# Grid Trading with Bots

By [Financial Pendulum](https://paragraph.com/@tin-st) · 2022-10-14

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Can one trade profitably with trading bots using grid strategy?

Grid strategy is a buy low sell high strategy that uses a set of grids to extract volatility from the asset that it is trading.  For example:

·       BTC price: 20,000 USDT

·       Range: 19,500 – 21,500 USDT

·       Number of Grids: 10;

·       Amount of investment: 10,000 USDT

If BTC goes down, the bot will buy at 19,900 and put a sell order for 20,100. 

If BTC keeps going down, the bot will keep buying until 19,500. 

If BTC recovers to 19,700, the sell order will get executed, and the bot will put a buy order for 19,500.

This strategy works best in a range bound market where prices mostly stay within the range of the grid.

But what if there is a large drawdown or upswing?

One can take a pseudo delta neutral approach by having 50% long and 50% short.  That way large swings are partially offset.  Since grid trading is essentially a mean reversion strategy, large swings will incur losses because the long bot is buying on the way down (bigger position), while the short bot is covering (smaller position), so on net losses will be greater than gains.   Therefore, one needs to monitor the position and know when to reduce risk. 

All in all using bots to automatically extract volatility from the market can be a profitable strategy when used with proper risk management.

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*Originally published on [Financial Pendulum](https://paragraph.com/@tin-st/grid-trading-with-bots)*