If you haven't traded grid successfully yet, it is high time for us to bring this strategy into the focus of your attention. Grid trading is a system of trading, mainly popular on Forex. This strategy makes profits from both sideways and trending market.

Grid trading helps to maximize the profits while the in-built hedging system minimizes the risks. It assumes placing several buy stop and sell stops orders at certain intervals from the base price simultaneously, in both directions. These buy stop and sell stop orders, placed with several pip intervals build up a trading grid.

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Whereas many brokers put restrictions on trading strategies, we can say - all strategies allowed! Test, trade, earn and grow with us. Try grid strategy on our free demo account or download MetaTrader 4 to trade in live now! The design of the Forex trading grid depends on the trader's strategy and risk tolerance. Nevertheless, most grids generally look quite similar. All of them have a common structure - a visual grid in the chart, where the moving price rate comes through the levels and "picks up" the result of preset parameters.

Actually, the grid is formed by the buy stop and sell stop orders placed at a determined distance above and below the entry point. So, the number of pips in a grid, which is usually made up of about orders, is about 50 to The number of orders to buy or sell is usually equal in both directions. Traders use a take profit order for executing the trade automatically, it closes the trade and fixes the profit.

For example: The chosen interval is 10 pips The current price is 1. As soon as the price rises to the first buy order at 1.

What is Forex Grid Strategy?

If the price rises by 10 more pips, there are 10 pips of profit. Simultaneously, the second trade is open as the buy order is activated at 1. If the price keeps increasing, the process will go on.

No strategy will work instead of you. Especially when we speak of risky strategies, promising many profits. But when automated properly, it works for profit-making sometimes even better than manual trading. However, proper automating requires a total understanding of market sentiment and trend tendencies.

What is the Forex Grid Trading Strategy? - Admirals

Grid trading is no exception. There is a pattern in a grid, a so-called "dangling trade" which occurs when one of the orders is activated but price reverses before reaching the take profit. The grid orders will be triggered when the chosen trigger price type Last price or Mark price rises above or falls below the trigger price you enter.

The initial structure is to determine a series of price levels, according to the latest market price buy, sell, mid-price , place sell limit orders at a price higher than the market price, and a buy limit order at a price lower than the market price, and wait for the price to be triggered. One of them the one near the latest market price is the initial opening order waiting to be executed;. Opening a position is to wait for the market to fluctuate to the nearest price point and trade after the initial construction. No special operation is required for this process. Grid update means that every time a price point is touched i.

The price of the most recently executed order will always be the one that is left blank, then buy or sell limit orders are filled in again according to the set parameters, thus the number of limit orders in the grid is maintained, as shown in the following example. The initial market price is , and the grid limit price at each unit is:. Assuming that the price drops to and the buy order is executed, it is the initial open position, and the grid limit order becomes:. The price rises to and the sell order is executed, and the grid limit orders are updated as follows:.

When the price drops to and two buy orders are executed, the grid limit orders are updated as follows:. Users can choose to manually terminate grid operation or to set Stop Trigger. Users can choose whether to cancel all orders and close all positions manually or automatically after the grid is stopped. When 'cancel all orders' on stop is enabled, the system will automatically cancel all the unfilled orders for the symbol when the grid is stopped; When close all positions on stop is enabled, the system will automatically close all the open positions at the market price for the symbol when the grid is stopped.

Note that during the grid operation, the following scenarios will cause the grid to terminate:. Insufficient margin causes some positions to be liquidated or fail to place orders. When the delivery contract is delivered, the product no longer exists and the grid strategy will be automatically stopped.

The Grid Strategy in Forex

During the delivery process, the system will automatically remove user limit orders and settle open positions. The system will prompt for above actions if a grid is currently in operation, notification as shown below:. The recommended grid trading leverage is lower than 20, because when the leverage is too high, the insufficient margin may cause position liquidation or opening order, and lead the grid to terminate.

If the leverage is higher than 20x, a second confirmation will pop up to remind users. Set the lower price and the upper price of the grid cannot be modified after the grid order is placed. However, the downside is that the trader always has to keep the available margin in mind — especially, in trending markets. The Forex grid trading strategy is a technique that seeks to make profit on the natural movement of the market by positioning buy stop orders and sell stop orders. This is performed on a predefined market distance referred as to a leg , with a preset size of take-profit and no stop-loss.

The size of the grid

This kind of trading removes the variable of knowing the direction of the price move. However, this also means very complicated money management conditions. Moreover, it increases the margin of error, because you will have to manage multiple trades at the same time. A grid strategy can be considered a hedged system - because it entails a system of loss protection. The idea is that any some of the losing trades might be offset by profitable trades. In an ideal situation, the entire system of trades can become positive. At this point, you can close all of the remaining positions and will have realized a profit.

However, there isn't a guarantee that your system of trades will always net a profit. This is why using a strong strategy based on education and experience is as essential with this strategy as it is with any other prediction-based forex trading strategy. Now, I'll introduce you to two scenarios in which this is can be called a successful grid trading strategy for a trader with good risk measurement. Then I'll introduce a scenario in which the grid strategy results in losses.

First of all, decide on a starting point. For example, take a look at the current price of 1. Please Note: Past performance does not indicate future results, nor is it a reliable indicator of future performance. Next, choose the number of grid Forex strategy levels — in this example, there are three levels.

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Now, place three buy stop orders above the current price starting at 1. Note that there are other ways to plot the grid's leg — pivot points, chart formation, support and resistance, etc.

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Furthermore, the number of levels is not restricted. You can change both the number of trades and the size. However, use caution when making changes, as the possible size of the loss can increase with each one. After placing the orders, one of three scenarios can occur. Two of them are favourable for the trader. The first one is when the price moves in one direction either up or down — this liquidates all the trades in that direction and hits all your take-profits. Then, you simply close the remaining Stop Orders.

The third, unfavourable trading scenario, involves the price opening some positions without hitting your Take-profit and retreating into the opposite direction. This, in turn, leaves one position open and accumulates loss. The third scenario illustrates the biggest drawback of the Forex grid system strategy and also highlights an important general point for traders.

Namely, you must possess the ability to psychologically deal with losing positions.