Grid bots explained: how they earn and what the fees do to them

A grid bot lays a ladder of price levels across a range. It buys at a lower level and sells at the next one up, again and again, as the price moves up and down inside the range.

Lines, grids and one round trip

N lines make N−1 grids, the gaps between them. One grid is a buy at its lower line closed by a sell at its upper line. That round trip is the only thing a grid bot earns from.

The fee rule

Every fill costs a fee, and a grid trade has two fills. If the exchange charges 0.10% per fill, a round trip costs about 0.20%, so a grid only profits when its step is wider than that. A tighter ladder loses money on every completed grid. Backtests and the Optimize tool exist to find a density that clears fees with room to spare.

Arithmetic or geometric

• Arithmetic: equal price gaps. Simple, good for narrow ranges.
• Geometric: equal percentage gaps. Better for wide ranges, since each grid keeps the same percentage profit.

Long or neutral

A long grid starts flat and only places buys below the current price. A neutral grid also places sells above the price, buying the coin to fill them, so it starts already holding some. On a spot account these two are available. Short and hedge grids need a futures account.

The risk

If the price leaves your range, the grid stops working. Below the range you hold coins that have lost value, above it you have sold everything. Choose the range deliberately.