Crypto glossary
Grid trading
Grid trading is a strategy that places buy and sell limit orders at fixed intervals within a price range to profit from repeated swings up and down.
The trader chooses an upper and lower price and a number of grid lines between them. Buy orders sit below the current price and sell orders above it. Each time price falls to a line, a buy fills and a matching sell is placed one step higher; each time it rises, a sell fills and a new buy goes in below. Every completed buy-sell pair earns roughly the gap between two lines, minus fees.
Grid bots are offered natively by several large exchanges and by third-party platforms, and they suit crypto's frequent sideways phases, when price oscillates for weeks without a clear trend. Arithmetic grids use equal price steps, while geometric grids use equal percentage steps, which fit wider ranges better.
The weakness appears when the market trends. If price falls below the range, the bot ends up holding a full bag of the asset bought at higher prices; if it rises above, the bot has sold everything and misses the rally. Tight grids also multiply fees.
Example
A trader sets a grid on ETH between 2,800 and 3,400 dollars with 30 levels. Over two choppy weeks, the bot completes 85 buy-sell cycles, each earning about 0.6% before fees.