Quick Understanding of Spot Grid Strategy

I. What is Spot Grid Strategy?

Spot grid strategy is an automated strategy that executes buy low and sell high within a specific price range. Users only need to set the highest and lowest prices of the range, determine the number of grids to divide, and can start running the strategy. If needed, can also preset trigger conditions, and the strategy will automatically start running when market conditions reach the trigger conditions. The strategy will calculate the buy low and sell high prices for each small grid, automatically place orders, and as the market fluctuates, continuously buy low and sell high to earn returns from volatility.

Spot Grid Quick Entry

II. Scenarios Suitable for Spot Grid

The core of spot grid is "sell high and buy low volatility arbitrage", so this strategy is very suitable for volatile markets and volatile upward trending markets. If the market shows a downward trend, it will bring corresponding loss risk to you.

In actual spot grid strategy, you will find that when the grid strategy breaks through the grid upward or downward, the strategy will pause until the price returns to the preset grid range, and the grid strategy can run normally. These opportunities are often missed during this time. Based on this, OKX has fully upgraded the spot grid strategy and added a moving grid feature. This feature can help users capture upward or downward market trends:

In the scenario of an upward moving grid in a rising market - cancel the lowest grid order and place an order one grid above the highest grid. The overall range size remains unchanged and moves upward. For example, set 5 arithmetic grids between Bitcoin spot price 25,000 U - 30,000 U, with each grid price difference of 1,000 U. In a rising market, when Bitcoin spot price breaks through 30,000 U, the lowest order at 25,000 U is automatically canceled and an order is placed at 31,000 U.

In the scenario of a downward moving grid in a falling market - only place new orders below the lowest grid, expanding downward, and the range becomes larger. For example, set 5 arithmetic grids between Bitcoin spot price 25,000 U - 30,000 U, with each grid price difference of 1,000 U. In a falling market, when Bitcoin spot price falls below 25,000 U, an order is placed one grid below 25,000 U, that is, at 24,000 U, and the entire grid strategy range becomes larger with 6 grids.

Through the moving grid feature of OKX spot grid strategy, can automatically adjust the grid to improve strategy flexibility, increase fund utilization, seize investment opportunities when market volatility breaks through the grid, and avoid missing such market opportunities.

III. Spot Grid Creation Steps, Related Parameters and Tutorial

3.1 Creation Steps

(1) After entering OKX's PC or APP, Select "Strategy Trading Mode" in the "Trading" page, then click create grid and Select spot grid.

(2) Enter parameters in the Trading page or use smart parameters, then Confirm investment amount, can create a grid. (After the grid is created, the invested funds will be isolated from the Trading Account and used independently in the grid strategy)

(3) After creation is Complete, can View and manage grid strategies under "Strategy" below the Trading page.

(4) During strategy operation, can withdraw returns generated by grid arbitrage at any time, or stop the grid.

3.2 Related Terms and Parameters of Grid Strategy

Two Creation Modes:

Manual Creation: Set parameters and trigger conditions based on your own judgment of the volatile market range. Currently, OKX spot grid strategy can set two trigger types: price trigger and RSI technical indicator trigger. Regarding trigger condition settings, you can View the article "Introduction to Grid Strategy Trigger Conditions" for details.

Smart Creation: Directly use the system's smartly recommended grid strategy parameters. (The logic of recommended parameters is: after backtesting 7-day market conditions, combined with smart algorithms to recommend parameters suitable for recent market conditions)

Specific Parameters of Grid:

Range Lowest Price: When the market price is lower than the range lowest price, the strategy will no longer execute order placement operations.

Range Highest Price: When the market price is higher than the range highest price, the strategy will no longer execute order placement operations.

Grid Number: Grid number represents the number of order placement small ranges divided in the volatility range. For example, range 100-400, arithmetic, grid number 3, then it is divided into 3 grids: 100-200, 200-300, 300-400.

Investment Currency: Users can Select whether to investment Trading currency or quote currency, or investment both currencies.

