What Is Futures Grid Trading and How Does It Work

Grid trading has become a trading strategy that is increasingly used in the futures market. It automatically earns profits for traders with minimal time and effort. In this article, we will take a closer look at the Futures Grid trading bot and a step-by-step guide to getting started with it. It is tailor-made for you, so ensure you take advantage of it. Let's get started!

 

Part 1 -  What is KuCoin Futures Grid Trading Bot?

1.A Brief Look at Grid Trading 

 

Grid trading is the process of placing buy and sell orders at regular intervals, like in a game where you can determine how high or low your price will go. Unlike traditional strategies that have set rules for when to buy an asset (such as stocks), grid traders can make money by keeping their eyes on changing markets - figuring out when there's peak demand, so they know which side has an advantage over others who want it most.

 

2.KuCoin Futures Grid vs. Spot Grid Bot

 

The KuCoin Futures Grid trading bot works similarly to the Spot Grid Bot. They are both means to earn passively by capital appreciation, but they are differentiated by two unique features unique to the futures Grid Bot. 

 

The first advantage of the Futures bot is that you can take advantage of the market irrespective of the direction it moves. This means you can either long or short a token on KuCoin Futures. If you think a token's price will go down, the KuCoin Futures bot will help you maximize your returns from the given opportunity. 

KuCoin Bots Comparision

The other advantage of the Futures Grid bot is the presence of leverage. On our bot, we currently support up to 10 times leverage. This means your return can be amplified by a multiple of 10. While this is an amazing way to increase your capital, you should remember that higher returns equate to higher risks.

So how do you know which one to choose between the Futures Grid and Spot grid? To be honest, you will be better off with the spot grid if you do not want leverage and believe the market has bullish sentiments. If you want to run on the futures market, prefer having leverage, or maybe are unsure of the current market cycle, we advise you to use the Futures Grid bot.

 

Try to be careful in times of increased volatility to avoid the risk of being liquidated. 

 

3.What is KuCoin Futures Grid Bot

 

Unlike the Spot Grid bot, the Futures Grid bot is designed to help you make profits irrespective of the market direction. You can automate many buy and sell orders within two price points, especially when you are sure the market is going sideways. And what more? You can leverage your positions by doing so. 

KuCoin Futures Grid Bot Home Page

The buy and sell order spread is what makes the grid, and since you are not only interested in the current price of the token but rather the derivatives market, it is called Futures Grid. 

 

The step-by-step way of using the KuCoin Futures bot will be discussed in a few moments, and you can decide how much you would want the Artificial intelligence (bot) to help you. You can set stop-loss or take profit parameters according to your preference and indicate the amount of capital you want to trade with. One amazing feature of the Futures bot is that we put an extra feature that allows you to see the percentage of traders either going long or short at a particular time. This would show you the market's perception of the token at that time. 

 

4.Why Should You Use The KuCoin Futures Grid Bot?

 

You may ask, Why should I use the KuCoin Futures bot when I can trade myself? There are many answers to this question, namely:

• Speed: Bots react way faster than we humans do, and big organizations use them to profit off tiny margins with huge leverage. The cryptocurrency market can be very volatile, and price fluctuations can increase liquidation risk. 
• Risk Management: You'll like this bot, especially if you are a conservative trader or you are new to investing. We have built it with a wealth of risk management features that will make it appealing to you. You can trade without emotions or the risk of human error and conservatively make profits as you deem fit. You can also leverage stablecoins like USDC and USDT. Though your profits might not be as high as if you trade more volatile assets, the risk of losing money is also greatly reduced. 
• Automation: Furthermore, why stay glued to your screen when you can automate the process. The crypto market is a 24/7 market, unlike many other assets in the financial world. You can make money when you sleep by setting certain parameters in place. The advantage is that if you learn how the market works, nothing stops you from making money repeatedly, especially when a market direction is set.
• Emotionless Trading: The Futures Grid bot also eliminates the risk of emotional trading of FOMO or FUD. This emotional trading can come from resting on one's laurels to make even bigger bets or even revenge trading. 

5.When To Use Futures Grid Bot To Trade

You can easily use KuCoin Futures Grid Bot to make profits in a variety of market situations – sideways markets, wildly oscillating markets, as well as markets that trend up or down.

• Sideways Markets: Sideways markets are the ideal scenario for using the KuCoin Futures Grid Bot. The entire principle of grid trading is based on taking advantage of price fluctuations in such markets. When the market is moving sideways, many other popular trading strategies, e.g., trend trading or swing trading, become less applicable. This is when grid trading takes the center stage and helps you earn profits in an otherwise uneventful market.

