Introduction
Grid trading involves buying a set of grid levels. You buy a grid level if the price falls below a certain threshold and you do not already own that grid level. Conversely, you sell a grid level if the price rises above a certain threshold and you own that grid level.
In the image above, an example of markers is shown that highlights when a grid is bought or sold.
The Grid Calculator is an essential tool that allows users to set up their grid trading strategy by calculating the grid levels based on their input parameters. It is divided into four sections:
- Parameter Setup: In this section, you set up the parameters for your grid trading strategy.
- Grid Results: This section displays the results of the grid in a tabular format.
- Summary: The summary section provides an overview of the calculated investment values.
- Backtesting: In the final section, you can perform backtesting to evaluate the quality of the generated strategy.
Each section is designed to provide you with comprehensive tools and insights to optimize your grid trading experience.
Parameter Setup
To calculate a grid, you need to set five mandatory values:
- Total Investment: This is the total amount of investment that the user wants to allocate.
- Current Price: The current price of the asset that the user wants to purchase.
- Min Price: The minimum price level within which the user wants to perform buy and sell operations.
- Max Price: The maximum price level within which the user wants to perform buy and sell operations.
- Number of Grids: The number of grid levels or intervals into which the user wants to divide the buy and sell strategy.
These parameters are essential for defining the grid trading strategy and ensuring that the buy and sell orders are placed systematically within the specified price range.
In the example shown in the image, a user wants to propose an investment of $10,000 to be executed using a grid strategy. Currently, the price of the asset they want to purchase is $1.23, and it is expected that over time this price may vary within a range from $0.95 to $3. The $10,000 will be invested by dividing it into 10 lots or "grids" that will be bought and sold over time.