Grid trading is a trading strategy based on stock price fluctuations. It involves setting strategic parameters that allow the system to automatically buy low and sell high, thereby profiting from price difference.

You can divide your assets into multiple portions, set a base price, and draw corresponding grid levels based on price intervals above and below this base price. When the stock price drops and triggers a grid level, a predetermined amount is bought at the set price; conversely, when the price rises and triggers an upper grid, the same amount is sold. By repeatedly buying and selling as the price fluctuates, you can profit from these price differences.

Submitting a grid strategy

Step 1. Open a new tab > adaptive tab, and select grid trading.

Step 2. Enter the price and quantity as prompted by the interface, then submit the strategy.

Step 3. After successful submission, you can view grid orders and their trigger history on the right side.

Note: If the strategy is no longer suitable for current market trends or needs to be paused for other reasons, click on the strategy order and select Pause to temporarily halt monitoring, or directly revoke it. If you need to adjust strategy parameters, click Amend to modify the order.

Configuring strategy parameters

Base price: The initial reference price for grid strategy calculations. The system uses this price as a starting point, combined with the trigger conditions you defined, to compute grids above and below the base price. It then monitors the market price in real time to detect whether it touches any grid. Once the market price triggers a grid (either upward or downward), the trigger price becomes the new base price, and new grids are recalculated based on the updated trigger conditions.

Max Price and Min Price: They define the valid price range within which the grid strategy operates, serving as risk control parameters. If the trigger price exceeds the maximum price or falls below the minimum price during operation, it is considered outside the expected valid range of the grid strategy.

If new base price exceeds below scale: You may choose to either place no orders or immediately close all positions in the stock at the current market price.

Trigger Condition: This parameter determines the grid size. You can set the grid interval as a price difference or percentage, and separately configure the order prices for upward and downward triggers. For example, with a base price of USD 100, if the price rises by USD 1.00, place a sell order at the best ask price. If the price falls by USD 1.50, place a buy order at the best bid price. If the price reaches USD 101 (triggering the upper grid), place a sell order at the best ask price for the specified quantity per order. If the price drops to USD 98.5 (triggering the lower grid), place a buy order at the best bid price for the specified quantity per order.

Market Price (Market Order): When the grid is triggered, a market order will be placed. The actual fill price is determined by the prevailing market conditions.

Market Price (Limit Order): When a grid is triggered, a limit order will be placed with the limit price set to the market price at the time of triggering. The actual fill price may be better than this limit price, but the order may not be filled immediately.

Trigger Price (Limit Order): When a grid is triggered, a limit order will be placed with the limit price set to the trigger price. The actual fill price may be better than this limit price, but the order may not be filled immediately.

Qty of each order: The number of shares to be ordered when the price fluctuation triggers a grid.

Validity: Supports long-term orders. Options include day, Good Till Cancelled, and custom.

Session:

• Regular trading hours only: Grid trading can be executed only during regular trading hours.
• Regular trading hours + pre-market and after hours: Grid trading can be executed during regular trading hours, pre-market hours, and after hours. Since only limit orders can be executed during pre-market and after hours, Market Price (Market Order) cannot be selected in the Trigger Condition field.

Multiple Placement: If Multiply Placement is enabled, when the stock price gaps up or down by more than one grid, the system will place orders, and the total order quantity will be the quantity per order multiplied by the number of grids covered by the price jump.

Holdings Scale: If enabled, you can set maximum and minimum holdings. When a grid is triggered, the system checks whether the order will cause your holdings to exceed these limits. If it will, the order will not be placed.

Short Selling: If enabled, a short sale can be automatically initiated when the position is zero. If disabled, sell orders are not executed when the position is zero.

Note: Grid trading cannot be executed during overnight and Hong Kong stock auction sessions.

Key takeaways: Grid trading involves setting a base price and drawing the corresponding grids based on it to profit from repeated buying and selling operations, capturing price differences. Strategy parameters include Base Price, Max Price, Min Price, If new base price exceeds below scale, Trigger Condition, Qty for each order, Validity, Session, Multiply Placement, Holdings Scale, and Short Selling. 

FAQs

Q1: Why didn‘t my grid order trigger even though the market conditions were met?

This may be due to constraints such as the set maximum or minimum holdings, price range, insufficient current holdings, or insufficient funds. You are advised to review the parameter configurations of your grid order to ensure they meet the trading conditions.

Q2: Why did my grid order trigger even though the market conditions were not met?

Grid orders are triggered based on real-time tick-by-tick trades, while the market chart displays time-weighted average data. This discrepancy may cause the displayed market conditions to not fully reflect the actual fill scenario.

Q3: Why must the grid be set more than 5 price levels away and exceed 0.5% of the base price?

To protect users, the system imposes parameter restrictions requiring grid orders to be set at a certain distance from the base price. If the trigger condition intervals are too narrow, the potential profits may be insufficient to cover service fees.

Disclosures

This article is for reference only and does not constitute any investment advice.