Trading bots are necessary to generate consistent returns in the us securities market. If you have enough capital and insider knowledge, automated trading bots are a great way to increase your income. However, many retail traders don't know how to effectively use these bots and lose more than they make. With a grid trading bot by your side, your chances of coming out as a winner from your trading experience increase substantially. However, you need to use these bots efficiently and smartly to get the best possible result. Some crucial pointers are detailed here to make smart choices with grid trading.
- Don't Trade Against The Trend
If you trade with a bot, do not buy (or sell) just because the bot suggests you. Always look at the trending direction. If your grid bot suggests buying and its uptrend, don't hesitate to buy. If the bot suggests selling and the trend is down, do not hesitate to sell. The bots use several indicators that we mere human beings cannot understand, so follow them blindly when they favor your trading position.
- Never Use Leverage
Using too much leverage will make your balance disappear from thin air in no time if you have bad luck with your trades or use inappropriate stop losses as well as take profits. If you want to use a bot for trading, it is best to use no leverage. If you want long selling spot trade using grid trading, you can try these.
- Get a good broker/platform.
- Build your trading strategies on top of those trading bots
- Use that strategy in auto mode
These tips will increase your return over time. In addition, the bot will close all open trades and take profit if the currency reaches a certain level.
- Set Target
To help you predict where the market is heading, it's better to trade with a longer-term (6 months-1 year) view instead of the day-to-day view. For example, if your target is $700 and the market is going down gradually, and you see it at $650, then buy in low dollar amount. This is because you are looking to buy low while the market is moving down further, which will keep giving profit even if the price keeps falling. The difference between your entry and target price determines your profit.
- Avoid Trading During Rush Hours
Like humans, grid trading bots also need to analyze and trade, making the best spot trade shorting grid. You can use this time to study the market while the bots are not looking at their charts, giving you a small edge over them. You can analyze trade positions based on their behavior, but you should avoid trading when the bot is not in their favor.
Most grid trading bots don't trade based on news or rumors, so if there is strong news and its effect is still visible just 3-5 days later, there is a high likelihood that it will affect the market tomorrow.