WunderTrading Grid Bot: The Best Crypto Trading Bot for You?

The WunderTrading’s product lineup is quite impressive and offers a rich assortment of interesting solutions for retail traders and institutional investors with a strong focus on automation. Among many exciting tools, GRID bots stand out as a reliable alternative to many other forms of investments commonly suggested to newcomers as the safest way of allocating capital in the crypto market.

WunderTrading Grid Bot: The Best Crypto Trading Bot for You?

Thanks to the general advancements of the automation industry, many companies managed to perfect the formula for a great GRID trading bot by introducing risk management features and other ways to take control over its performance.

What is a GRID bot for trading?

One of the most popular approaches to buying assets in the crypto industry is Distributed Cost Average. The DCA method suggests splitting a single large purchase into multiple buy orders spaced across a relatively short period during a temporary downtrend. The idea is to buy as close to the dip as possible while maintaining a steady pace of asset acquisition.

The DCA approach is used by many crypto enthusiasts to slowly accumulate a large portfolio of tokens that they plan to hold indefinitely until they appreciate. Some individual investors set up a system where they buy a small amount of tokens with each paycheck.

When it comes to active trading, DCA means something different. A DCA trading bots places multiple buy orders and immediately creates a sell order to liquidate all market positions at an opportune moment. If you want to simply grow your portfolio, you may disable the sell order creation and leave your market positions on the spot market open for as long as you need.

A spot GRID trading bot utilizes the same approach as DCA to open new positions, but places a separate sell order for each buy order. When you protect these positions with strategically placed stop-losses, the lines on the price chart form a net hence the name “grid”.

In theory, this method allows investors to reduce the average acquisition price of assets and allows them to liquidate each order at the best possible price in the future. The main goal of a retail trader running a GRID system is to find a way to make a GRID trading bot for crypto using trading signals that initiate the sequence.

Choosing appropriate trading strategies

Both DCA and GRID bots use a predetermined algorithm to choose the placements of new buy orders after the first one. You need to use a source of trading signals that will trigger bots to place the first order. After that, a GRID system works as a closed loop and continuously opens buy and sell orders as instructed by the algorithm. You can stop it at any moment.

Finding the right entry point for the first order is the trickiest part. While some investors prefer buying trading signals from dedicated providers, many experienced retail traders believe that using a reliable technical analysis strategy to generate signals is a much better idea.

Companies like WunderTrading allow their clients to use signals from the TradingView platform, a popular charting tool with the capabilities of a trading terminal. The catalog of technical indicators contains a wide range of analytical tools including standard instruments like RSI or MACD and highly specialized indicators like Hash Ribbons.

Here are some basic technical analysis approaches that you can use to generate trading signals for GRID bot trading:

  • Price reversals and retracements. The theory says that prices try to return to median values. Any change in the price is met with resistance. For example, when bulls push too hard and the price deviates, bears will drag it down at least a little to create equilibrium. This movement in the opposite direction is called price retracement. Catching periods of trend reversals is a challenging task but some indicators help. You can use Relative Strength Index (RSI) to identify when an asset is overbought (downward correction) or oversold (upward correction).
  • Breakout strategies. When you determine support and resistance levels for an asset, any breakout means that the trend may change its course or become stronger depending on the general direction of the price. Using graphical tools like Fibonacci lines is a traditional approach to searching for breakouts, but it is hard to automate. Instead, you can use Bollinger Bands. This technical indicator creates a channel within which the price should fluctuate under normal circumstances. In many ways, standard deviation acts as an indicator for upper and lower limits of the price action.
  • Trend-following strategies. GRID bots work well during upward trends. Identifying a strong trend is possible with indicators like 3MA (Three Moving Averages) or Moving Average Convergence/Divergence (MACD). When lines start diverging, it means that the current trend is getting stronger. When they move closer together or cross each other, the market is getting ready to change its course. When combined with RSI or Stochastic, this information can be highly valuable.

Use these strategies to create a robust GRID trading system. Remember that you only need to find a good entry point.

Advantages of GRID bots

When it comes to cryptocurrency trading, speed and reaction time often mean everything. Any good trading bot will instantly react to a trading signal and quickly place orders. In many senses, GRID bots have the same advantages as many other forms of automation. However, there are several important aspects of GRID bots that make them stand out.

  • Advanced risk management. These bots are relatively safe on their own. If you have a sufficiently large portfolio, running GRID bots is a good idea to stay active in the market and generate profits consistently. You can further adjust the risk style of your bots by tinkering with settings like stop loss levels, market position size, and order placement algorithm.
  • GRID bots are easy to set up. The WunderTrading platform allows its clients to launch GRID bot systems in a couple of clicks. If you already have a good technical analysis strategy or a signal provider, setting up GRID bots will be quite straightforward. You don’t need any technological expertise to create a complex automated trading system.
  • You can use them to diversify investments. Since you control the risk style of your bots, it is possible to use them as a hedging mechanism against risks associated with your other investments. If you rely on staking (a low-risk and low-reward investment), increasing profitability goals and lowering stop-losses can be a good way at running a slightly more rewarding trading system to offset low profitability generated by staked coins.

Should you use GRID bots?

DCA and GRID bots are hugely popular among crypto investors. They are versatile and reliable. If you are interested in creating a balanced portfolio of crypto investments, using these bots is a good way to hedge against any kind of risk.