Cryptocurrency markets are characterized by constant fluctuations and never-ending volatility, which makes it difficult to predict the market's movements and make gains. Grid trading is a strategy that perfectly adapts to the unique characteristics of the crypto market, by helping you find arbitrage opportunities in volatile market conditions.
One popular strategy is Infinity Grid, an upgraded version of Spot Grid that enables traders to capitalize on market volatility with unlimited upside potential, but equal downside risk. In this article, we will discuss what Infinity Grid is, when to use it, and how it differs from Spot Grid.
What is grid Trading?
A grid bot is a trading bot that automates a trading strategy called grid trading. Grid trading is a strategy where a trader buys and sells cryptocurrencies at specific price levels, typically buying when the price is low and selling when the price is high, with the goal of making gains from the market's volatility. The bot creates a grid of buy and sell orders at specific price intervals, and as the market moves up and down, the bot automatically executes these trades, accumulating growth along the way. You can learn more about spot grid trading here.
What is Infinity Grid?
Infinity Grid is an advanced version of the Spot Grid. The key difference between Infinity Grid and Spot Grid is that the Infinity Grid does not require users to set an upper price limit, allowing the user to hold their cryptos in a rising market.
What's the difference between Spot Grid and Infinity Grid?
The major difference between Spot Grid and Infinity Grid is the upper limit setting. Spot Grid requires traders to set upper and lower limits when creating a strategy, which often results in missed opportunities when the price exceeds the upper limit.
Additionally, Spot Grid is suitable for short-term trading, while Infinity Grid is more suitable for long-term trading. Spot Grid enables traders to capitalize on short-term market fluctuations, while Infinity Grid allows traders to hold onto their digital assets for an extended period and capitalize on long-term market trends.
When to use Infinity Grid?
Infinity Grid is an ideal tool for traders who want to capitalize on market volatility and maximize their gains. The Infinity Grid bot can automatically buy low and sell high, ensuring that traders never miss opportunities. It also automates placing orders to avoid market sentiment leading to less than optimal trades. As long as the market fluctuates up or down, the bot will execute trades.
Moreover, Infinity Grid is particularly suitable for traders who want to avoid the downsides of Spot Grid trading. One of the main drawbacks of Spot Grid trading is that upper and lower limits need to be set, which often leads to missed opportunities for the user when the price exceeds the upper limit.
Use cases
When deciding between Spot Grid and Infinity Grid, there are certain circumstances in which one makes more sense than the other.
The Spot Grid is a popular grid trading strategy that requires you to set upper and lower price limits for your trades. For example, if the price of Bitcoin fluctuates, your trades will be executed automatically, buying and selling at these predetermined price levels. However, if the market price goes beyond your set upper limit, you will miss out on the opportunity to potentially grow your earnings.
On the other hand, the Infinity Grid is an advanced version of the Spot Grid that does not require you to set an upper price limit. This means that you can hold onto your cryptocurrencies even in a rising market, maximizing your gains. In a bullish market, the Infinity Grid would be the better choice as it allows you to capitalize on the upward price movements of crypto without being limited by an upper price limit.
Let's say you want to create an Infinity Grid Bot for BTC/USDT on OKX, while the current price of Bitcoin is 25,000 USDT and you have 5,000 USDT to invest.
For this example, let's use the following parameters:
Bottom price: 22,500 USDT
Profit per Grid: 1%
Total investment: 5,000 USDT
Once you start the Infinity Grid, the bot will buy BTC for approximately 4,500 USDT, keeping the remaining 500 USDT in case the price falls below the bottom price.
The bot will ensure that your BTC holdings are always worth 4,500 USDT. That means:
If the price rises 1% and reaches 25,250 USDT, your BTC would increase to 4,534.65 USDT. The bot will then sell 34.65 USDT worth of BTC to maintain a BTC value of 4,500 USDT. Your USDT balance in the bot will increase to 565.35 USDT. If the price rises another 1% to 25,500 USDT, the BTC value would increase to 4,568.18 USDT. The bot will sell 68.18 USDT worth of BTC to maintain a BTC value of 4,500 USDT. Your USDT balance in the bot will increase to 633.53 USDT. The bot will continue to sell BTC and increase your USDT balance with every price increase, while ensuring that your BTC value remains at 4,500 USDT.
If the price falls, the bot will do the opposite to maintain your BTC value at 4,500 USDT. Whatever the price does, the Infinity Grid Bot will make sure your BTC value in USDT always stays the same and with every change. The bot will keep doing this "infinitely" as long as the price stays above your lower limit of 22,500 USDT.
In summary
Infinity Grid is a powerful trading bot, with its unique approach to grid trading, Infinity Grid can potentially help you to consistently grow your holdings in both bullish and bearish market conditions. By automating the process of buying and selling assets based on predefined parameters, you can minimize your risk exposure and take advantage of market movements without having to monitor prices constantly.
Compared to traditional grid trading tools, Infinity Grid offers several advantages, including the ability to set your lower limit and profit per grid. This makes it a good choice for both novice and experienced traders.
So, if you are looking to build a long-term investment portfolio, Infinity Grid has the features and flexibility to help you achieve your goals. With the right strategy and risk management, Infinity Grid would be an option.
