Margin Grid Bot Explained — Pionex
Understanding the Margin Grid Bot and all of its Parameters
This bot is useful for users who want to short or long the market. As the name states this bot is also based on the grid bot. Let me quickly explain what it is about:
In Grid trading on Pionex you can set a price corridor that consists of an upper and a lower price range. Within this range the price can vary, and if the price is low the bot buys a portion and if its high it sells a portion. This kind of bot is perfect for a sideways movement of the market and when there is enough volatility in the sideways movement. It is good to avoid emotional reactions such as selling low and buying high with the result of losing money. However, if the price runs out of the range you might have sold low within the range. Nonetheless, this ain’t too bad, because you are then prevented from a bigger loss. [1]
If you want to try this bot on Pionex, click here.
So, technically the margin grid bot mechanism is the same, the context is different though. You can choose to either short or long a position. [2]
Short
You own USDT and you want to short Ethereum. You use your USDT as collateral and receive Ether to short Ethereum. So, you bet on a falling price. You receive USDT and profit when Ether goes down. Next you need to select the leverage to short the position — 0.2x, 0.5x, 1x, 2x. Now you can configure the parameters.[2]
Long
You own Ether and you want to long Ethereum. To do so, you receive USDT and use Ether as collateral. You bet on a rising Ether value. You receive Ether and make profit if the price goes up. As above you need to select the leverage to long the position — 0.2x, 0.5x, 1x, 2x. Then you can configure the parameters. [2]
Have you understood what the leverage is about?
To get a better understanding I will shortly explain how the leverage grid bot of Pionex works. For the normal grid bot that is explained above you deposit 1000 USDT and the bot works with 1000 USDT to invest them in other coins (e.g. Cardano, Bitcoin, Ether etc.). The leverage grid bot works different. If you choose the leverage of 2x, the bot will double your investment. To do this it will lend money from the pionex pool and apply an hourly interest rate on the lended money. So, you actually have only 1000 USDT, but it will lend 1000USDT more to double your investment. In a bullish market this can help you to really leverage your money, but at the same time you can also lose all your money, because you apply interest rates and if the market falls you also lose not only your money but the one you borrowed. So, this does not mean that you can lose actually the money you lend — the bot will stop if your 1000 USDT is liquidated.
As you have read above Long and Short also work with leverage like the leverage grid bot. So you might think, what’s the difference between Margin Grid Bot Long and Leverage Grid Bot. I’ll tell you. The main difference lies in the collateral. With the leverage grid bot, you go all in. You invest your money and if it falls you lose and if it rises you win. So, the leverage grid bot invests your collateral. The margin grid bot keeps your collateral and does not invest it. So for example you receive money from the pionex pool to apply the margin grid bot, but keep a certain portion as collateral. [2]
- Upper limit: upper end of the price range.
- Lower limit: lowest end of the price range.
- Number of grids: divides the price range in x grids and sets buying and selling bids for the grids/sections
- Leverage: The multiple that is applied on your investment
- Borrowable fund: This fund is borrowed from the pionex pool to apply the leverage grid bot.
- Daily interest: Interest rate that is charged on the borrowed fund. It is charged every hour. Interest rate is dynamic and the more user apply leverage grid bots the higher it will be.
- Estimated liquidation price: the position of your bot will be liquidated if the price reaches the liquidation price.
If you want to try this bot on Pionex, click here.
