The First Bot (Grid)
- Asset
- TQQQ — 3x leveraged QQQ
- Capital
- $500
- Strategy
- Grid — sell 3% on any rise ≥0.05%, re-buy on any fall ≥0.05%
- Ran for
- One week
- Outcome
- Retired. Killed by volatility decay and token burn; converted to buy-and-hold.
Initial Thoughts
- Capital – Start small. Paper trading is great to learn the fundamentals, but I wouldn’t have skin in the game
- Frequency – Need some volatility. Something that would trigger buys/sells a couple of times a week.
- Parameters – Buy as price dips, sell small chunks as price rises
I looked into leveraged Exchange-Traded Funds (ETFs). TQQQ is 3x daily QQQ. Let’s experiment with $500.
The grid bot would execute on a tight range – sell 3% of the position on any rise of 0.05% or more, and re-buy with the sale proceeds on any fall of 0.05% or more. The threshold is a floor, not a target: a move straight from $100 to $99 clears it just as a 0.05% tick does, so trades can fire at much larger swings than the trigger implies.
Execution
| TQQQ Grid Bot | |||||
|---|---|---|---|---|---|
| Price | $ Change | % Change | Shares Bought (Sold) | Sale (Buy) Proceeds | Notes |
| $ 70.00 | - | - | 7.13 | $ - | Position Opened |
| $ 70.04 | $ 0.03 | 0.05% | (0.21) | $ 15.00 | 3% sold at 0.05% gain |
| $ 69.33 | $ (0.70) | -1.00% | 0.21 | $ (15.00) | Bought -1% dip with sale proceeds |
| $ 70.72 | $ 1.39 | 2.00% | (0.21) | $ 15.32 | 3% sold at 2% gain |
| $ 68.60 | $ (2.12) | -3.00% | 0.21 | $ (15.32) | Bought -3% dip with sale proceeds |
Realized across those four trades. Two complete round trips on $500 – about 0.03%. Fractional is the word for it: at that rate the grid needs hundreds of round trips before it earns anything worth the name, and every one of them costs a conversation with the model.
The bot was running on its own. No need to monitor its activities. So far so good.
What I Had Not Accounted For
The two things that killed it were token usage and volatility decay.
Token burn
Trading with such frequency burned through Claude Pro’s token budget. Each trade requires a conversation with AI to execute. AI checks the price, evaluates the strategy, places the order, confirms execution, then updates its records. The grid bot could trigger several times an hour, quickly reaching token usage limits within Claude’s 5-hour window.
This is the constraint that has no analogue in traditional algo trading. A conventional bot’s cost per trade is commission and slippage. An agentic bot pays in tokens, and that budget is fixed per window regardless of how well the strategy is doing. Trade frequency stops being purely a strategy decision and becomes a budget decision.
Volatility decay
TQQQ can move +/-1% in a sideways market. The underlying QQQ ETF could go up 1% then down 1% over two days which would be back to roughly even. Since TQQQ is 3x the movement, going up 3% and down 3% would net ~0.10% loss. In a volatile market, this could steadily erode TQQQ’s price, leading to the bot buying into a depreciating asset.
After a week of analyzing the grid bot’s activities, the grid bot was retired and converted to a B&H strategy.
Terms used above are defined in the glossary.