Futures Grid Parameters Explained
This module will systematically explain the key parameters in contract grid trading, including price range, grid quantity, leverage multiplier, investment amount, and the logic of setting stop-profit and stop-loss, helping users establish a stable strategy that adapts to market rhythm.
Long, Short, and Neutral Positions:
Long Grid Strategy is suitable for markets where prices are expected to oscillate upward within a set range. The strategy will open long positions when prices fall and close long positions when prices rise, achieving the goal of buying low and selling high.
Short Grid Strategy is suitable for markets where prices are expected to oscillate downward within a set range. The strategy will open short positions when prices rise and close short positions when prices fall, achieving the goal of selling high and buying low.
Neutral Grid Strategy is suitable for markets where prices are expected to trade sideways within a set range. The strategy will open short positions above the price and long positions below the price, profiting from price fluctuations.
Leverage Multiplier: The leverage multiplier determines the trading amplification. Higher leverage can amplify returns but also increases risk, potentially leading to liquidation. It is recommended to choose an appropriate leverage multiplier based on individual risk tolerance, with beginners starting from low leverage and gradually becoming familiar with the strategy.
Price Range: The lowest price is the lower limit of the strategy’s operation. When the market price is below this value, the strategy will not open new positions. The highest price is the upper limit of the strategy’s operation. When the market price is above this value, the strategy will not open new positions. Setting a reasonable price range is crucial for ensuring the strategy’s effective operation. It is recommended to set an appropriate range based on historical price fluctuations and current market trends.
Grid Quantity: The number of grids determines the divisions within the price range. More grids mean denser orders that can capture price fluctuations more frequently, but with smaller profits per grid; fewer grids have the opposite effect. It is recommended to choose an appropriate number of grids based on market volatility and personal trading objectives.
Arithmetic Grid: Where the price difference between adjacent grids is equal, suitable for markets with small and stable price fluctuations.
Geometric Grid: Where the price ratio between adjacent grids is equal, suitable for markets with large price fluctuations or exponential changes.
Choosing the appropriate grid type helps more effectively capture market fluctuations.
Investment Amount: The investment amount is the total funds used for strategy operation. In contract grid trading, this amount will be allocated across different grids for opening positions. It is recommended to reasonably allocate the investment amount based on personal financial situation and risk tolerance.
Moving Grid: A moving grid is a strategy that dynamically adjusts the price range to automatically follow market trends, adapting to continuous price increases or decreases. This strategy is suitable for trending markets but requires careful setting of movement conditions to avoid increased trading costs due to frequent adjustments.
Start Conditions: Set the trigger conditions for strategy initiation, such as starting the strategy when the market price reaches a specific value.
Termination Conditions: Set the trigger conditions for strategy termination, such as stopping the strategy when the market price reaches a take-profit or stop-loss point.
Reasonably setting start and termination conditions helps control the strategy’s operation timing and risk.
Take-Profit and Stop-Loss: Take-profit automatically closes the position when the market price reaches a preset profit target, locking in profits. Stop-loss automatically closes the position when the market price reaches a preset loss limit, preventing further losses. Setting take-profit and stop-loss helps control risk and protect capital.
Limit Order: Limit order refers to the price setting when the strategy opens a position. By setting a limit order, you can control the opening price and avoid unfavorable transactions due to market fluctuations.
Profit Reinvestment: Profit reinvestment involves reinvesting earned profits into the strategy to increase position size, thereby achieving compound growth. This strategy is suitable for long-term grid trading but requires careful risk control to avoid liquidation risk due to oversized positions.
Per-Grid Increment: Per-grid increment involves gradually increasing position size in each grid to obtain higher profits when prices move in a favorable direction. This strategy is suitable for trending markets but requires careful setting of the increment ratio to control risk.
Estimated Liquidation Price: The estimated liquidation price when all long positions in the grid are filled and the maximum number of long positions can be opened.
