In the simplest way, I will guide you to understand the classic strategies.
OKX jointly launched a series of classic strategy studies with high-quality data platform AICoin, aiming to help users better understand and learn different strategies through core dimension analysis such as actual data measurement and strategy characteristics, and try to avoid blind use.
Grid trading is a systematic trading strategy. Its core principle is to divide multiple grids within a preset price range and implement counter-trend operations - buying when prices fall and selling when prices rise. This strategy reduces emotional interference by keeping long and short positions balanced, automating trade execution, and accumulating profits through frequent small transactions. It emphasizes flexible adjustment of parameters to adapt to market changes, focuses on risk control and fund management, and is especially suitable for long-term operations in volatile markets. Although it performs well in sideways markets, it may miss big moves in trending markets. Successful implementation of grid trading requires the flexible application of these principles based on specific assets and market circumstances, while carefully controlling risks and avoiding excessive leverage.
Generally speaking, grid strategies are divided into two types: spot grid and contract grid. Among them, the contract grid is divided into three types : long mode, short mode, and neutral mode, each of which has its own suitable market conditions. (Note: The contract grid neutral mode is hereinafter referred to as "neutral contract grid")
Issue 02 introduces the grid strategy and uses 3 big data models to conduct actual measurements on [Neutral Contract Grid & Spot Grid]:
Model 1: Neutral contract grid and spot grid under a 1-h operating period with sideways fluctuations. Model 2: Neutral contract grid and spot grid under a 4-h operating period with downward oscillations. Model 3: Neutral contract grid and spot grid under a 1-day operating period with upward oscillations. Neutral contract grid and spot grid
In this period of data testing, the operating standard of the neutral contract grid is: taking the market price of the trading pair when the strategy is started as the center, determine the lower limit and upper limit of the grid, and the pending orders are divided into above and below the market price. When the price is above the market price, the price Every time it breaks through a grid, sell to open a short position, and when it falls below each grid, buy to close the short position, so as to obtain part of the profit from the price drop.
Contract Grid Neutral Mode & Spot Grid Strategy can be summarized in one sentence: focusing on interval trading, it provides a rational trading method under the premise of careful risk management and parameter optimization.
Table of Contents
ToggleComparison of pros and cons
Overall, sideways markets reduce trend risks, and the two strategies can focus more on range trading. However, we need to be alert to the possibility of the market breaking through the current shock range, and the grid parameters may need to be adjusted. Users may consider optimizing grid spacing based on the range of observed price fluctuations. Try to dynamically adjust the grid to accommodate possible fluctuation range changes.
In addition, there are obvious differences in the operation methods and risk management between the two. The neutral contract grid is suitable for two-way trading and high-leverage contract markets, emphasizing capturing opportunities in volatility and bearing higher risks; while the spot grid is suitable for one-way trading and relatively stable spot markets, and is suitable for more Conservative trading strategy. The core concepts of the two are similar, but in practical application, the choice needs to be based on the trader's risk tolerance and market conditions.
Among them, the neutral contract grid trading strategy combines the advantages of grid trading and market neutral strategies, providing many advantages. It reduces systemic risks through long and short hedging, takes advantage of high-frequency small transactions and market fluctuations to make profits, and at the same time reduces directional risks. This strategy is highly flexible and adaptable, can be automated and applied to a variety of assets, and provides liquidity to the market, but it is more complex to implement.
Model one
The model is: neutral contract grid and spot grid under a 1-hour operating period of sideways fluctuations.
Model 2
The model is: neutral contract grid and spot grid under the 4-h operating cycle of downward shock.
Model three
The model is: neutral contract grid and spot grid under the 1-day operating cycle of upward shock.
Analysis and Summary
Grid strategies perform differently under different market conditions, and traders need to choose an appropriate strategy based on market trends while weighing risks and returns. In Model 1 and Model 3, the return rate of the neutral contract grid is significantly higher than that of the spot grid. Especially in the volatile upward environment of Model 3, the return rate of the neutral contract grid is as high as 11.28%. In Model 2, in a downward shock environment, both the neutral contract grid and the spot grid suffered losses, indicating that the neutral contract grid and spot grid performed poorly in falling markets.
By observing the spot grid performance of Model 123, we can know that under different market environments, the spot grid winning rate fluctuates greatly and the performance of the spot grid is relatively unstable. Although the neutral contract grid has higher returns, it is also accompanied by higher risks because of the use of leverage. For example, in the volatile downward market of model 2, leverage expands losses, while spot trading is relatively stable, but in Losses may occur during adverse market conditions.
Specifically:
1. In terms of strategy performance, contract grid strategies generally show higher profit potential in different market environments, but they may also face greater risks.
The spot grid strategy performs better in sideways and upward markets, but suffers losses in downward markets.
2. In terms of risk and return, the neutral contract grid strategy obtains higher absolute returns through the use of leverage, but it also assumes higher risks. While spot grid strategies have lower absolute returns, their risk-adjusted returns may be more attractive in some circumstances given that no leverage is used.
