[daedalus]

I don't agree with babypips on that one point. I think grids play the most significant role in price action out of any indicator or methodology i've seen. But then again, I am slightly biased. That being said, I do use a couple VERY simple indicators only to indicate trend bias.

*EDIT UPDATE 1/13/07*
I have revised my MA's for trend bias... the above work, but these tend to hold the trend a bit better for my type of trading. Only indicators on the charts are:

62 EMA
78 EMA

Same principals still apply, just make sure your trading with the trend of the MA's which means the fast ma is above/below slow ma to establish trend either up or down.

The chart examples below were created when I was using different MA's. Since then I have revised the system slightly to be more efficient using the above EMA's.


The 62 and 78 are there to establish the overall trend, up, down, or sideways.

Thats it... nothing more. That being said, here is the most important point of all. These pullbacks work extremely well when the markets are trending. Sideways and consolidation points in the charts are not the best place to enter a position be it off a grid, or any other indicator. This means that the first thing we look for is either higher highs or lower lows with our MA/RSI bias.

Until I have a chart pattern like that there is no point in playing. Far too often traders of any methodology are constantly looking for the best place to be in at all the time, 24/7 with no mindfulness of the chart pattern they are trying to trade within. Consolidation chop is consolidation chop, and until movement occurs I don't have anything to do. This is the biggest point that I cannot stress enough.

Also, keep in mind you need to keep track of your risk:reward ratio to have good success here. I put my stops 1 pip outside of the 85% level. If there is too much risk between where I can get in at the 61.8 level and the 85 level, i stand aside. You have to think of EVERYTHING in terms of risk a reward. If you don't you're a dead duck before you get off the pond.

I've added a couple examples here... Hopefully they are fairly self explanatory. I'll add more later on... There is sooo much I want to discuss, i'll add more as thoughts hit me.

I wait for the pullback to come back and TEST the level... if it doesn't touch, it doesn't count. Entry is after close of the candle that interacted with the grid, entry at open of the next candle.

I also will play 38% pullbacks, but i'll go into the specifics of them later... I don't use them nearly as often, and you need to set different stop losses, and I also require the grids to come into contact with price action 2x's and hold before entering the position.