

• The absolute profit per grid is fixed (excluding trading fees).

• At lower price levels, the grids are relatively “dense” (the same price difference represents a larger percentage of the price). At higher price levels, the grids are relatively “sparse” (the same price difference represents a smaller percentage of the price).
• Applicable scenarios: Price fluctuations are relatively stable, and users may focus more on the fixed profit per trade.

5. Geometric Grid

• Definition: In geometric grids, the price ratio (percentage) between each grid line is fixed. For example, in a 100–200 USDT range with 10 grids, the ratio coefficient for each grid is (200 / 100)^(1 / (10 – 1)) ≈ 1.0801 (The price ratio is about 8.01%). The grid line prices would be: 100, 100 × 1.0801 ≈ 108.01, 108.01 × 1.0801 ≈ 116.64, …, 200.

• Feature:

• The ROI (percentage) earned from each grid trade is fixed (ROI Per Grid).

• In lower-price ranges, the grids are relatively sparse (the same percentage corresponds to a smaller price difference); In higher-price ranges, the grids are relatively dense (the same percentage corresponds to a larger price difference).
• More aligned with the nature of financial asset price movements (percentage-based fluctuations).
• Applicable scenarios: When price volatility is relatively stable, or users focus more on the fixed return rate of each trade.

6. ROI Per Grid:

• Definition:
• In arithmetic grids, ROI Per Grid refers to the percentage of the grid price difference relative to the grid’s buy price. ROI Per Grid = (Grid Price Difference / Buy Price) × 100%. It varies across different price ranges (higher in lower-price ranges, lower in higher-price ranges).
• In geometric grids, ROI Per Grid refers to the preset fixed percentage ROI, which is the same for every grid interval.
• Importance: It measures the relative return of each successful buy-low-sell-high trade (before fees) and is one of the key indicators for evaluating the efficiency of a grid bot. Users typically aim to set an ROI Per Grid that covers fees and ensures reasonable profits.

7. Amount:

• Definition: The total amount of funds you are willing to invest in this grid bot (usually denominated in the quote currency, such as USDT).

• Importance: It directly determines:

• The scale and capacity of the grid.

• The fund allocated to each grid order, which approximately equals to the Total Amount / (Number of Grids × 2), as both buy and sell orders exist simultaneously, but actual fund usage is dynamic.
• The strategy’s total potential profit and risk exposure.

8. Minimum Investment:

• Definition: The minimum trading volume or minimum transaction amount (coin quantity) required by the exchange or bot platform.
• Importance:
• Feasibility check: The per-grid investment amount calculated based on the total amount and number of grids must be greater than the minimum investment requirement; otherwise, the bot cannot be created, or orders cannot be placed in some grids.
• Impact on grid design: It limits the maximum number of grids that can be set under a given total amount (too many grids will lead to insufficient funds per grid), and limits the selectable coins for small-capital users (high-priced coins require a higher minimum amount per grid).

9. Trailing Grid:

• Definition: An advanced feature. When the price reaches the top or bottom of the range, the bot automatically shifts the entire grid range upward or downward by a certain range (e.g., half or one interval width), instead of stopping.
• Importance:
• Trend adaptation: This feature aims to capture certain price trends and avoid premature exit in one-sided markets (e.g., selling too early or buying too much).
• Risk: If the trend reverses, the shifted grid may end up in a less favorable position (e.g., after shifting upward and then encountering a decline, the grid is trapped at a higher level), which increases strategy complexity.

10. Start Conditions:

• Definition: How orders are initialized when the bot starts.
• Common Options:
• Start immediately (at current price): Place buy and sell orders above and below the current market price.
• Wait until the price falls within the range: If the current price is outside the range (typically above), wait for the price to drop back into the range before placing orders, preventing buying at high prices at the beginning.
• Importance: It determines the initial entry cost or position when the bot starts.

11. Termination Conditions:

• Definition: Circumstances under which the bot will stop running automatically.
• Common Conditions:
• Price breaks the range: When the price reaches and breaks the set upper or lower limit, the bot stops running. This is the most common termination condition.
• Target profit reached: The bot stops running when the cumulative profit hits a preset value.
• Specified runtime reached: The bot stops after running for a certain period.
• Manual termination: The user manually stops the bot.
• Importance: A key setting for controlling risk (stop loss) and locking in profit.

12. Take-Profit / Stop-Loss Price:

• Definition:
• Take-Profit Price: When the latest market price reaches this level during bot operation, the bot will sell all held base currency in advance to lock in profits and stop. This is typically set above the upper bound of the grid range.
• Stop-Loss Price: When the latest market price reaches this level during bot operation, the bot will sell all held base currency in advance to limit losses and stop. This is typically set below the lower bound of the grid range.
• Importance: A mechanism to exit early and protect profits or control losses when the price shows a clear breakout trend without hitting the grid boundaries, which is an important supplement and reinforcement to the termination condition when the price breaks out of the range.