Futures Grid Parameters Explained
This module will systematically explain the key parameters in contract grid trading, including price range, grid quantity, leverage multiplier, investment amount, and the logic of setting stop-profit and stop-loss, helping users establish a stable strategy that adapts to market rhythm.
Long, Short, and Neutral Positions:
Long Grid Strategy is suitable for markets where prices are expected to oscillate upward within a set range. The strategy will open long positions when prices fall and close long positions when prices rise, achieving the goal of buying low and selling high.
Short Grid Strategy is suitable for markets where prices are expected to oscillate downward within a set range. The strategy will open short positions when prices rise and close short positions when prices fall, achieving the goal of selling high and buying low.
Neutral Grid Strategy is suitable for markets where prices are expected to trade sideways within a set range. The strategy will open short positions above the price and long positions below the price, profiting from price fluctuations.
Leverage Multiplier: The leverage multiplier determines the trading amplification. Higher leverage can amplify returns but also increases risk, potentially leading to liquidation. It is recommended to choose an appropriate leverage multiplier based on individual risk tolerance, with beginners starting from low leverage and gradually becoming familiar with the strategy.
Price Range: The lowest price is the lower limit of the strategy’s operation. When the market price is below this value, the strategy will not open new positions. The highest price is the upper limit of the strategy’s operation. When the market price is above this value, the strategy will not open new positions. Setting a reasonable price range is crucial for ensuring the strategy’s effective operation. It is recommended to set an appropriate range based on historical price fluctuations and current market trends.
Grid Quantity: The number of grids determines the divisions within the price range. More grids mean denser orders that can capture price fluctuations more frequently, but with smaller profits per grid; fewer grids have the opposite effect. It is recommended to choose an appropriate number of grids based on market volatility and personal trading objectives.
Arithmetic Grid: Where the price difference between adjacent grids is equal, suitable for markets with small and stable price fluctuations.
Geometric Grid: Where the price ratio between adjacent grids is equal, suitable for markets with large price fluctuations or exponential changes.
Choosing the appropriate grid type helps more effectively capture market fluctuations.
Investment Amount: The investment amount is the total funds used for strategy operation. In contract grid trading, this amount will be allocated across different grids for opening positions. It is recommended to reasonably allocate the investment amount based on personal financial situation and risk tolerance.
Moving Grid: A moving grid is a strategy that dynamically adjusts the price range to automatically follow market trends, adapting to continuous price increases or decreases. This strategy is suitable for trending markets but requires careful setting of movement conditions to avoid increased trading costs due to frequent adjustments.
Start Conditions: Set the trigger conditions for strategy initiation, such as starting the strategy when the market price reaches a specific value.
Termination Conditions: Set the trigger conditions for strategy termination, such as stopping the strategy when the market price reaches a take-profit or stop-loss point.
Reasonably setting start and termination conditions helps control the strategy’s operation timing and risk.
Take-Profit and Stop-Loss: Take-profit automatically closes the position when the market price reaches a preset profit target, locking in profits. Stop-loss automatically closes the position when the market price reaches a preset loss limit, preventing further losses. Setting take-profit and stop-loss helps control risk and protect capital.
Limit Order: Limit order refers to the price setting when the strategy opens a position. By setting a limit order, you can control the opening price and avoid unfavorable transactions due to market fluctuations.
Profit Reinvestment: Profit reinvestment involves reinvesting earned profits into the strategy to increase position size, thereby achieving compound growth. This strategy is suitable for long-term grid trading but requires careful risk control to avoid liquidation risk due to oversized positions.
Per-Grid Increment: Per-grid increment involves gradually increasing position size in each grid to obtain higher profits when prices move in a favorable direction. This strategy is suitable for trending markets but requires careful setting of the increment ratio to control risk.
Estimated Liquidation Price: The estimated liquidation price when all long positions in the grid are filled and the maximum number of long positions can be opened.