• Ranging Markets: Contrary to popular belief, grid trading’s usefulness is not limited to stable sideways markets. Oscillating markets are also a great environment to take advantage of the bot’s automated grid trading. These markets are characterized by large ups and downs, creating opportunities for even larger profit opportunities as you get to earn from multiple positions in a larger grid.

In these markets, simply ensure that you set your buy and sell order trigger points wide enough to capitalize on the larger swings.

• Uptrending Markets: By offering adjusted grid strategies – the Long and Short modes – the KuCoin Futures Grid Bot provides you with something that has long been absent from the arsenal of grid traders – the opportunity to use this trading strategy in trending markets.

The standard grid trading becomes less useful when the market is trending upward. However, the Long mode of the KuCoin Futures Grid Bot allows you to earn profits in an uptrend too. As this mode only executes long orders, the bot will protect you from shorting an asset that has entered an uptrend. Further, since you set a range at which you think the price will rise to instead of a specific price point, you get to earn more profits from the volatility arbitrages when the prices oscillate within the buy order range.

• Downtrending Markets: Downtrending markets have also long been considered a poor scenario to use grid trading. Not anymore with KuCoin Futures Grid Bot! If you use the bot’s Short mode, you will protect yourself from long orders on assets that have joined the market in a downtrend. At the same time, you can earn more from the volatility arbitrages as well within the short-sell order range.

 

Part 2 - How To Create Your First Futures Grid Bot?

 

1.Detailed Steps To Create Your First Futures Grid Bot On KuCoin

 

KuCoin trading bots can only be accessed via our official mobile application. The app can be installed on any Android or IoS device. 

 

The first step is to log in to your mobile app with your registered email ID or mobile number. 

KuCoin Mobile App | Futures Grid Bot Creation Process

 

1. Click the Trade button on the app's home screen. 
2. On the top right corner, click Grid.
3. In the pop-up window, click Trading Bot Pro.

KuCoin Mobile App | Futures Grid Bot Creation Process

 

1. Click Futures Grid. Scrolling down to the bottom, you can check many tutorials on trading bots and join the KuCoin community.

KuCoin Mobile App | Futures Grid Bot Creation Process

 

1. You can see the number of Futures Grid bots currently running on the KuCoin exchange and the highest APR earned by a bot on a given day.
2. Click the play icon to start watching a quick video on how to get started with the Futures Grid bot along with popular do’s and don’ts.
3. Scrolling down will lead to the list of top users with the highest APR on that day. 
4. The APR number implies that the bot has made that much return on that day. These numbers may seem exaggerated but that is the percentage made by the bot on that particular day. The bot might only be running for a couple of days or a week max. So you must only use it for directional purposes. 
5. Click the Daily Ranking or the 7-day Ranking tab depending on what you want to see. KuCoin allows you to click the user, copy their settings and apply them to your Futures Grid in a single click. Make use of this option if you are a novice crypto trader.

To get started, click Create at the screen’s bottom. 

 

2.Creating a Futures Grid Bot Using KuCoin AI Parameters   

Once you are on the trading bot interface, you can choose between setting your own parameters (Customize) and letting the bot take care of everything (Auto). When you select the “Auto” trading feature, the AI will determine the price intervals, the number of levels/grids, etc, based on the historic price action of the asset you selected. 

KuCoin Mobile App | Creating Futures Grid With AI Parameters

Select the crypto pair you want the bot to trade, check the details determined by the bot, enter the funds you want to invest in the bot, and click Create. 

 

It is important to transfer your funds from the main account to the trading account to initiate the bot. You can directly transfer funds by clicking the swap button as shown in the screenshot above. 

 

The minimum amount required to start the bot changes from crypto pair to crypto pair. In the above example, the bot requires a minimum of 764 USDT to start auto grid trading the BTC Perp/USDT pair (a popular Futures asset class). However, different pairs require different amounts of minimum investment, and the barrier to entry is much lower for certain altcoins.

 

Unlike other bot services, KuCoin doesn’t charge any subscription fee for using the bot. All we charge is the transaction fee during the buying and selling of cryptos by the bot on your account.  

 

3.Creating a Customized Grid Bot On KuCoin App 

Once you click Customize on the top right, you will be redirected to the below page on the KuCoin app. 

KuCoin Mobile App | Creating Customized Futures Grid

Here, you can see the currency price of the crypto pair you selected. Based on your analysis, you can determine your own intervals and the number of levels needed. Click the Tutorial button on the top right to learn more about determining these levels carefully. 