13. Slippage Control:

• Definition: This feature refers to whether a limit order is used when placing grid orders to attempt better pricing (even if it may not be filled immediately).
• Options:
• Yes/Enable: The bot will attempt to place orders at slightly better prices than the grid line prices (e.g., lower for buy orders, higher for sell orders) to achieve better fill price and slightly higher profits/lower costs. However, this may result in the order not being immediately filled.
• No/Disable: Orders are placed strictly at the grid line prices. Fill probability is relatively higher (if liquidity is good).
• Importance: Fine-tunes execution prices to seek better fills. It may yield slight advantages in highly liquid markets if enabled and may ensure order execution in low-liquidity or highly volatile markets if disabled.

14. Grid Size Progression:

• Definition: Increase the volume (or quantity) for each grid when buying during a price decline and decrease the volume (or quantity) for each grid when selling during a price rise. Also referred to as “dynamic position sizing” or “pyramiding/inverse pyramiding.”
• Importance:
• Lower cost: Buys more as price drops, reducing the average holding cost.
• Faster recovery / higher profit: Once a rebound occurs, the larger position bought at lower levels brings higher returns.
• Risk: If the price continues to fall, it quickly consumes funds and may lead to greater losses. Therefore, this feature requires stronger risk tolerance and long-term confidence in the asset and significantly increases the risk level of the bot.

15. HODL Mode:

• Definition: When taking profits from selling a grid, only the profit portion (earned quote currency) is sold, while the originally invested base currency is retained. Also known as “principal-protected grid” or “profit harvesting.”
• Importance:
• Core purpose: This feature helps avoid completely missing out on long-term appreciation due to frequent trading by always holding a certain amount of the target coin (base position) while earning profits in the quote currency through volatility.
• Applicable scenarios: When you are long-term bullish on the coin, but also want to earn extra returns from short- to mid-term fluctuations.
• Difference from standard mode: Standard grid sells the coins bought at each grid (including both principal and profit) when selling.

16. Profit Reinvestment:

• Definition: It refers to whether the profit (in quote currency) generated during bot operation is automatically reinvested into the grid bot to increase the size of subsequent orders.
• Importance:
• Compound returns: Reinvesting profits theoretically accelerates profit growth (compounding effect).
• Scale expansion: As profits accumulate, the operating scale of the bot gradually increases.
• Risk: In drawdowns, reinvested profits are also exposed to loss, potentially amplifying the drawdown. It is best enabled when the bot performs well and the market is stable.

17. Sell Coins at Termination:

• Definition: How to handle the remaining base currency in the bot account when the bot ends due to meeting termination conditions (e.g., range breakout, take-profit/stop-loss, manual termination).
• Common Options:
• Yes: Automatically sell all held base currency at market price and convert them to quote currency (e.g., USDT). The final account balance will be entirely in quote currency.
• No: Take no action. After the bot stops, the remaining quote currency and target coin in the account remain unchanged.
• Importance: It determines the asset composition after bot termination.
• Sell (Yes): Locks in final profit/loss (in quote currency) and exits the position, which is typically selected in bearish outlooks, for stop-loss purposes, or when funds are needed.
• No/Do not sell: Retain the base currency position due to optimism about its long-term growth or plans to manually manage or transfer it to another bot. This is often chosen when a breakout above the upper limit triggers a take-profit during a bull market (expecting further price increase).

Summary and Key Considerations:

• Volatility is the lifeline: Without price volatility, the grid cannot execute trades and generate profit. Choosing coins with appropriate volatility and setting a reasonable range are critical.
• Range setting is the foundation: The selected price range determines the strategy’s safety margin and adaptability. If it is too narrow, it’s easily breached; if too wide, efficiency drops. It must be set based on analysis and market expectations.
• Trade-off between grid density and per-grid profit: The number of grids and the choice between arithmetic/geometric spacing determine the ability to capture price fluctuations and the profit per trade. A balance must be found between trading frequency and per-trade profitability.
• Capital management is critical: Investment Amount, Grid Size Progression, and Profit Reinvestment directly affect risk level and potential returns. It is advised to always configure based on your own risk tolerance.
• Advanced features are a double-edged sword: Features such as Trailing Grids and Grid Size Progression can enhance bot performance but also significantly increase complexity and risk. Beginners should use them with caution.
• Exit Strategy Is Indispensable: Termination Conditions, Take-Profit/Stop-Loss Prices, and Sell Coins at Termination form the last line of defense for risk control and profit protection. They must be clearly set.
• Backtesting and live trading: Before going live, backtest using historical data to verify how parameter combinations perform in past market conditions (returns, max drawdown, breakout frequency, etc.). In early live trading, it is recommended to use small amounts for testing.

Understanding and properly configuring these parameters is fundamental to successfully running a spot grid bot. There is no one-size-fits-all configuration; adjustments and optimizations are required based on market conditions and trading goals.