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Grid Type Calculations

Applies to: Advanced Traders, Quantitative Analysts, Strategy Developers

This guide provides the mathematical foundation for both Arithmetic and Geometric grid types, including formulas, examples, and practical applications.

Arithmetic Grid Calculations​

Definition​

Arithmetic Grid: Each grid level has an equal absolute price difference between adjacent levels (e.g., 1000, 1100, 1200, 1300...).

Core Formula​

Price Difference Calculation​

Spread = (Upper Price - Lower Price) / Number of Grids

Where:

  • Upper Price: Highest price in the trading range
  • Lower Price: Lowest price in the trading range
  • Number of Grids: Total grid levels to create
  • Spread: Constant price difference between adjacent grids

Price Distribution Formula​

Individual Grid Price Calculation​

Price_n = Lower Price + Spread × (n - 1)

Where:

  • Price_n: Price at grid level n
  • n: Grid level number (1, 2, 3, ..., Number of Grids)
  • Lower Price: Base price level
  • Spread: Calculated constant difference

Complete Price Series​

Price_1 = Lower Price + Spread × 0 = Lower Price Price_2 = Lower Price + Spread × 1 Price_3 = Lower Price + Spread × 2 ... Price_n = Lower Price + Spread × (n - 1) = Upper Price

Arithmetic Grid Example​

Given:

  • Lower Price = $1000
  • Upper Price = $2000
  • Number of Grids = 5

Calculation:

Spread = ($2000 - $1000) / 5 = $200

Grid Prices:

Price_1 = $1000 + $200 × 0 = $1000 Price_2 = $1000 + $200 × 1 = $1200 Price_3 = $1000 + $200 × 2 = $1400 Price_4 = $1000 + $200 × 3 = $1600 Price_5 = $1000 + $200 × 4 = $1800

Note: The highest price is $1800, which may not exactly equal the Upper Price due to integer division. The system automatically adjusts to ensure Price_n = Upper Price.

Geometric Grid Calculations​

Definition​

Geometric Grid: Each grid level has an equal price ratio (percentage difference) between adjacent levels (e.g., 1000, 1100, 1210, 1331... with 10% ratio).

Core Formula​

Price Ratio Calculation​

Ratio = (Upper Price / Lower Price) ^ (1 / (Number of Grids - 1))

Where:

  • Upper Price: Highest price in the trading range
  • Lower Price: Lowest price in the trading range
  • Number of Grids: Total grid levels to create
  • Ratio: Constant multiplier between adjacent grids

Price Distribution Formula​

Individual Grid Price Calculation​

Price_n = Lower Price × Ratio ^ (n - 1)

Where:

  • Price_n: Price at grid level n
  • n: Grid level number (1, 2, 3, ..., Number of Grids)
  • Lower Price: Base price level
  • Ratio: Calculated constant multiplier

Complete Price Series​

Price_1 = Lower Price × Ratio ^ 0 = Lower Price Price_2 = Lower Price × Ratio ^ 1 Price_3 = Lower Price × Ratio ^ 2 ... Price_n = Lower Price × Ratio ^ (n - 1) = Upper Price

Geometric Grid Example​

Given:

  • Lower Price = $1000
  • Upper Price = $2000
  • Number of Grids = 5

Calculation:

Ratio = ($2000 / $1000) ^ (1 / (5 - 1)) = 2 ^ (1/4) ≈ 1.1892

Grid Prices:

Price_1 = $1000 × 1.1892 ^ 0 = $1000.00 Price_2 = $1000 × 1.1892 ^ 1 = $1189.20 Price_3 = $1000 × 1.1892 ^ 2 = $1414.21 Price_4 = $1000 × 1.1892 ^ 3 = $1681.79 Price_5 = $1000 × 1.1892 ^ 4 = $2000.00

Comparison Table​

AspectArithmetic GridGeometric Grid
Price DifferenceConstant absolute differenceConstant percentage ratio
CalculationLinear progressionExponential progression
Best ForStable prices, narrow rangesVolatile markets, wide ranges
Grid SpacingEqual dollar amountsEqual percentage changes
Example1000, 1100, 1200, 13001000, 1100, 1210, 1331
Profit DistributionVaries with price levelFixed percentage per grid

Practical Considerations​

Arithmetic Grid Advantages​

  • Simpler to understand and calculate
  • Predictable absolute profit per grid
  • Better for stable, range-bound markets
  • Easier risk management in dollar terms

Geometric Grid Advantages​

  • Better for volatile instruments
  • Adapts to exponential price movements
  • Maintains consistent risk percentage
  • More efficient capital utilization in trending markets

Choosing Grid Type​

Use Arithmetic When:​

  • Trading stable currency pairs
  • Market is in tight consolidation
  • You want predictable dollar profits
  • Price movements are linear

Use Geometric When:​

  • Trading cryptocurrencies
  • Market has high volatility
  • You want percentage-based profits
  • Price movements are exponential