Grid trading is one of Binance's most popular automated strategies, but many users struggle with one setting: arithmetic or geometric mode? Register a Binance account to experience both modes. Get the Binance app to easily create grid strategies on mobile.
How Grid Trading Works
Grid trading's core idea is setting multiple buy and sell price levels within a price range. Price drops trigger buys, price rises trigger sells — continuously buying low and selling high to capture spreads.
Imagine drawing many horizontal lines on a price chart — each space between lines is a grid cell. Every time price crosses a line, a trade triggers. The difference between arithmetic and geometric is how those lines are spaced.
Arithmetic Grid Explained
In arithmetic mode, the price difference between each grid level is equal. For example, setting 10 grids between 1,000 and 2,000, each grid is spaced 100 apart (1000/10=100).
Grid levels: 1,000, 1,100, 1,200, 1,300, 1,400, 1,500, 1,600, 1,700, 1,800, 1,900, 2,000. The price gap between adjacent grids is always 100, regardless of price level.
Arithmetic grids invest similar capital and earn similar absolute profits at each level. Low-price and high-price grids contribute equally to earnings.
Geometric Grid Explained
In geometric mode, the price ratio between each grid level is equal. Same range (1,000 to 2,000) with 10 grids, spacing increases by percentage.
Grid levels approximately: 1,000, 1,072, 1,149, 1,232, 1,320, 1,414, 1,516, 1,625, 1,741, 1,866, 2,000. Notice that low-price spacing is smaller (~72) while high-price spacing is larger (~134).
Geometric grids produce the same percentage return at every level, regardless of price.
The Core Difference
In one sentence: arithmetic grids earn the same dollar amount per grid; geometric grids earn the same percentage per grid.
This seemingly subtle difference has significant impact. With BTC grids set between 20,000 and 40,000:
Arithmetic: Grids at 20,000–22,000 and 38,000–40,000 have identical spacing (2,000), but the lower grid yields 10% returns while the upper yields only 5.3%. Lower grids are more efficient.
Geometric: Lower grids have smaller spacing, upper grids have larger spacing, but every grid yields the same percentage. Capital efficiency is uniform across all price levels.
When to Choose Arithmetic
- You expect price to spend more time in the lower portion of the range
- The range spread is modest (within ~30%)
- Trading stablecoin pairs or low-volatility coins
- You want more trading opportunities at lower prices
When the range is narrow, arithmetic and geometric produce nearly identical results.
When to Choose Geometric
- The range spread is large (over ~50%)
- Trading highly volatile coins
- You want uniform capital efficiency across all price levels
- You plan to run the grid strategy long-term
For highly volatile assets, geometric mode better adapts to the logarithmic distribution of price movements — a fundamental characteristic of financial markets.
Selection Guideline
If unsure, a simple rule of thumb: if the upper limit divided by the lower limit is less than 1.5, use arithmetic; if greater than 1.5, use geometric. In most cases, geometric is the safer choice since it maintains balanced efficiency across all price levels, avoiding the obvious inefficiency of high-price grids in arithmetic mode.