Educating investors about the benefits of trading digital assets and the potential returns has always been a central tenet of OKEx’s work. The team regularly produces guides and updates on how to generate returns by trading on the platform, and offers advice on what can be quite a complicated subject.

Many investors, both new and more experienced, seek guidance on the best trading strategies to use to generate a return on their investments.

Previously. The OKEx team has produced guides on calendar spread arbitrage, and spot futures arbitrage. 

Now, the exchange is offering guidance on another trading strategy – grid trading.

So what is it, and how can you utilize it in your day-to-day trading plans?

In its post OKEx goes into detail about how to grid trade, but in a nutshell it’s actually quite simple.

The method encourages you to compare positions and base your trades around them, drawing a grid to highlight areas where you need to adapt your position in order to maximize your chances of a solid return.

“It’s a technique where a certain number of sell or buy orders are placed at regular intervals above or below a set price to target gains instead of stopping loss,” OKEx says.

“Where a position’s market price meets a predefined target and a gain is recorded upon closing, the same number of buy or sell orders are placed above or below the set price again. This creates a fishing net-like grid of orders for gaining profits back and forth in the fluctuating market.

“Theoretically, grid trading strategy is a sort of absolute return strategy employed by medium-to-low frequency trading investors in arbitrage trading. In a mid-to-long term, the amount you invest is supposed to be risk-free. However, practically, you need to consider the potential risks in doing investment.”

Remember the risk

Despite offering new ways to trade and profit on its platform the team at OKEx is very clear that even low-risk strategies like grid trading, carry some risk. As such, their spokesperson said you should always take precautions when you trade cryptocurrencies, or any assets.

The spokesperson said: “Trading digital assets involves significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risks involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.

Always make sure you have a risk management plan in place.