Help Centre | What is “Grid Trading”?

What is “Grid Trading”?

Grid trading is a trading strategy based on price fluctuations where preset parameters are used by the system to buy low and sell high, aiming to profit from price differentials within a trading range.
Investors divide their assets into multiple portions, set benchmark prices, and plot corresponding grids based on price fluctuations. When the price falls and triggers a grid, they buy a portion at the set price and quantity. Conversely, when the price rises and triggers a grid, they sell a portion. By repeating these buy and sell actions, they aim to profit from the price differentials.

No matter how the market fluctuates, there are three patterns in the market: rising, consolidation, and falling.

“Grid Trading Order” is a programmatic trading strategy which does not rely on human thinking. It aims to buy low and sell high within a stock price range during market fluctuations which can reasonably control the position, avoid chasing the winner and cutting the loser. The advantages of grid trading are strong anti-risk ability and considerable returns during the consolidation.

Who Benefits from Grid Trading

Grid Trading Order is suitable for customers who have basic positions and are willing to fulfill the concept of grid trading.
1.Value Investors: Long-term holders of stocks can use grid trading during volatile market conditions to enhance stock returns.
2.Technical Analysts: Those with a strong grasp of stock analysis and seeking to profit from short-term differentials during ranging markets can utilize grid trading to monitor stocks and automate trades.
3.Investors Seeking to Break Even: If stocks are underperforming, grid trading can help capture market oscillations and lower average costs to break even.
4.Portfolio Managers: For those managing multiple stocks, grid trading can help manage positions to reduce risk and promptly adjust holdings during price fluctuations.

Instruction

If you believe that a stock will oscillate and consolidate within a certain range in the future. You can set certain conditions through “Smart Order” – “Grid Trading”, buy when the stock falls and sell when the stock rises to get the margin in between.

Let's look at the steps:

STEP 1 Select stock

Enter the stock for “Grid Trading”, typically are the stocks with better fundamental, continuous price fluctuations and less gaps.

STEP 2 Set Conditional Point

Enter the initial base price, generally is the price for bottom position which should not be too high.

Select Trigger Type, spread or proportion can be chosen. Input the appropriate spread according to your analysis of that stock. If the benchmark price rises by the specified spread or percentage, the sell order will be triggered. If the benchmark price falls by the specified spread or percentage, the buy order will be triggered.

*The spread and the percentage should not be too small, you should set a profitable value considering the transaction cost.

Input the Price Range. After input the upper limit and lower limit, our system will calculate the upward and downward price range automatically.

STEP 3 Set condition

Input the sell price and purchase price. HK stock supports order of latest price, 1 bid & ask price and 5 bid & ask price, while US stock supports order of latest price and 1 bid & ask price.

Input the quantity per transaction, the same amount is entrusted each time the order is placed.

Click “More settings” to set the largest position, minimum bottom position and multiple commission.

*Position Range Control: When the position range control is enabled, users can set maximum and minimum position limits. Upon triggering a grid, orders will be checked to ensure they do not exceed the specified position range. If the range is exceeded, the order will not be placed.

*multiple commission: When the multiplier order feature is enabled, the quantity of each order submitted will be adjusted based on market volatility and the set percentage thresholds for price movements, creating a proportional relationship for order placement.

For example: Setting a 3% sell threshold for an individual stock, with an order quantity of 100 shares per order and activating the multiplier feature:
1.If the stock opens the next day with a 6% gap up (compared to the previous day's closing price), the order quantity will double as the percentage increase is 6% divided by 3%, resulting in a 2x multiplier, thus placing an order for 200 shares.
2.If the stock opens the following day with a 9% gap up, reaching a 3x multiplier relationship, the order quantity will be tripled, resulting in an order for 300 shares.

STEP 4 Select effective time and place order

For the valid date, same day/ 2 days/ 3 days/ 1 week/ 2 weeks/ 30 days/ 60 days/ 90 days/ 180 days are available, and can be extended by changing the order.

Click unlock to trade and submit order. The submitted order can be viewed under the smart order page, and the order can be modified as needed.

*You are not allowed to modify if the “Grid Trading” order has been triggered, but you may cancel the order.

Order time

Anytime