The Complete Guide to Grid Trading
Why LUNA Wiped Out Every Grid

Grid trading is one of Asian retail traders' favorite "passive income" strategies — fire up a bot, and as long as price chops inside the range, it prints. It looks like a "fixed-deposit" style of trading. But in May 2022, LUNA went from $80 to zero in three days, and every LUNA grid blew through the bottom and went to zero.

This article walks through the math behind grid trading (arithmetic vs geometric), which markets fit and which don't, a Pionex / Binance Grid / Bitsgap platform comparison, and the truth about blow-through risk that 99% of Chinese-language tutorials gloss over.

1. The Math Behind Grid Trading

At its core: programmatic "buy low, sell high". Inside a preset price range, you place a buy order and a sell order at every interval. When price chops inside that range, it keeps triggering small round-trips and pockets the spread.

An Example (Intuitive Version)

Say BTC is at $60,000 and you expect it to chop between $50k and $70k:

• Place 5 buy orders: $58k / $56k / $54k / $52k / $50k
• Place 5 sell orders: $62k / $64k / $66k / $68k / $70k

Price drops to $58k → buy order fills → a $60k sell order goes up
Price climbs back to $60k → sell order fills → you pocket $2k of spread
Price keeps chopping → rinse and repeat

2. Arithmetic Grid vs Geometric Grid

Arithmetic Grid

spacing = (price_max − price_min) / n
Fixed spacing per grid (e.g. $200)

Example: $50k–$70k, 20 grids
  spacing = (70000 - 50000) / 20 = $1,000
  Grids: $50k / $51k / $52k / ... / $70k

Geometric Grid

spacing_ratio = (price_max / price_min)^(1/n)
Fixed ratio per grid (e.g. 0.5%)

Example: $50k–$70k, 20 grids
  ratio = (70000/50000)^(1/20) = 1.01695 (1.695%)
  Grids: $50k / $50,847 / $51,710 / ... / $70k

3. Key Parameter Settings

① Upper and Lower Bounds

Usually based on support / resistance from the last 30-90 days. Too narrow and you blow through it; too wide and your capital sits idle.

② Number of Grids

• Choppy market: 30-50 grids
• Wide-range swings: 80-150 grids

③ Per-Grid Capital

Per-grid capital = Total capital / (Number of grids × 2)
                                          ↑
                              x2 leaves a buffer for up/down moves

④ Density vs Width

• High density (many grids): triggers often, small profit per trip, fees eat a bigger share
• Low density (few grids): rare triggers, bigger profit per trip, low efficiency
• Wide range: more tolerance for moves, low capital utilization
• Narrow range: high utilization, easier to blow through

4. Markets That Fit vs Don't Fit

✅ Good fit

• Choppy ranges (price bouncing between support and resistance)
• Moderate volatility (10-30% monthly)
• Clear range (you can draw upper and lower bounds on the chart)

❌ Bad fit

• One-way trends (you blow through whether it goes up or down)
• Low-liquidity small caps (slippage eats profit)
• Around major news events (extreme volatility)
• Freshly listed new coins (no history to anchor to)

5. The Biggest Killer: Blow-Through

Downside Blow-Through

Price breaks below the lower bound → bot stops → you're left holding spot, "bagheld". All the buy orders filled, but no sell orders trigger.

May 2022, the LUNA event: price went from $80 to zero in three days as UST de-pegged.Every LUNA/UST grid blew through to the bottom and went to zero. This isn't "I'm bagheld, I'll wait for the bounce" — it's actually zero.

Upside Blow-Through

Price punches through the upper bound → your entire position gets sold off → you watch it rip without you. You didn't lose money, but the opportunity cost is huge.

The Defining Case from the 2022 Bear

BTC went from $69k in November 2021 to $15k in November 2022. A massive number of grids set in the $30k-$50k range all blew through the bottom, and retail was left holding BTC bought at $40k that lost 60% of its value.

6. Comparing the Major Grid Platforms

Pionex Origin Story (the Chinese-speaking world loves this one)

Pionex was founded in 2019 by a Singapore team, who came from BitUniverse (a popular portfolio-tracking + bot app in Asia, huge in Taiwan / Korea / Indonesia).

A common myth is that "Pionex was funded by Binance" — that's not true. The actual investors are Banyan Capital, Shunwei Capital (Lei Jun of Xiaomi), and ZhenFund. That said, Pionex does route its liquidity through Binance + HTX, which is probably where the rumor came from.

Their angle: "free bots" to break 3Commas' subscription moat. Retail doesn't pay a monthly fee — all 16 bots are free, and Pionex only takes a cut on trade fees.

7. Writing Your Own Grid Strategy: A Pine Script Example

Below is a simplified arithmetic gridto help you understand the internals. For live trading, you're better off using the platform's native bot.

//@version=5
strategy("Simplified Grid Trading (Teaching)", overlay=true)

// === Parameters ===
upperLimit = input.float(70000.0, "Upper Limit")
lowerLimit = input.float(50000.0, "Lower Limit")
gridCount = input.int(20, "Grid Count")
qtyPerGrid = input.float(0.001, "BTC Per Grid")

// === Compute each grid price ===
spacing = (upperLimit - lowerLimit) / gridCount

// === Simplified entry: buy on break below any grid, sell on break above ===
// (real grid logic is more complex; this is illustrative)
for i = 0 to gridCount
    gridPrice = lowerLimit + i * spacing

    // Cross down
    if (close < gridPrice and close[1] >= gridPrice)
        strategy.entry("Buy_" + str.tostring(i), strategy.long, qty=qtyPerGrid)

    // Cross up
    if (close > gridPrice and close[1] <= gridPrice)
        strategy.close("Buy_" + str.tostring(i))

// === Visual: draw all grid lines ===
for i = 0 to gridCount
    line.new(bar_index, lowerLimit + i * spacing,
             bar_index + 1, lowerLimit + i * spacing,
             color=color.gray, extend=extend.right)

// === Grid break warning ===
bgcolor(close > upperLimit ? color.new(color.red, 80) : na, title="Grid Break Up")
bgcolor(close < lowerLimit ? color.new(color.red, 80) : na, title="Grid Break Down")

8. Going Further: Grid + Trend Filter

A pure grid blows through in trending markets. The next-level move: pause the grid in trending regimes.

// Use EMA 200 for major trend
ema200 = ta.ema(close, 200)
inRange = math.abs(close - ema200) / ema200 < 0.10  // Within 10% of EMA 200

// Run grid only on small deviation
if (inRange)
    // Grid logic
else
    strategy.cancel_all()  // Cancel all orders, wait for trend end

9. Three Key Takeaways

1. A grid isn't a money machine — it's a tool for monetizing chop. It only works in the right market regime. Force it onto a trending market and it blows through.
2. At its core, it's short volatility: small wins 90% of the time, big losses 10% of the time. That's the lesson LUNA left behind.
3. Picking the right asset matters more than tuning parameters: high-liquidity assets that won't go to zero (BTC, ETH) are where grid trading actually belongs. Setting a grid on a small altcoin is gambling with your life savings.