Experience and Thoughts on Grid Trading

Grid trading originated from the concept in cryptocurrency trading. Grid means a lattice pattern, and this trading method is named after the similarity to the way cryptocurrency trading divides a specific range into a grid and trades within it. This grid trading method is provided by cryptocurrency exchanges, but not by stock exchanges, so it seems that each individual adapts and uses it with slight modifications according to their own preferences.

Since the buying and selling prices are predetermined, it's somewhat understandable when visualized in a diagram, but it doesn't seem suitable for highlighting the drawbacks. Therefore, the grid method I envision to illustrate the drawbacks is as follows. (Please excuse the awkwardness of the drawing. 😂)

Terminology

• Sea: US stock market - It deepens when more capital flows in and shallows when it flows out.
• Fish: SOXL (SOXL) - It goes back and forth, disregarding my feelings. (SOXL, a friend of the Escolar)
• Net: Investment amount per tier - Determines how many nets you cast. Curiously, only one fish can be caught per net. (Number of shares)
• Net installation and retrieval company: Securities firm - A company authorized to fish in this sea. It operates by charging fees.
• Net installation machine: HTS, MTS
• Net retrieval sensor: Automatic program - Users can install it, or they can use the function provided by the company.
• Net installation location:
  Buy % - Users set how densely they want to install the nets. (Distance between nets)
  Sell % - Users set where they want to catch the fish. (Distance between the fish and the net)
• Shrimp: Money ($) injected into the US stock market - When a lot of shrimp, the food of SOXL, is injected, SOXL can go to the deep sea. And it grows bigger as it eats the shrimp. (Uptrend)

The initial drawing lol

The drawing in the middle

Current version lol

There's a sea where you can catch fish if you cast your net. In this sea, you can install nets at specific locations through a company to catch fish. This fish is a legendary fish that gets bigger and more expensive the further out in the sea it's caught. Conversely, if it's caught near the shore and then completely rises to the surface, it disappears like dust. ㅎㄷㄷㄷ When installing a net to catch this fish, the size of the fish varies depending on the location, so you need to buy a more expensive net the bigger it is, and you decide where to cast the nets you've bought. When a fish enters the location where the net is installed, it's automatically caught by the net retrieval sensor, or if you instruct the company to retrieve it manually, you'll catch the fish and sell both the fish and the net. (Profit realization) Of course, even if there are no fish at the location where the net is installed, you can retrieve the net and sell it, and you can sell the net at the current fish price. If you installed the net near the shore and forgot to retrieve it, but the fish went out to the deep sea, you can sell the net for a higher price than you bought it for, as the company also needs to quickly retrieve nets to sell them to those who are fishing in the deep sea. Conversely, if you cast your net in the deep sea but the fish is near the shore, many nets are already installed near the shore, so they're less likely to buy your net. So, even if you bought the net at a high price, you may end up selling it at a low price. As the fish gets closer to the bottom of the sea, the net remains spread out (quantity held), but the average price of the net at the current point in time decreases. (Fish, let's play in the big water!!) Let's use this to gauge the risk.

Worrisome Situations (feat. Current Situation lol)

• The fish only moves outside the nets I've installed. (Involuntary long-term investment / Involuntary value investment / Getting stuck are alternative expressions that seem appropriate.)
• The sea level doesn't rise for a long time. (The stock market hasn't seen an uptrend during the period I've held my investment)
• The fish doesn't move much. (3x leverage with no volatility)
• The fish population is declining. (Trading cliff, difficulty in buying/selling)

Failed Situations

I now understand that there's an underground level beneath the bottom of the sea.
But it seems there's something beneath the underground level, too.

• The sea has completely dried up. (Change in the stock market)
• The fish have come out of the water and gone extinct. (Delisting)

Does the analogy of worrisome and failed situations resonate with you?! These are quite possible scenarios, so I hope you've contemplated them seriously. Many people simply cast their nets in the deep sea at the end of 2021, and they've been going through a tough time in 2022. I hope you can find a bit of solace in knowing that you're not alone in this. Thankfully, though, I've spread out a lot of nets, and now I'm starting to catch fish near the shore?! I've been repeatedly casting and retrieving the nets around 11-12. I hope SOXL will do well until the end of the year.