Grid bot on VPS: setting up 3Commas / Pionex / Hummingbot

For reliable 24/7 operation of grid bots like 3Commas, Pionex, or Hummingbot, using a Virtual Private Server (VPS) is the optimal solution. For most tasks, even basic plans with minimal specifications are sufficient.

Grid trading is a powerful strategy that allows you to profit from sideways market movements when an asset's price fluctuates within a certain range. Unlike trend-following strategies, grid bots thrive in uncertain conditions, constantly buying low and selling high. However, for such a bot to operate effectively, stable and continuous execution is required, making a grid bot VPS an indispensable tool. In this article, we will explore how to set up a grid bot, compare popular platforms, and determine the optimal requirements for your grid trading server.

What is grid trading and how does it work?

Grid trading (from "grid") is an algorithmic trading strategy based on placing multiple limit buy and sell orders at predetermined price levels, forming a "grid." The main idea is to automatically buy an asset when its price falls to one of the grid levels and sell it when its price rises to the next level. This process repeats multiple times, allowing for small profits from each trade.

How it works:

• You define a price range (upper and lower bounds) within which you expect the asset to fluctuate.
• Within this range, a series of limit orders are placed: buy orders below the current price and sell orders above.
• When the price falls and reaches a buy order, it is executed. A new sell order is then placed above that point.
• When the price rises and reaches a sell order, it is executed. A new buy order is then placed below that point.

This strategy is most effective in flat or sideways markets, where the asset's price moves within a narrow corridor without a strong trend. Typical trading pairs for grid trading include BTC/USDT, ETH/USDT, and other pairs with relatively stable stablecoins. In such conditions, grid bots can demonstrate a stable ROI in the range of 5-15% per month, depending on volatility and bot settings.

Why do you need a VPS for Grid bots? A reliable grid trading server

The operation of a grid bot, like any other trading algorithm, requires round-the-clock market monitoring and instant order execution. A regular home computer cannot provide the necessary reliability and stability. This is why a VPS for Grid bots, as well as for DCA bot hosting and other automated strategies, is a critically important component:

• 24/7 Operation: A VPS operates without interruptions, regardless of your home internet or power supply. This ensures your bot is always active and ready to trade.
• Stable Internet Connection: Valebyte.com data centers provide high-speed and stable internet connectivity, minimizing delays when sending orders to the exchange.
• Low Latency: Locating your VPS in a data center with low latency to cryptocurrency exchange servers (e.g., Binance, Bybit) allows the bot to react to price changes faster, which can be critical for profitability. We covered the aspects of selection and setup in detail in the article: VPS for Binance: Setting up a trading bot with minimal latency.
• Security: Hosting your bot on a separate server enhances the security of your trading operations, isolating it from potential threats on your personal device.
• Independence: You can manage the bot remotely from any device, without being tied to your computer.

Thus, a grid trading server based on a VPS ensures continuity, speed, and security, which are the foundation for successful automated trading.

Platform Comparison: 3Commas, Pionex, and Hummingbot

Choosing a platform for grid trading depends on your experience, budget, and willingness to delve into technical details. Let's look at three popular solutions:

3Commas: Convenience and Functionality in the Cloud

3Commas is a popular platform for automated trading, offering a wide range of bots, including grid bots and DCA bots. Although 3Commas operates in the cloud and does not require your computer to run constantly, using a VPS can be beneficial for running additional scripts, monitoring, or integrating with other tools. Setting up a 3Commas VPS usually involves installing a terminal or script that interacts with the 3Commas API.

Pionex: Exchange with Built-in Bots for Beginners

Pionex is a unique cryptocurrency exchange that has integrated bots directly into its platform. This is an ideal option for beginners, as it requires no technical knowledge or VPS setup. You simply select the desired bot (e.g., Grid Bot or DCA Bot), set the parameters, and launch it. Pionex fees are competitive, and the lack of need for a Pionex bot VPS makes it very accessible.

Hummingbot: Maximum Control for Experienced Users

Hummingbot is an open-source project that provides a framework for creating and running trading bots, including grid bots, arbitrage bots, and market makers. It requires installation on your own server, making Hummingbot on VPS an optimal solution. This is the choice for those who value full control, flexibility, and customization options. A detailed guide to its setup can be found in our article: Hummingbot on VPS: Step-by-step installation for market making.