Investment Amount: The amount of each currency invested in the grid strategy. Among them, the maximum available for each currency is equal to the maximum transferable amount of that currency in the Trading Account currently.

Arithmetic Grid: The difference between every two adjacent order prices is equal (e.g., 1, 2, 3, 4).

Geometric Grid: The ratio between every two adjacent order prices is equal (e.g., 1, 2, 4, 8).

Moving Grid (Optional): The grid moves up or down with the price, and set the price to stop moving up or down.

Trigger Condition/Stop Condition: Immediate trigger/stop, price trigger, RSI trigger, Trading View signal.

Take Profit Price: When the coin price rises to this price, the strategy automatically stops and sells the occupied spot.

Stop Loss Price: When the coin price falls to this price, the strategy automatically stops and sells the occupied spot.

3.3 Tutorial (Taking BTC/USDT Trading Pair as an Example)

Set Parameters

Range Lowest Price: 50,000 USDT

Range Highest Price: 100,000 USDT

Grid Number: 50

Grid Mode: Arithmetic

Investment Amount: 5000 USDT

Moving Grid: Move Down

Trigger Condition: Immediate Trigger

BTC/USDT price when strategy is created: 60,100 USDT

Strategy Operation

First Stage - Initial Orders: The system will calculate each price level of the strategy as 50,000, 51,000, 52,000...98,000, 99,000, 100,000, then place buy orders at these prices. If market depth is good, the order placement situation after the strategy starts will be buy orders at every price from 50,000-60,000, and sell orders at every price from 62,000-100,000.

Second Stage - Strategy Operation: If the market price falls below 60,000, the buy order at that position is executed (buy low), and the program automatically places a sell order at the corresponding upper position of this small grid 60,000-61,000 (i.e., at 61,000 price) (sell high). If the price rises, after the sell order is executed, a buy order is placed at the corresponding lower position.

In this way, as the market fluctuates, continuously placing and executing orders can continuously earn volatility returns in volatile markets.

Third Stage - Strategy Adjustment: When the market price falls below the range lowest price of 50,000, the grid automatically adjusts and moves downward, and the range expands, that is, placing an order at 49,000. If the market continues to fall, it will automatically repeat the grid downward movement, placing orders at 48,000 or even lower, until the stop downward movement price is reached or the stop loss is triggered and the strategy stops.

IV. Important Notes

4.1 If the current price/indicator has already triggered the stop condition when creating the strategy, the strategy creation will fail. You need to adjust the current settings and recreate. Created but not yet running strategies can be manually started or stopped.

4.2 Regarding modification of trigger condition parameters: Price trigger conditions can modify price parameters before the strategy is triggered after creation. RSI trigger conditions do not allow parameter modification. If you need to adjust parameters, can stop the strategy and recreate.

4.3 Regarding moving grid settings:

If moving grid (downward) is not set, when the market price falls below the range lowest price of the grid, the grid will no longer continue operations. If the price continues to fall and does not return to the grid range, the held trading currency will suffer floating losses. Therefore, it is recommended to set a stop loss price at a reasonable position below the grid lowest price to stop losses in time.

If moving grid (upward) is not set, when the market price exceeds the range highest price, the grid will no longer continue running. If the price continues to rise and does not return to the grid range, it is easy to miss the rising market due to breaking through the grid.

4.4 When enabling moving grid (downward), need to reserve funds. If funds are not reserved, when downward movement occurs, need to transfer funds to support the new orders from downward movement.

4.5 After the grid is created, the invested funds will be isolated from the Trading Account and used independently in the grid strategy. Therefore, users need to pay attention to the risk brought to the overall position in the Trading Account after the funds are transferred out.

4.6 When take profit or stop loss is triggered and the strategy stops, or when manually stopped, there will be a market sell order for the trading currency. If the risk control system judges that it will bring risk to the market, the sell may fail. Users can judge by themselves whether to continue manually selling coins.

4.7 If during the grid strategy operation, the currency encounters unpredictable abnormal situations such as trading suspension or delisting, the grid strategy will automatically stop.

Disclaimer

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