The little-known undiscovered Binance’s tool to make consistent profits
As a user of Binance Exchange since its beginnings I acknowledged that its team is capable of developing great central features for trading cryptos. Still sometimes I get trapped in an uncontrollable necessity to trade and track my investments, which leads to poor decision making and emotional driven losses. So, I tried for some years different tools external from Binance to automate my trading and not be so engaged with the daily movements of the markets. I had mixed experiences which is not the idea of this article. But in December 2020, Binance launched the Grid Trading Bot which I didn`t really start using it until the March’s update when they released the Long/Short grids.
I recommend trying different external tools for Grid Trading, and to study the Academy related articles. As a personal review, these bullets can help you understand the key components and advantages of Binance Grid Trading Bot:
- It’s an automatic consistent profit making. The bot places low buy orders with a higher sell orders during a sideways price movement, thus does not require predicting the direction of the market movement.
- Built on USDⓈ-M Future Contracts. It builds grids over perpetual and quarterly contracts, meaning that long/short orders shape its structure. The tool is not available for Spot trading, so traders need an external tool to connect with Binance Spot (such as Bitsgap, Bituniverse, 3commas, etc).
- Trading Fees in Futures are lower than Spot. During the execution of the strategy, oftentimes hundreds or thousands of little Maker transactions are completed. It is highly convenient to pay the less percentage of fees, and if possible take advantage of every discount promotion available.
- Implies a funding fee. Considering the bot is built in Futures, positions are not exempt of Funding Rates. Depending on the open positions, every 8 hours you will either pay or receive funding for your position. Be aware that these transactions are deducted directly from the margin.
- Offers Long, Short and Neutral Grids. Even though Grid Trading is promoted as a Non-Directional Strategy in which cash-in is made by matched orders, this tool gives you the possibility to choose a direction for the market that can boost your total profit. A futures’ long grid is quite similar to a Spot grid, since it opens an initial buy/long position and when reaches the top limit it ends-up selling all the initial buying. So, the main difference between the three of them is the Initial Position.
- For a sideways market with a slight upward trend: Long Grid
- For a sideways market with a slight downward trend: Short Grid
- For a sideways market with a strong support-resistance channel: Neutral Grid or combination of Long/Short Grids.
- Allows Leverage with risk of liquidation. Useful to boost profits, but adds risks of losing your collateral. Be very careful! Your Initial position has a liquidation price that will change during the days of operation and can dangerously be set inside the grid limits. Binance does not offer any tool to know where exactly is going to be the liquidation price when the price tests the limits of the grids. As an example, the same BNBUSDT perpetual grid shown below has a liquidation price of 602.95 USDT and a day later, 536.15 USDT.
To manage the risk of liquidation, you can choose between Cross or Isolated Margin. Even though a Cross selection can lead to a more efficient capital use, it may be a less-riskier option to treat each grid separately by using the Isolated Margin.
- API key’s creation is not required. The bot is integrated to the Binance platform and is funded through your Futures Wallet assets. When using external trading tools, an API key must be created, thus sharing your API keys can expose you to cyber attacks. Another disadvantage of using API to connect with external tools is that when market stresses, the connection with Binance becomes slow and bots can be shutted-down, losing big opportunities of profiting from volatility.
- Free. There is no one-time or monthly payment for using it.
To sum up, if used with responsibility and diligence, Binance Grid trading tool can be a powerful consistent profit generator, less time consuming, easy-to-use, secure and free automatic option.
DISCLAIMER: Nothing contained in this article should be construed as investment advice.
Follow Binance Grid Trading community on:
Twitter: https://twitter.com/binancegrid
Telegram: https://t.me/binancegrid
Website: https://tools.binancegridtrading.com/
