grid trading, one way from a to b only

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grid trading, one way from a to b only

Postby 123lundy » Tue Dec 02, 2014 10:51 pm

So I have an entry setup, I enter manually and I place my stop and my take profit levels...

Then I wait for hours or days while price trades back and forth before it eventually hits my stop or my take profit level.

Now I am wondering if I can capitalize on all this movement.

Is there a strategy for long or short bias, which will grid trade starting from my entry point, to my stop, and also going to my target, where I am always taking profit and entering again at a better price with partial lots?

It would need to be very customizable to determine the grid, the lot sizes, possibly multiple entries and thus multiple grid programs running on the same pair. Of course all of this would be one direction only, depending on bias.

It should handle limit entries for the main entry, the stop and final take profit level is when the program is cancelled. but until one of those 2 hits, it constantly grid trading in one direction this pair. Always getting a better price. Ok...

Any comments, suggestions? I am not a programmer, but maybe someone has done this, partly, or would like to do it, I would be happy to assist.
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Re: grid trading, one way from a to b only

Postby Apprentice » Wed Dec 03, 2014 5:37 am

moomoofx have studied the grid strategys,
You can contact him.
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Re: grid trading, one way from a to b only

Postby moomoofx » Wed Dec 03, 2014 5:56 am

No need, I'm here.

Yes you can capitalize on any price fluctuations provided the profit exceeds the spread and commissions.

It doesn't have to be one directional, since the market moves both ways. One direction will work of course, you will only be taking advantage of half the price fluctuations.

Grids are complicated to implement, especially if you want multiple grids to be managed within the same strategy instance. I'm not aware of any such grid implementations on FxCodeBase.

The risk of grids is when the price just keeps moving against you. Many grids combat this by increasing their trade size and averaging down, often using a martingale methodology. These increased trade sizes of course multiplies your risk too. Depending on the size of your grid, you could easy be blown.

For example, a grid of 5 pip entries can easily be blown away when news comes out and the price moves 20 pips in a single tick..

The grid has nothing to do with your original trade. If you get the grid strategy working without blowing up and can take advantage of all the little wiggles in the price, you'll be rich before you know it and you can forget about trading any other strategy. As you can imagine, there aren't many people that have done this. Grids have a habit of blowing up.

You can read more about my research into grids on my site: http://moomooforex.com/tag/grid-trading/

Grids aside, some alternatives for you would be to look at simply re-entering your trade multiple times, perhaps split up your original trade notional.

For example, if you place a long trade at 1.100 with a profit at 1.200 and a stop a 1.000....
- if the price goes to 1.05, place another trade with profit at 1.2 and stop at 1. This trade will have a higher risk-reward ratio if it works out.
- if the price goes to 1.15 and then back to 1.12, then you can enter a trade again on this mini-retracement. It looks like the price is moving towards your target but retraced slightly giving you an ideal chance to scale in. As you are closer to the profit target now, your probability of success has gone up.

Given you had some confidence to place the first trade in the first place, then you must have some confidence in the other two trades described above.

Cheers,
MooMooForex
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