Forex Grid trading – Why do it and some trading strategies

 

FOREX GRID TRADING

 

Creating a grid

Grid trading refers to the creation of specific equal distant price levels on a trading chart. These price levels can have a random starting point or a specific one, but in general the distance between the price levels is the same. This distance is referred to as the grid gap.

 

Examples of a Grid

The grid below shows a grid with 200 pip gaps

general grid

 

Why create Grid

  • Grid levels provide fixed trading decision points
  • Every time the price reaches a particular grid level a trading decision can be made. The trading decision could be buy, sell, close an open deal or do nothing. Nice a simple
  • Grid Level enable Standard decision making
  • A Grid allow the same trading decision to be made all the time.
  • Standard decision making allows for automation
  • Because the same decision is made all the time the trading decisions can be programmed and automated.

 

Example of a grid system

There are many Forex systems using the Grid Concept. Below is an example of one such Grid System. We will provide a few more.

A simple grid system could have the following simple rules or steps

Step 1: Determine a grid size: Say 250 pips

Step 2: Start where the price is right now. Open and Buy and  sell transaction.

Step 3: At each grid level reached ensure that there is an open buy and sell transaction.

Step 4: At each grid level reached ensure that there is an open buy and sell transaction.

Step 5: When the total cashed transaction is bigger than the total of the open transactions close all transactions at a net profit and go to start.

Step 6: If the 4th level of the grid is reached close all transactions at a loss (effectively the stop).

This system has totally standard decision making and can be fully automated.

The above system will be referred to the No Stop, Hedged, Grid trading system:- No Stop, Hedged, Grid Trading System

There are many others – The Grid Trend Multiplier is another Grid Trading approach:- Grid Trend trading Multiplier

 

Benefits of grid trading

  • Non emotional. Because all decisions are determined before the time there is stress from decision making
  • A grid will enter trades in wild whipsaw markets that are normally very frustrating and unpredictable. No trade touching a grid level will be missed.
  • Automated Forex trading.
  • You do not need trading charts. Because trading happens at price levels there is no need for trading charts.

 

Dangers of grid trading

Grids work very well in sideways markets or when the price is traveling in your intended direction. Loses accumulate exponentially when you have open transactions at each level that are not hedged or that do not have stops.

 

Video explaining the No stop, Hedged, Grid trading system

 

This video has been viewed 28 495 times


Other Videos

There are a number of other videos on the Expert4x Grid trading playlist which can be accessed here:

 

 

 

Tallinex

 

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