When I read forums and articles on the net about grid trading I always notice a fascination about this technique. The principle of grid trading is very simple. Maybe the simplest strategy, ever. After decided the size of the grid, the automaton will open simultaneously a buy and sell order on each line of the grid with a take profit of grid size.
On the paper this strategy is very interesting. It will works in every market conditions because we can assume that for all currencies we will never have an infinite trend. We will always have waves. But this theory have two important weaks:. But like roulette game in casino, the bank always win. See with me what is going on in practice. You need to face a lot of hidden facts that can completely destroy your strategy.
Here is the list:. I want to warn you about grid trading system. The theory Open a buy and a sell orders when the price touches a grid line Define a take profit of grid size. With that you will accumulate little profits each time a grid level is touched. You will have a beautiful balance graph with a constant growing account No stop loss. You keep opened orders until the end of your life This strategy takes advantage of range periods This strategy hates trend.
Because of you open in both way on each grid line, you will accumulate more and more open orders and increase the leverage until the account blow up On the paper this strategy is very interesting. But this theory have two important weaks: It needs an infinite funded accountIf the trend is for a long time, you will not be in profit until the the trend finished and you cannot withdraw money But like roulette game in casino, the bank always win.
Here is the list: Opened orders are not executed exactly at the expected price. It can have a huge gap, for example at sunday opening hours. Depending of the currency traded, you can have an important stread between bid and ask. Because your orders can be alive for an undetermined period, the swap can become important. The two most important points: Leave a Reply Cancel reply.More...