On the evening of January 30, Momo from Binance Futures conducted the "Binance Futures Grid Trading AMA" New Year event on BinanceChinese's tg. The Binance Chinese community rebroadcast it. Please review the following exciting sharing.
“Binance Futures has always been a product that has attracted the attention of many users in the Binance ecosystem, and we often hear in the community that people want to know more about this product. Among them, grid trading in strategic trading is the most popular one. Today I will talk about contract grid trading with you.
1. What is strategic trading?
Strategic trading is to define and describe your own trading mode in a very clear way, and let trading robots and programs execute transactions according to the set rules. You can imagine that you are the director of a situational drama. You write different scripts according to different situations, and the trading robot is the actor. As long as your script is set, the trading robot will perform according to the script. The strategic trading tools provided by Binance include "Grid Trading", "Time Weighted Average Price Strategy (TWAP)", "Volume Share Participation Algorithm (VP)" and other "Automated Strategy Trading" functions. Today we will focus on " Grid Trading" will be introduced.
2. What is “grid trading”?
"Grid trading" is to divide the price range into a grid, with different price points one by one, and the trading robot will help you execute the transaction. To give a simple example, suppose you are bullish on BTC and BTC will fluctuate from 15,000U to 30,000U. At this time, you can use grid trading to make profits by "buying low and selling high". At this time, at 15,000U- Within the price range of 30,000U, as long as the price goes down, a "buy order" will be automatically triggered. When the price goes up, a "sell order" will be automatically executed. The contract grid uses the fluctuations in this price range to create profits by buying and selling.
3. What are the benefits of "Contract Grid Trading"?
This is a very critical question. Binance’s contract grid has three major benefits:
The first advantage is that you can do three directions according to the market trend: long, short, and flat. Simply put, it can be done regardless of whether the market is spring, summer, autumn, or winter. In addition, the grid is particularly suitable for volatile market conditions, such as consolidation, which can highlight the characteristics and advantages of grid trading.
The second benefit is that trading is automated, there is no need to keep track of the market, and emotional factors are reduced. Everyone knows that buying low and selling high is said to be very simple, but very few people can actually do it with discipline when trading. Therefore, it is most disciplined to let a trading robot perform it. You don’t have to disrupt your schedule and keep an eye on the market in the middle of the night just because of the market trends.
The third advantage is that the profit method is relatively stable. The currency price fluctuates every day. Therefore, between the high and low price fluctuations, there is room for the grid to make profits, which can have a "snowball" effect.
4. How do novices set up Binance Futures grid trading?
The simplest and painless way to get started is to use the "one-click creation" of the contract grid provided by Binance, which has ready-made recommended parameters, including time interval, price range (lowest and highest price) and grid number.
If you want to create it manually, it can be divided into five steps: https://www.youtube.com/watch?v=4nyXEXIQcF0
1. Select the trading pair: Select the trading pair you want to run the grid on.
2. Choose a direction: Decide on normal (flat), long (bullish), or short (bearish) based on your prediction of the market direction.
3. Select the equal difference/equal ratio grid: The equal difference grid means that the price difference between each grid is equal, for example, the price difference between each grid is 10U. The equal ratio grid means that the price fluctuation ratio is equal, for example, the increase or decrease between intervals is 10%.
4. Set price range: Set the highest low/highest price, which is the price range for the trading robot to execute transactions.
5. Decide on the number of grids: the number of grids within the above price range, which will affect the profit of each grid.
5. Are there any incentives to try grid trading now?
Yes, if you want to try the grid, Binance Futures is here to help!
As long as you read the tutorial and answer the questions correctly, you will have a chance to share 500 USDT and limited Binance peripherals. In addition, as long as you enable grid trading and run the grid for more than 48 hours during the event, you will have the opportunity to share 1,000 USDT. The top 10 users who have been running the grid for the longest time will also receive a limited Binance New Year gift box (down jacket and Spring Festival couplets)!
6. What is the difference between spot grid and contract grid?
The operating principles of spot grid and contract grid are the same. The biggest difference is that the market situations that can make profits are different. The contract grid can go in three directions according to the market trend: long, short, and flat. Spot can only go long, which is only suitable for bull markets. But the contract can be short or flat, so both bull and bear can be done.
7. How many grid cells should be set to maximize the profit?
The "number of grids" and "profit" of the grid are like a seesaw. The more grids there are, the higher the number of transactions, but the income per order will be reduced. On the contrary, the fewer grids, the higher the income per order, but the income per order will be higher. The number of trades is low, so it's a trade-off between making small profits from many trades or a strategy that generates higher profits per order with less frequency.
8. Are there any teaching documents for grid trading?
Binance Futures provides a number of teaching articles, but I would like to recommend that you participate in the latest incentive activities. As long as you read the teaching articles and answer the questions correctly, you will have the opportunity to share 500 USDT and limited Binance peripherals. You can also get prizes for studying, which is awesome!
9. Does the grid have stop-profit and stop-loss?
You can use the "Advanced Function" in the order interface of the contract grid to set the stop loss trigger to achieve the purpose of stop loss.
10. How long will the grid be open?
Theoretically, as long as the price is within the range you set and the stop loss is not triggered, you can continue running. From our past data, profits are usually proportional to the grid running time. After all, grid trading Like a snowball, you need some time to let the ball get bigger.
Community Q&A:
1. How can a newbie to Contract Grid quickly get started and understand the strategy?
In fact, the fastest way to learn is to actually operate the grid. Newbies can use Binance Contract to provide an intelligent "one-click creation" grid, which has system-recommended parameters and is very friendly to users who are using the grid for the first time.
2. Are the risks of grids big?
All transactions have certain risks, which is why Binance has always been committed to advocating responsible trading. Compared with the manual and active trading that ordinary users are accustomed to, grid trading uses trading robots to automate trading behaviors in a disciplined manner. In volatile market conditions, Buying low and selling high is equivalent to overcoming the risk of misjudgment caused by emotional factors in trading.
3. How to use grid trading to make money in a bear market?
Generally speaking, the profit of the grid is directly proportional to the market fluctuation, but it still depends on each trader's parameter settings on the grid. The easiest way is to go to the "Strategy Trading" page of Binance Futures. There are the top 10 trading pairs with market popularity and volatility for reference, and there is also a strategy pool for copying.
4. How are grid transaction fees calculated?
The handling fee of the grid is the same as that of the contract. The details of the handling fee are here: handling rate. However, in the future, handling fee related activities may be launched for grid transactions, so please continue to pay attention.
5. Contract or grid, which one is more suitable for novices? Are there any potential risks with grid trading?
Whether it is a contract or a grid, there are financial products that use leverage. When investors or traders cannot continue to maintain the margin required for the leverage of their positions, forced liquidation will occur. This is why Binance has always advocated "responsible trading". There are some methods that can be used to avoid forced liquidation, such as controlling margins, using stop-loss functions or choosing lower leverage.
Relevant links serve as supplementary information for your reference and study:
1. Strategic trading guide | Binance Support
2. What is Contract Grid Trading | Binance Support
3. Step-by-step guide to grid trading on Binance Futures | Binance News
4. Advantages of grid trading on Binance Futures | Binance News
5. Binance Beginner’s School – Grid Trading
6. Strategic trading
7. Introduction to cryptocurrency: What is forced liquidation? How to avoid it? | Binance News
8. Participate in grid trading, the latest incentive activities: https://www.binance.com/en/survey/preview/28adf5281e144e10bac02ce1b987b486
