Grid Spacing Types

Grid Spacing Types

Grid spacing defines the distance between consecutive grid levels. The two primary approaches — linear and geometric — produce fundamentally different grid structures that suit different market conditions and asset behaviors.

Linear (Arithmetic) Spacing

Linear spacing places grid levels at equal dollar intervals throughout the range.

Formula:

Spacing = (Grid High - Grid Low) / (Grid Levels - 1)

For a range of $100 to $150 with 11 levels:

Spacing = ($150 - $100) / 10 = $5
Levels: $100, $105, $110, $115, $120, $125, $130, $135, $140, $145, $150

Every level is exactly $5 apart, regardless of the price.

Profit characteristics: Each completed round trip earns the same dollar amount ($5 in this case). The percentage return, however, varies by level:

Lower levels produce a higher percentage return per trade. This creates an implicit bias — the grid is more “profitable” (in percentage terms) at the bottom of the range.

Geometric (Percentage) Spacing

Geometric spacing places grid levels at equal percentage intervals. Each level is a fixed percentage above the previous one.

Formula:

Ratio = (Grid High / Grid Low) ^ (1 / (Grid Levels - 1))
Level_n = Grid Low x Ratio^n

For a range of $100 to $150 with 11 levels:

Ratio = (150/100) ^ (1/10) = 1.0414 (4.14% per step)
Levels: $100.00, $104.14, $108.45, $112.94, $117.61,
        $122.47, $127.54, $132.82, $138.32, $144.05, $150.00

The dollar gap between levels increases as the price rises, but the percentage gap remains constant at 4.14%.

Profit characteristics: Each completed round trip earns the same percentage return:

This uniform percentage return means every trade is equally efficient regardless of price level.

Which Should You Choose?

Choose linear spacing when:

• The grid range is narrow (less than 20% of the price).
• You are trading stablecoins or very low-volatility pairs.
• You want simplicity — linear grids are easier to calculate and understand.
• The dollar profit per trade matters more than percentage return.

Choose geometric spacing when:

• The grid range is wide (more than 30% of the price).
• You are trading volatile assets like altcoins.
• You want consistent percentage returns across all levels.
• You plan to run the grid for an extended period where the price may shift significantly within the range.

Why Geometric Spacing Matters for Wide Ranges

Consider a grid from $50 to $200 with linear $10 spacing:

• At $50: a $10 move is 20% of the price.
• At $200: a $10 move is only 5% of the price.

The grid is extremely dense at the top (where price rarely moves enough to trigger trades) and sparse at the bottom (where moves are large and might skip levels). Geometric spacing solves this by making levels proportionally spaced.

Hybrid Approaches

Some advanced grid configurations use hybrid spacing:

• Range-weighted: Denser levels near the current price, wider levels at the extremes.
• Dynamic grids: Spacing adjusts based on recent volatility — tighter during calm markets, wider during volatile ones.
• Cluster grids: Extra levels concentrated around key support/resistance zones.

These approaches require more sophisticated configuration but can improve capital efficiency in specific scenarios.

Practical Impact on Profits

For most traders with moderate range sizes (15-30%), the difference between linear and geometric spacing is modest. The choice becomes significant when:

• The range exceeds 50% of the current price.
• The asset has a history of large percentage moves in both directions.
• You are comparing performance over many months of operation.

When in doubt, start with linear spacing for simplicity. Switch to geometric if you find that trades cluster at one end of your range and rarely execute at the other.

Summary

• Linear spacing uses equal dollar intervals, producing higher percentage returns at lower price levels and consistent dollar returns across all levels.
• Geometric spacing uses equal percentage intervals, ensuring uniform percentage returns at every level and better distribution across wide ranges.
• Choose linear for narrow ranges and simplicity; choose geometric for wide ranges and consistent percentage efficiency.

Next Step

Now that you understand grid mechanics, learn when the strategy performs best in When Grid Trading Works Well.