Setting up a Grid Bot on a VPS: Step-by-step guide for Hummingbot

Since 3Commas and Pionex are cloud solutions or integrated into an exchange, their setup on a VPS is not a direct necessity for the bot itself. However, for Hummingbot, a VPS is the standard and recommended deployment method. Let's look at the main steps:

1. Choosing and Preparing Your VPS

Choose a VPS from Valebyte.com with Ubuntu 20.04/22.04 LTS operating system. After gaining access:

• Update the system:

sudo apt update && sudo apt upgrade -y

• Install necessary packages (e.g., `git`, `curl`):

sudo apt install git curl -y

2. Installing Docker and Docker Compose

Hummingbot is most often run in a Docker container for ease of deployment and isolation.

• Install Docker:

curl -fsSL https://get.docker.com -o get-docker.sh
sudo sh get-docker.sh

• Add your user to the docker group to avoid `sudo` with every Docker command:

sudo usermod -aG docker $USER
newgrp docker

• Install Docker Compose (if not installed with Docker):

sudo apt install docker-compose -y

3. Deploying Hummingbot via Docker

Create a directory for Hummingbot and download the deployment script:

mkdir ~/hummingbot_files
cd ~/hummingbot_files
wget https://raw.githubusercontent.com/hummingbot/hummingbot/master/INSTALL_DOCKER.md -O setup_docker.sh
chmod +x setup_docker.sh
./setup_docker.sh

This script will help you set up the necessary directories and permissions. Once completed, you can launch Hummingbot:

docker compose up -d

To connect to the Hummingbot console:

docker attach hummingbot

4. Configuring a Grid Strategy in Hummingbot

Inside the Hummingbot console, you can use the `create` command to set up a new strategy. Select `grid_strategy` and follow the instructions to specify the trading pair (e.g., `binance_perpetual`, `BTC-USDT`), price range, number of grids, and other parameters.

To ensure the bot continues to run even after disconnecting from the SSH session, use the `tmux` or `screen` utility:

tmux new -s hummingbot_session
docker attach hummingbot
# Press Ctrl+B, then D to detach from the tmux session

Which VPS to choose for a Grid Bot? Is VPS-XS sufficient?

The VPS requirements for a grid bot are relatively low, especially if you plan to run one or two instances. For most grid bots, including Hummingbot on VPS, a basic plan is sufficient.

Minimum recommendations:

• Processor: 1-2 vCPU (modern Intel Xeon or AMD EPYC).
• RAM: 1-2 GB RAM.
• Disk: 20-30 GB NVMe SSD. Using NVMe is critical for fast access to log files and databases, as well as for overall system responsiveness.
• Operating System: Ubuntu 20.04/22.04 LTS or Debian.

Valebyte.com plans, such as VPS-XS or similar entry-level options, with 1-2 vCPU, 2 GB RAM, and 30-40 GB NVMe SSD, are generally sufficient for running one or two simple grid bots. If you plan to run multiple bots, use complex strategies, or integrate additional scripts and indicators, it is recommended to choose a plan with 2-4 vCPU and 4-8 GB RAM. The main goal is to ensure stability and sufficient RAM to avoid swapping.

Optimization and Security of your DCA Bot Hosting on VPS

Even for a relatively undemanding application like a grid bot, it's important to pay attention to the optimization and security of your DCA bot hosting or grid trading server.

1. Firewall Configuration (UFW): Restrict access to the VPS to only necessary ports (SSH, and if you use a web interface, then the corresponding port).

sudo ufw enable
sudo ufw allow ssh
# If you have a web interface, e.g., for monitoring:
# sudo ufw allow 80/tcp
# sudo ufw allow 443/tcp

2. Using SSH Keys: Disable password authentication for SSH and use only SSH keys. This significantly enhances security.
3. Regular Updates: Keep the operating system and all installed software up to date.

sudo apt update && sudo apt upgrade -y

4. Resource Monitoring: Periodically check CPU, RAM, and disk space usage with utilities like `htop`, `df -h`.
5. Backups: Regularly back up your bot's configuration files and, if necessary, the entire system. Valebyte.com offers convenient solutions for creating VPS snapshots.
6. Using `tmux` or `screen`: To keep the bot running even after disconnecting from the SSH session.

Conclusion

Using a VPS to run 3Commas, Pionex, or Hummingbot grid bots is the key to the stability, security, and efficiency of your trading operations. For most users, especially when working with self-hosted solutions like Hummingbot, even a basic VPS-XS from Valebyte.com will be sufficient to ensure 24/7 uninterrupted operation. The choice of a specific platform depends on your level of technical expertise: Pionex for maximum simplicity, 3Commas for cloud functionality, and Hummingbot for those seeking full control and flexibility on their own grid bot VPS.