This time we’ll talk about trading technique called grid trading aspect whose name comes from the graphics shown (There is also another way of trading based on graphs called renko charts). This technique does not work for binary options. use is recommended forex
Those who use this system are often confronted by the typical teaching of money management and operational wing level market generates, however, if this technique is used properly can generate profits consistently. However, others claim it ends up causing losses. Anyway, I will plead and introduce the principles of this technique called grid trading.
What is Grid Trading?
The grid trading is a trading technique that allows the investor to enter the market regardless of the movement you have. For example, you execute an order. In this case, the benefits come when the price reaches the upper band where it becomes to execute a purchase or sale. As you’ll see below, it requires a lot of discipline and patience and above all to have enough capital. Those who use it say that eventually gains are obtained and that does not require constantly be aware of whether the market is trending or not.
The system is to make a series of horizontal lines in our price chart so that is the same distance between levels that are on par. Each line corresponds to a price and all placed an order and take profit whose sale is always the distance between levels. Type of stop orders is never open. All lines give a look to the chart grid. In the next picture you will understand the operation of the system
It also can be used to operate 24 hours a day or stop operating at any time, it is also possible to remove the capital in the desired time.
Over time grid system accumulated losses in the account of the trader but also the balance grows linearly (can watch if you use a tool for automatic analysis as myfxbook). Profitability depends entirely on the number of occasions on which the price is crossing the different levels
How grids work?
The best way to understand it is as an example. We have a chart candlesticks pair EUR / USD with a time frame of 30 minutes, which spans several days.
Now put the lines with a spacing of 30 pips, separating the lines of the sale by adding 2 or 3 pips due to Spread.
The positions that are left open provide what is known as an unrealized loss which is calculated by summing the distance between levels and the spread you pay on each trade.
Main types of Grids
Here is a list with different types of grids:
- Grids Sides.
- Grids trend.
- Balanced Grids.
- Multiple Grids combined.
We do not make use of this technique but found it very interesting. If you are interested in the network you can find more information about the strategy . We will try to upload more style items