Trading on Futures is generally something that is best reserved for people with lots of money to lose or those with enough time and dedication to make the hard decisions! However, recently Binance has released a grid trading bot on the USDT futures markets which makes it possible for anyone to easily set up a bot to conduct trades all through the day and night! This means that you can profit off small moves rather than hoping for that moonshot with leverage that will tank and get you liquidated...
Okay... so, let's get a few things out of the way. These are USDT settled markets, so you will be looking to maximise USDT. There are Coin settled markets, but there are no grid bots on those markets, and I don't think I would want to be risking cryptoassets... however, I'm more than happy to take bets with USD pegs!
So, first things first, you will need a Binance account. If you are really disciplined, then you can just allocate some USDT to the Futures section and then play around with that... however, if you doubt your discipline, it is best to create a secondary Binance account so that it is harder to "accidentally" go all or nothing...
Now, another thing to keep in mind is that you are trading derivatives on the trading pair. So, what most people don't understand is that you are NOT trading and holding the underlying assets, you are trading a promise to deliver. It is best to use the perpetual contracts, so that you don't need to worry about actual delivery on the derivative!
The next thing to understand before you go further is the concept of leverage. With leverage, you are effectively borrowing to enhance your position... however, that opens you up to increased profits/losses and also the possibility of liquidation. However, these losses can be mitigated if you set up stop-losses in your bot.
Now, the most successful Neutral trading bots will be those that run the longest within their trading zone and match as many trades as possible. For instance, this VET/USDT bot has now run for 5 days and will stay in profit even if it collapses. So, this is the strategy to keep in mind... stay in the trading zone for as long as possible to make money with SMALL profits multiplied many times!
If the bot exits out of the trading zone, then you are looking at some losses (which will hopefully be already covered by the matched trades over time) as your stop losses kick in... and there is the next lesson, SET STOP LOSSES FOR YOUR BOT! The worst thing that can happen is if you forget these, and then you get liquidated... stop losses mean that you accept a small loss, pick yourself up and try again!
As I mentioned before, the sheer volume of matched trades (just over 5700 for this bot) is what will make you your profit. Each match is small in terms of profit, on the order of cents with the float of 100 USDT at 10x leverage. You are trading on the internal volatility within your trading bracket.
Your enemy are the big swings that will take you to the end of your trading zone for the bot. At this point, you SHOULD terminate the bot (this can be done automatically, see later)... as the other option is to expose yourself to liquidation... and the goal of leveraged markets is to first MINIMISE potential losses and exposure and NOT maximise profits.
So, first you are going to need to try to identify a perpetual market that you think will stay within a range for a few days at least. Something like this is okay... no big swings, yet! From memory, this was the VET/USDT one.
Then from the overflow menu (the three dots), select grid trading.
This will bring you to the bot page. Now, I'm using this DOGE/USDT set up as an example... DON'T use this one at the moment, as the large swings (thanks Elon Musk...) will quickly slam your bot to the end of their trading zones at a loss before you have matched enough trades to turn a profit.
In the top line, select the isolated margin and select your leverage. I would suggest 5x, or 10x as a maximum. You can go much higher, but then you are exposing yourself to huge losses...
On the next line, select Neutral... this will set a spread of buy and sell orders in the trading zone. Don't play with the Long/Short options yet, those are more complicated and I will write something more about those later on. Put it this way, if you don't know how they work, you can just lose money just setting them up with the wrong paramenters!
Lower/Upper Price: This is the zone where you are aiming to keep your bot trading within. This will be where the spread of orders can be matched in your grid. If you expand it too far, then there will be fewer matched trades... if you tighten it too much, then the price can easily spike out of it... putting your bot out of action.
Mode: Don't worry too much about this at the moment, just use Arithmetic.
Grids and Initial Margin: The Grid is how many orders the bot will place, combined with the leverage and initial margin that you give the bot, it will determine the size and profit of each order placed. Keep in mind that there is a minimum order size, and the profit from the match already subtracts the trading fee. Now, if you aren't above the minimum order size you have three options, increase the leverage (NO NO NO!!!!!), tighten the grid range, reduce the number of grid orders (fewer trigger points to match) or increase the initial margin (more capital in play). Personally, I will reduce the grid a little bit or tighten it up to see if I can sneak in. I prefer to stay disciplined with the margin and the leverage.
Now here are the "optional" advanced settings. Of which I will talk about the Top Triggers. These are NOT optional. These are the ways that you will limit your losses if your bot gets knocked out of its trading zone. Remember the strategy, trade little but trade lots... if you exit the zone, you are exposed to losses and you NEED to stop the bot... it might recover, or it might tank further.
Tick the Cancel all orders and Close all positions. This has the effect of shutting your bot down COMPLETELY and solidifying any losses before they blow out of hand.
Now, you need to set a Bottom and Top price to trigger the bot to stop and shut down. I generally set them very tight to the bottom and top prices of the grid. Basically, as soon as the market price gets too uncomfortable, I'm packing up and going home... Remember, the strategy is trade little but trade often!
Anyway, there you go... you have all you need to start experimenting with the Binance Futures Grid bot. Play around with it... expect a few small losses whilst you are learning to identify a good market to play in. However, with experience you will know when you need to set a tighter range (if the market is stable...) or larger range (volatile...) or when you need to decide to skip a few days!
Good luck! Stay Disciplined!
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