The grid step, or the separation between the grids, it's an essential factor to consider when setting your grid strategy. As you may have guessed, a lower step will increase the number of transactions and lower the profit per transaction, so where is the sweet spot? Let's dive in.
Before asking yourself what grid step you should be using, you have to consider two critical questions:
The answer to these two questions may limit the grid step you can use. If you have a small budget, you will have no choice but to allow for a bigger grid step to cover a decent trading range.
If budget is not an issue, then the next question is how wide should the trading range be. The wider the range, the more you spread your funds. Hence the less profit per transaction, but the more likely the price will stay within range. So, there is another “sweet spot” to be considered here.
As a general rule of thumb, you would want to emphasize the budget and the trading range more than the grid step. If budget is not an issue and you have already set a trading range you are comfortable with, then you can aim for a 0.5-1% grid step. You can use around 0.5% for less volatile coins (top 10 by market cap) and 1% or even more for the more volatile currencies.
Table of contents