What is grid trading
What is grid trading？
Grid trading is a trading strategy based on the fluctuation of stock price, which sets the strategic parameters and the system executes buy low and sell high according to the parameters to earn the band difference.
The investors divide the assets into several parts in advance, set the benchmark price and draw the corresponding grid based on the price difference between the rise and fall of the benchmark price. When the stock price falls and triggers the grid, buy one part according to the set price and quantity. On the contrary, when the stock price rises and triggers the grid, sell one part, and earn the price difference by repeatedly buying and selling.
How do I submit a grid trading order?
Select "Grid Trading" in the order type after entering the transaction hall or through the quick transaction drawer.
Enter the price and quantity parameters according to the interface prompt and submit the strategy.
After submission, you can see the corresponding grid trading record on the stock details page, and click to directly enter the details of the strategy.
The asset home page or order record page can also see the order, as well as the corresponding transaction and profit and loss.
If the strategy is not applicable to the current market trend or needs to be suspended for other reasons, you can click the strategy and choose to suspend, or cancel it directly. If you need to adjust the strategy parameters, you can click Modify to change the order.
How to set grid trading parameters?
Base price: The initial calculated price of the grid strategy. The system will calculate the grid above and below the base price based on the base price and the trigger conditions set by the user, and monitor whether the stock market price has touched the grid. Once grid ever triggered, the triggering price will become the new base price and the new grid will be calculated based on the triggering conditions.
Maximum price and minimum price: The effective price range of the whole grid strategy operation, which is used as risk control. If the trigger price is higher than the maximum price or lower than the minimum price, it is considered to exceed the effective price range expected by the grid strategy.
Exceeds price scale: You can choose to clear all positions of the stock at the latest price or do nothing.
Trigger condition: A parameter that determines the size of the grid. The upper and lower grid ranges can be set according to the price difference or percentage, and the order price after the grid is triggered by the rise or fall can be set separately. For example, if the benchmark price is 100 and the price increases by 1.00 to sell the order at bid 1, and decreases by 1.5 to buy the order at ask 1. Then if the stock price rises to 101, the grid above will be triggered and the order will be sold at bid 1 for 1 portion, if the stock price drops to 98.5, the grid below will be triggered to place buy order at ask 1 for 1 portion.
- Market Price (Market): When the grid is triggered, a market order will be placed. The final execution price will depend on the market conditions at that moment.
- Market Price (Limit): When the grid is triggered, a limit order will be placed at the current market price. The final execution price may be better than this limit price, but it might not execute immediately.
- Trigger Price (Limit): When the grid is triggered, a limit order will be placed at the trigger price. The final execution price may be better than this limit price, but it might not execute immediately.
Qty for each order: The number of orders placed when the stock price fluctuation triggers the setting grid.
Validity: Supports long-term orders. The options include DAY/GTD/GTC.
Session (US):
- Regular Trading Hours (RTH): Grid trading executes trades only during regular trading hours.
- Grid trading executes trades during pre-market, regular trading hours, and post-market sessions. Note that during pre-market and post-market sessions, only limit orders are supported, and trigger conditions do not allow for selecting market orders.
Multiple placement: When the stock price jumps higher or lower than one grid at opening, order quantity will be multiplied according to the number of grids covered and placed.
Holding scale: If the position range control is enabled, the maximum and minimum positions can be set. When the grid is triggered, the order will be checked to see if it will exceed the position range. If it does, no order will be placed.
Short Selling : If short selling is enabled, a zero position can trigger an automatic short sale. If short selling is disabled, a zero position will not execute a sale.
Note:Grid trading does not support overnight trading of U.S. stocks and auction trading of Hong Kong stocks.
FAQs
Q: Why didn't my grid order trigger even though the market conditions were met?
A: It could be due to factors such as the set maximum and minimum grid positions, price range, insufficient current positions, or lack of purchasing power. It is recommended to check the parameters of the grid order to ensure they meet the trading conditions.
Q: Why did my grid order trigger when the market conditions were not met?
A: Grid orders are triggered based on real-time transaction-by-transaction execution, while the market chart displays results that are time-weighted. This may lead to a discrepancy between the displayed market conditions and the actual transaction situation.
Q: Why is it necessary for the grid setting to exceed 5 quote levels and 0.5% above the base price?
A: To protect users, the system has set parameter limits, requiring the grid order settings to be at a certain distance from the base price. If the set trigger condition interval is too small, it may result in profits being insufficient to cover the transaction fees.