Grid trading, how to make some extra money while holding for the long term

I tried grid trading some time ago, but after selling Tesla at a cost of just over 200 (I bought very little at that time and didn't fully understand the rules of grid trading), I never touched it again.

But later I realized the reasons for selling too early:

1. I didn't understand Tesla well enough and bought too little with insufficient position

2. I didn't understand grid trading well enough and hadn't mastered the strategy

Recently, I spent some time researching it again and started grid trading with Tesla as the target (getting back up where I fell 😅). The initial results have been good. After implementing it for over a week, I've been making an average of $100-200 in extra income daily, and I can look forward to new clothes for autumn and winter.

Below is the trading situation.

Sharing some grid trading experience.

1. Stock selection.

Grid trading is essentially conditional orders for intraday trading (T+0). The advantage is that you don't need to monitor the market—it executes automatically. Therefore, the selected stocks must have volatility. Stocks like Berkshire Hathaway with very low volatility are unsuitable. Tesla is highly controversial, and its market cap has entered the faith zone of 300x P/E—large fluctuations are routine. Similar cases include Coinbase, which reacts to Bitcoin's ups and downs, and FIGR, which is a new RWA (real-world asset) species still in the stage of cognitive divergence, so volatility is daily.

2. Price movement settings.

My personal recommendation is around 2% of the current stock price. If set too high, the frequency of T+0 trades will decrease. If set too low, the trading frequency will increase, but the capital requirement will be higher (because more funds are needed to play), and excessively high trading will also increase transaction costs. For Tesla, I set the price movement at 10, which is slightly over 2% of the current stock price.

3. Monitoring range settings.

For Tesla, I set the range at 400-500, with an initial reference price of 450. If the stock keeps falling to 400, I'll increase my position by 50 shares. If it keeps rising to 500, I'll reduce my position by 50 shares. To avoid selling too early again, I just need to ensure my base position is sufficient (even if I reduce 50 shares at 500, the remaining base position meets my requirements, and I don't mind buying 50 more if it falls). Then, the game can continue. Of course, besides setting the monitoring range, you can also indirectly achieve monitoring by setting position limits. When the price exceeds the monitoring range or the position exceeds the set limit, grid trading will automatically enter a dormant state.

4. Notes.

Grid trading only applies to pre-market, intraday, and after-market sessions. It doesn't work for overnight trading. If you want to continue T+0 trading overnight, you need to set conditional orders manually. However, note that all overnight operations are not counted in grid trading. For example, if Tesla's current reference price is 450 and the after-market closing price is also 450, and it drops to 440 overnight where you manually buy, and the price stays at 440, then when the pre-market session starts, grid trading will automatically buy again at 440 (meaning your 440 overnight trade isn't counted in grid trading).

5. Don't get addicted.

Be clear about whether you're in it for the short or long term. Treat this as hiring conditional orders to earn some extra income—it won't make you rich. Your main focus should still be on the company's intrinsic value investing.

$Tesla(TSLA.US) 

$Coinbase(COIN.US) 

$Figure Tech Solutions - CL(FIGR.US)