Futures Grid 101
Bitget
2023-03-29 13:24
Global Bitgetters,
1. What is futures grid?
Futures grid is designed to apply grid trading strategies to futures trading. In futures grid, traders can choose between Long and Short. When going long, for example, a long position will be opened in a predefined price range with preset parameters, such as Number of Grids, to profit from the grid through buying low and selling high. The chart below shows how a long futures grid works. The principle is the same for short positions.
2. Let’s take a look at the main differences between futures grid, spot and futures
| Futures Grid | Spot | Futures | |
| Supported directions | Long and short regardless of bearish or bullish markets |
Long | Long and short |
| Suitable market conditions | Dropping or rising prices with fluctuations | Rising prices with fluctuations | One-sided market |
| Fund utilization rate | ★★★ | ★ | ★★★★ |
| Risk profile | Lower than futures | Low risk | High risk |
| PnL | Considerable profit with controllable risks | Less profitable than futures grid | High profit with high risks |
3. What are the advantages of futures grid?
In futures grid trading, positions are managed passively, making it less risky than futures trading. By setting the initial opening at only 50% or so, it avoids the high risks associated with being all-in with futures trading. Futures grid trading features buy-low and sell-high strategies to take profit in batches, while suffering fewer losses than futures trading.
4. What are the possible reasons for a potential loss?
1. A position in the futures grid is opened in the wrong direction, resulting in a floating loss.
2. In a volatile market, a grid is terminated before the order reaches its profitable price.
3. The grid parameters are inappropriate; the price interval is too small, grids are too intense or profits are eaten away by fees.
5. Who should use futures grid trading?
Users who want to practice grid trading while maximizing their profits through leverage may find futures grid trading appealing.
With this tool, users can enjoy all the functions of traditional futures trading without the need to monitor the market. Transactions are conducted automatically based on preset parameters to earn more stable profits through arbitrage in volatile markets. In this way, futures grid trading can help users maximize their returns on the basis of grid trading.
Users who want to go short can choose the Short direction when market conditions are favorable to make a profit from dropping prices through quantitative trading.
Disclaimer
Futures grid trading is a transaction tool. The above-mentioned information should not be considered as financial or investment advice from Bitget. Profits fro m futures grid trading may be impacted by one-sided market conditions or improper price intervals. You can adjust your futures grid trading strategy according to market conditions.
You choose to use futures grid trading at your sole discretion and at your own risk. Bitget shall not be liable for any losses caused by your use of this function. You are advised to estimate your own risk profile after reading through this futures grid trading guide and to make informed decisions.
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