 

The first thing to do is to set your price range which involves a low and high. A low price is the lowest price at which the bot buys the asset. If the asset’s price drops below this price, the bot will stop buying. 

Similarly, the high price is the highest price in the range that you have set for selling the asset. If the asset’s market price climbs higher than this high price, the bot will stop selling.

 

Enter the number of grids you want the bot to place and the total funds you want to invest in the bot.

After deciding which bot you want to create, it’s time to start the bot. After implementing the parameters, clicking the Create button will lead you to the order confirmation pop-up window. 

Order Confirmation Pop-Up Window

This is the final check before starting your Futures Grid bot. After clicking confirm, the bot will officially start running. You can always check how your bot is doing in terms of the number of trades, as well as profits, by clicking on the Running tab at the bottom of the screen. 

Running Bot: Overview

4.Checking & Making Changes To The Futures Grid Bot

Once the bot is up and running, you can add margin to the bot to avoid the liquidation price. Simply click the Add Margin button to perform this operation

Adding Margin To Your Futures Grid Bot

5.Exiting The Futures Grid Bot

You can abort the bot anytime you wish with the click of a button. Once you decide to exit the bot, you will realize your profits or losses and the funds will automatically be transferred from the bot account to your trading account.

 

Exiting The Futures Grid bot

Part 3 - Key To Maximizing Your Futures Grid Bot Profits

Below are some tips to help you maximize your profits while minimizing your risks when trading with the KuCoin Futures Grid Bot.

 

Choose the trading pair that suits your risk appetite

For low-risk traders, it is advisable to select a high-cap established coin, e.g., BTC or ETH, and take advantage of the relatively smaller price fluctuations of these “giant coins.” If, however, you prefer trading under a high-risk, high-reward scenario, you could choose a small-cap coin and capitalize on its wider price fluctuations.

 

Set Take Profits and Stop-Losses Carefully

In addition to fine-tuning your trading risk levels, ensure that you set appropriate take-profit and stop-loss levels to automatically buy a position when a limit price is reached and sell a position when a certain amount of loss is met. This is of particular importance in grid trading. While grid trading allows you to earn great profits when the asset price bounces within a certain catchment range, you risk the possibility of the price breaking out of the range and trending beyond the expected levels. This risk is particularly relevant when you use the standard Neutral mode in the bot. When you set take-profits and stop-losses, you trade within your limits, thereby controlling your losses.

 

Keep Abreast of Crypto Industry News

Many novice traders concentrate excessively on studying price charts and pay considerably less attention to fundamental analysis elements, such as following industry news and announcements. However, any experienced and successful trader knows the benefit of keeping abreast of industry news. These news might have a significant impact on the market and asset prices. If these news concern the leading coins, important regulatory changes, or other significant developments, the market might well change its direction or turn from a sideways hibernation to a strong trend. Such changes might require you to tweak the modes in your KuCoin Futures Grid Bot.

 

Part 4 - KuCoin Futures Grid Bot vs. Futures Trading: Which is Better?

The key benefits of the bot over manual futures trading are:

• Better arbitrage. Futures Grid Bot is an automated fellow that works tirelessly in a high-frequency mode, placing orders. By applying the automated high-frequency approach, the grid bot can give you more arbitrage opportunities. Such a level of automated execution is virtually impossible for a real trader.
• Lower risk. Since the grid strategy is to buy and sell in batches, the initial position of the Futures Grid bot is lower than that of the Futures. Therefore, if the price moves in the opposite direction, the floating loss of your Futures Grid bot will be lower than that of the Futures. In the same way, the liquidation price of the Futures Grid bot will naturally be lower than the liquidation price of the Futures.
• No emotion involved in trading. Any form of manual trading, including futures trading, carries an element of emotion. Traders, even the most capable ones, are often susceptible to emotions and biases when placing their trades. The Futures Grid bot allows you to set your strategy and then take your eyes off the market charts, freeing your overall trading from being affected by emotions.

Bottom Line

KuCoin has 10 million Bot users globally, and you wouldn't think many people are wrong, would you? One reason, even more are using the trading Grid bot is its ease of setting up. It is also flexible or customizable, depending on how you prefer calling it. Although this bot works 24/7, the volatile nature of the crypto market requires that you often check your thesis and indicators to see if the market has not changed direction. The bot would not change its parameters unless you change it. 

We hope you found this guide helpful and informative.