1️⃣Derivatives Grid Trading Explained

Derivatives Grid Trading is designed to automatically long and short Derivatives contracts to maximize profits in a volatile 24/7 crypto market.

Grid Tradings are automated trading strategies designed to place long and short positions at predetermined intervals within a predefined price range. They’re designed to capitalize on price fluctuations and perform best in volatile markets.

How Does the Tapbit Derivatives Grid Trading Work?

Tapbit‘s Derivatives Grid Trading offers three (3) ways — Long, Short and Neutral— to place your orders. Let's take a look at how each type of orderworks.

Long

Long mode is suitable for volatile market conditions where prices are rising. Long grids will enter long positions upon creation at market price, and take profits by closing long positions when the price rises.

Example

Suppose Trader A creates a Derivatives Grid Trading strategy based on the following parameters:

• Derivatives trading pair: BTCUSDT

• Market price: 19,000 USDT

• Upper price: 30,000 USDT

• Lower price: 10,000 USDT

• Grid Qty: 5

• Grid mode: Geometric

• Leverage: 2x

• Intervals: 24.2% ≈ ((30,000/10,000)^(1/5)– 1)x100%

Note

Geometric: Each grid has an equal price difference ratio. For example, if the interval is 1.25%. The price of the next order will be 1.25% higher than the previous price.

The system will calculate the price of each grid and place your orders with 2x leverage. When the Future Grid Trading strategy is successfully activated, the positions will be placed as follows.

Price (USDT)	Order Type
30,000	Close Long
24,082	Close Long
19,331	No order will be placed
Market price: 19,000 USDT
15,518	Open Long
12,457	Open Long
10,000	Open Long

When the BTC price rises to 19,331 USDT, no order will be triggered. In the one-sided market, the BTC price rises to 24,082 USDT, the sell order will be filled in USDT, and a buy order will be placed at 19,331 USDT.

If the price continues to rise and reaches 30,000 USDT, the 30,000 USDT sell order will be filled and a buy order will be placed at 24,082 USDT. On the other hand, if the price falls back to 19,331, the 19,331 USDT buy order will be filled and a 24,082 USDT sell order will be placed.

Your Grid Trading will only operate within the upper and lower price bounds that have been configured. When the BTC price rises above 30,000 USDT or falls below 10,000 USDT, no new order will be placed by the Grid Trading until the BTC price returns to the price range.

If the market price falls outside the price range, you can choose either to terminate the Future Grid Trading strategy, or wait for the price to return to the range you’ve set, at which time the strategy resumes. Once you have terminated your bot, all your pending orders will be canceled and your positions will be closed at the current market price. Your assets will be credited automatically to your Derivatives Account.

Short

Short mode is suitable for volatile market conditions where prices are falling. Short grids will enter short positions upon creation at market price and take profits by closing short positions when the price falls.

Example

Suppose Trader A creates a Derivatives Grid Trading strategy based on the following parameters:

• Derivatives trading pair: BTCUSDT

• Market price: 20,000 USDT

• Upper price: 30,000 USDT

• Lower price: 10,000 USDT

• Grid Qty: 5

• Grid mode: Arithmetic

• Leverage: 2x

• Intervals: 4,000 = (30,000 − 10,000)/5

Note

Arithmetic: Each grid has the same price difference. For example, if the interval is 4,000 USDT. The price of the next order will be 4,000 USDT higher than the previous price.

The system will calculate the price of each grid and place your orders with 2x leverage. When the Future Grid Trading strategy is successfully activated, the positions will be placed as follows:

Price (USDT)	Order Type
30,000	Open Short
26,000	Open Short
22,000	Open Short
Market price: 20,000 USDT
18,000	No order will be placed
14,000	Close Short
10,000	Close Short

When the BTC price falls to 18,000 USDT, no order will be triggered. In the one-sided market, the BTC price falls to 14,000 USDT, the 14,000 USDT buy order will be filled and a sell order will be placed at 18,000 USDT.

If the price continues to fall and reaches 10,000 USDT, the 10,000 USDT buy order will be filled and a new sell order will be placed at 14,000 USDT. On the other hand, if the price rises back to 18,000 USDT, the 18,000 USDT sell order will be filled and a 14,000 USDT buy order will be placed.

Your Grid Trading will only operate within the upper and lower price bounds that have been configured. When the BTC price rises above 30,000 USDT or falls below 10,000 USDT, no new order will be placed by the Grid Trading until the BTC price returns to the price range.

If the market price falls outside the price range, you can choose either to terminate the Future Grid Trading strategy, or wait for the price to return to the range you’ve set, at which time the strategy will resume. Once you have terminated your bot, all your pending orders will be canceled and your positions will be closed at the current market price. Your assets will be credited automatically to your Derivatives Account or Unified Margin Account.

Neutral

For neutral mode, the strategy will begin with no initial position. The bot will place long orders below the base price and short orders above the base price. When the market price hits the preset price, the long/short position will be opened, depending on which order direction is filled.

Example

Suppose Trader A creates a Derivatives Grid Bot strategy based on the following parameters:

• Derivatives trading pair: BTCUSDT

• Market price: 20,000 USDT

• Upper price: 30,000 USDT

• Lower price: 10,000 USDT

• Number of grids: 5

• Grid mode: Arithmetic

• Leverage: 2x

• Intervals: 4,000 = (30,000 − 10,000)/5

Note

Arithmetic: Each grid has the same price difference. For example, if the interval is 4,000 USDT. The price of the next order will be 4,000 USDT higher than the previous price.

The system will calculate the price of each grid and place your orders with 2x leverage. When the Future Grid Bot strategy is successfully activated, the positions will be placed as follows:

Price (USDT)	Order Type
30,000	Short
26,000	Short
22,000	No initial positions will be placed
Market price: 20,000 USDT
18,000	Long
14,000	Long
10,000	Long

When the BTC price hits 18,000 USDT, the long position will be executed, and the short order at 22,000 USDT will be placed above on the next grid. When the price rises to 22,000 USDT, the short order will be executed, and subsequently close the long position, and a long order at 18,000 USDT will be placed — that is, a grid trade is now completed and profits are made from the price difference.

Your Grid Bot will only operate within the upper and lower price bounds that have been configured. When the BTC price rises above 30,000 USDT or falls below 10,000 USDT, no new order will be placed by the Grid Bot until the BTC price returns to the price range.

If the market price falls outside the price range, you can choose either to terminate the Future Grid Bot strategy, or wait for the price to return to the range you’ve set, at which time the strategy will resume. Once you have terminated your bot, all your pending orders will be canceled and your positions will be closed at the current market price. Your assets will be credited automatically to your Derivatives Account or Unified Margin Account.

Risk

For Derivatives Trading, your position is at risk of being liquidated when the mark price reaches the liquidation price. We recommend that you set a stop-loss ratio to control possible losses.

Note: Derivatives Grid will be channeled directly through your Tapbit Derivatives Account and Trading Bot Account. If your account has been upgraded to the Unified Margin Account, Derivatives Grid will instead be channeled via your Unified Margin Account and Trading Bot Account.