3. In terms of market adaptability, the neutral contract grid strategy performs relatively stably in different market environments. Spot grid strategies perform better in rising or sideways markets but are prone to losses in falling markets.
4. In terms of trading activity, neutral contract grid strategies usually have higher transaction frequency and transaction amount, which may help capture more market opportunities, but may also bring higher transaction costs.
5. In terms of applicable investors, the neutral contract grid strategy may be more suitable for investors with higher risk tolerance and in-depth understanding of the market. The spot grid strategy may be more suitable for investors with lower risk tolerance who pursue stable returns.
6. In terms of risk management, when using the neutral contract grid strategy, more careful risk management is required, including setting stop losses and monitoring leverage levels.
In short, both strategies have their own advantages. The neutral contract grid strategy provides higher potential returns and better market adaptability, but the risk is also higher. Although the spot grid strategy has relatively low returns, it also has low risks and can still provide stable returns in certain market environments. Investors should choose appropriate strategies based on their own risk tolerance, investment objectives and market judgment.
OKX&AICoin Grid Strategy
Currently, OKX strategy trading provides convenient and diversified strategy types. Its grid strategies mainly cover: spot grid, contract grid, and infinite grid. Whether it is the OKX spot grid strategy or the OKX contract grid strategy, its essence is an automated strategy that executes buy low and sell high in a specific price range. The user only needs to set the highest price and lowest price in the range, and determine the details. Once the number of grids is reached, you can start running the strategy; if necessary, you can also set the trigger conditions in advance. When the market conditions reach the trigger conditions, the strategy will automatically start running. The strategy will calculate the price of buying low and selling high in each small grid, automatically placing orders, and as the market fluctuates, it will continue to buy low and sell high to earn profits from fluctuations.
However, there are three key differences between OKX contract grid strategy trading and spot grid strategy trading:
1) The contract grid strategy is traded in the contract market, and the spot grid strategy is traded in the spot market.
2) The contract grid strategy can use leverage, but the spot grid strategy cannot use leverage.
3) The contract grid strategy supports three trading strategies: long, long and neutral, while the spot grid strategy only supports one-way trading.
Currently, OKX Grid Strategy supports two creation modes:
1) Manual creation: Set parameters and trigger conditions based on your own judgment of the range of the volatile market. Currently, OKX spot grid strategy and contract grid strategy can set two trigger types: price trigger and RSI technical indicator trigger.
2) Intelligent creation: Directly use the grid strategy parameters intelligently recommended by the system.
How to access more strategy trading on OKX? Users can enter the "Strategy Trading" mode of the "Trading" section through the OKX APP or official website, and then click on the Strategy Square or create a strategy to start the experience. In addition to creating their own strategies, Strategy Square currently also provides "high-quality strategies" and "high-quality strategies for strategy leaders". Users can copy strategies or follow strategies.
OKX strategy trading has multiple core advantages such as easy operation, low fees and security. In terms of operation, OKX provides intelligent parameters to help users set trading parameters more scientifically; and provides graphic and video tutorials to allow users to quickly get started and become proficient. In terms of handling fees, OKX has comprehensively upgraded the handling fee system, significantly reducing user transaction fees. In terms of security, OKX has a security team composed of the world's top experts, which can provide you with bank-level security protection.
In addition, AICoin also provides users with a variety of strategic transactions, allowing users to understand the current market more quickly and intuitively. Users can find the "Strategy Square" option in the "Strategy" option on the left sidebar of the AICoin product. Click here to find the grid trading strategy in the "Selected Strategies" at the bottom of the interface.
At the same time, the AICoin grid strategy supports two forms: manual creation and AI grid. Find the "AI Grid" below in the "Quotes" option on the left sidebar. In this interface, users can see the network recommended by AI for the trading pair. In addition to grid trading strategies and manual creation options, this series will also introduce several other trading strategies, including all-currency DCA strategies. These trading strategies can be found in the "Strategy Square" on the left sidebar.
Disclaimer
This article is for reference only and represents only the author’s views and does not represent OKX’s position. This article is not intended to provide (i) trading advice or trading recommendations; (ii) an offer or solicitation to buy, sell or hold digital assets; (iii) financial, accounting, legal or tax advice. We do not guarantee the accuracy, completeness or usefulness of such information. Holding digital assets, including stablecoins and NFTs, involves a high level of risk and may fluctuate significantly. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. Please consult your legal/tax/transaction professional regarding your specific situation. Please be responsible for understanding and complying with applicable local laws and regulations.
In short, both strategies have their own advantages. The neutral contract grid strategy provides higher potential returns and better market adaptability, but the risk is also higher. Although the spot grid strategy has relatively low returns, it also has low risks and can still provide stable returns in certain market environments. Investors should choose a suitable strategy based on their own risk tolerance, investment objectives and market judgment.
