The core difference between arithmetic and geometric grids lies in how grid spacing is calculated: arithmetic uses a fixed price difference, while geometric uses a fixed percentage. This determines which price fluctuation ranges and coin characteristics each is best for.
Step 1: Understand the Price Spacing Logic of Both Grids
What to do: Understand the fundamental difference in how prices are arranged in arithmetic and geometric grids.
How to do: Compare their formulas:
Arithmetic Grid: The price difference between neighboring orders is equal. For example, with a price range of 100-400 and 3 grids, you get levels at 100, 200, 300, 400, each with a 100 USDT difference.
Geometric Grid: The ratio between neighboring orders is equal. For example, 1, 2, 4, 8, each next price is twice the previous.
This difference determines:
Arithmetic: The higher the price, the lower the per-grid yield. In the 10,000-20,000 range, each grid earns 1%; in 50,000-60,000, the same 1,000 USDT spread yields only 2%.
Geometric: Each grid's yield rate is constant. No matter where the price is, the profit percentage per grid stays the same.
Completion standard: You can explain that arithmetic grids have a fixed price difference per grid, while geometric grids have a fixed yield rate per grid.
Step 2: Match Your Situation Based on Fluctuation Range and Coin Characteristics
What to do: Choose the more suitable grid type based on actual price range and coin volatility characteristics.
How to do: Refer to these scenarios:
Situation A: Price oscillates in a narrow range (range span less than 30%)
Recommendation: Arithmetic grid
Reason: With a relatively small price range, a fixed price difference can keep profits per grid fairly even. Suitable for mainstream coins like BTC and ETH with stable absolute price movements.
Example: BTC oscillating between 50,000-60,000 USDT, arithmetic mode with 100 USDT per grid provides stable, predictable profits.
Situation B: Price fluctuates in a wide range (span over 50%), or the asset's unit price is high
Recommendation: Geometric grid
Reason: Geometric mode is better for assets with long-term upward oscillations, alleviating the problem of diluted capital at high prices. In a wide range, geometric grids place orders more densely at low prices (easier to trigger trades) and naturally widen spacing at high prices (capturing larger single gains).
Example: ETH ranging between 3,000-6,000 USDT, geometric mode ensures the per-grid yield is consistent in both low and high price zones, avoiding the "one grid at the top earns less than at the bottom" issue.
Situation C: The asset is a highly volatile altcoin (e.g., DOGE, SHIB with daily swings over 10%)
Recommendation: Geometric grid
Reason: High-volatility coins have large price spans; geometric grids better adapt to huge price changes, avoiding frequent triggering due to too-small grid spacing that eats profits with fees.
Completion standard: You've determined the price range of your trading pair and know whether to choose arithmetic or geometric.
Common failure reasons: Many use arithmetic grids for wide-ranging trends, and as prices rise, grids become sparse and miss out on gains; or use geometric grids for narrow oscillations, where low-price grids are too dense and fees eat profits.
High risk: If the market price falls below the grid's lowest price or breaks above the highest price, the strategy will stop executing, and the held position will face floating losses. Regardless of using arithmetic or geometric, always set a reasonable stop-loss price to prevent sustained losses from one-sided trends.
Step 3: Verify with Actual Parameters That Per-Grid Profit Is Reasonable
What to do: Before starting, run a calculator to ensure you'll still profit after fees.
How to do: Based on the chosen grid mode, calculate the per-grid profit rate:
Arithmetic mode: Per-grid profit amount is fixed; verify if each grid's profit exceeds fees. For example, with a 100 USDT price difference and a 0.08% fee per trade, if per-grid profit is less than 0.3%, earnings might not cover fees.
Geometric mode: Per-grid profit rate is constant; directly check the system-estimated per-grid yield rate and ensure it's higher than the fee rate.
Verification method: After creating the grid, go to [Open Orders] and check the order distribution. In arithmetic mode, orders are evenly spaced across price levels; in geometric mode, low-price orders are denser than high-price ones. If the distribution is the opposite of what you expected, you chose the wrong mode — stop the bot and reconfigure promptly.
