Everything You Need to Know About Forex Grid Strategy
Forex Grid Trading Strategy. Risk is an integral factor of forex trade. Though it keeps traders away from stress-free trading, it also ensures they make smart decisions without relying on their luck. Forex is for traders who are patient, educated, possess analytical skills, and take the right approach while trading. They, too, encounter a risk factor, but there’s a strategy that outweighs the risks and maximizes profit.
What is Forex Grid Trading Strategy?
Let’s first tell you two benefits of this strategy:
- It is an automated trading system that keeps you away from sticking to your computer screen the whole day.
- It works even in a volatile market, picking up profits from the price move’s directions.
- Trend direction does not matter for this system. Its math and statistics only!
Now, if you have prior trading knowledge, let’s dive deeper. Forex grid trading strategy makes profit by leveraging the natural back and forth movement of the market. It utilizes both sideways and trending markets for positioning buy stop orders and sell stop orders. You just need a predefined market distance (leg) and a preset size of Stop-loss and Take profit to remove the direction variable. These orders are then placed with pip intervals that form a grid. All of those parameters are already pre-set in our best Grid EA.
Formation of Forex Trading Grid
The standard interval size in a grid is 10-40 pips. So, if the grid constitutes 5-15 buy or sell orders, the number of pips would differ between 50-300. Both directions have an equal amount of buy or sell orders. The grid starts forming by placing a series of trades with the developing price action. Let’s assume the current price is 1.3550 and the interval is 10 pips. Now, if the buy order starts at 1.3560, and the price action rises to 1.3560, the trade is placed. Again if the price increases to 10 more pips, you earn 10 pips of profit. The process keeps repeating itself as the price action increases. If you execute buy orders, you get a long grid, while on sell orders, there’s a short grid. A combination of both generates a hedged or classic grid.
Since Forex grid trading is automated, you need to understand market sentiments and trend tendencies before implementing proper automation. There’s a situation called “dangling trade” when you activate one of the orders, but before reaching the TP-level, the price gets reversed. If the move is farther from the entry point, the loss will be more significant. The only way to deal with the foreseen problem is to place stop-losses. It closes the trade at a preset level before the price can harm your account. If EA uses Hedging (like ours do) you don’t have to worry about stop loss or take profit levels at all.
The grid size
Next, you must decide the number of orders you will open in a grid. Of course, you need to open several orders concurrently but limit the count to 10-15 orders in one side. Otherwise, the trade will enter in a complicated and risky mode with a large number of orders. For more volatile pairs bigger size is recommended.
The grid intervals depend on the spread volume and your trade currency. Traders who are already using grid strategy suggest low-spread currencies that are highly volatile. But if you’re considering a bigger spread than make intervals larger. It depends on your strategy operation time how long you want your grid to be.
Three Tips for an Effective Grid Strategy
- Keep your profit low when you place multiple orders. It will help you to reduce unforeseen losses.
- Spend time in examining pair volatility and what spaces should be between the trades.
- Never hesitate to implement backtesting.
If you want to leverage fully automated Forex Grid Strategy, try our Grid EA at FXShareRobots . Just one click and tons of trades in your account!