i find it funny he posted this ranging system right before the trend/crash in 08 lol
Maybe this is the best system, it works, Just dont place reversal position until a cross over is verified.
Perhaps if the EA is coded to look for two envrionments using an indicator or set of rules
- Ranging
- Trending
Then once the EA is thinking i am trading in âranging/trendingâ then we program the EA to act differently. It trades like normal in ranging as said above and when its trending we simply dont trade or use a different set of rules to enable the EA to be profitable ?
Just a thought
Hi Rhody !
What is meant by Directional Exposure ?
You said: "The only way a spot market trader can make money on net is to have a directional exposure.
Read more: 301 Moved Permanently
Can you suggest (not advise, thatâs ok, I wonât blame you for losses :P) any strategy on directional exposure ?
Thanks for your kind help.
It means being net long or net short. When someone is âhedgedâ holding opposing positions they are net flat, and thus can neither gain nor lose.
Thanks for your kind reply.
OK, to be net long, there must be then 2 buy positions (positive) against 1 short (negative).
So in Grid Trading, there must be 3 trades, either 2 positive longs or 2 positive shorts, to be profitable.
Thanks for shedding light on this.
You are the best
I jus:t cannot let go with this system, here are my final thoughts and i will apply it in demo for at least one year
1- You need a considerable balance >100K
2- You need to use an adjacent step by step trend following system. starting from level 2 onward.
4- You need not to close the winning untile a reversal is secured, keep winnings open and once the reversal is secured, close all. yes you would wait a lot more but you will win a lot more as well.and will reduce margin requirements.
5- be reasonable. target daily 300-400, dont forget that making 5000-8000 on your 100k monthly is a great trading.
UmmmâŚDonât you think it would be simpler to just be long 1 position and short none? There is no reason at all to do the other long and the short as itâs not going to give you any directional exposure and will cost you the spread.
So in Grid Trading, there must be 3 trades, either 2 positive longs or 2 positive shorts, to be profitable.
In ALL spot forex trading there must either be a long exposure to a short exposure to have any chance to be profitable (or take a loss).
Hi
Just some input on my own personal experience trading the grid system in the last 6 years. I use the following rules:
Grid gaps or sizes must be 250 to 500 pips
My stop is when the price has travelled to the 4th grid level - normally a loss of 6 times the grid size.
Currency selection is very important.
These basic rules have made this simple system profitable for me. With these big grid sizes the system is very boring and requires patience so I regard it as an investment system and trade other systems as well.
I hope this helps
My personal experience:
I trade with Smalfi trading strategy. It is a mathematical non-discretional strategy.
It has only a few things in common with the strategy presented in this post, but it is a sort of âhedge-gridâ too.
I completely agree with you Alex. In particular for the state âCurrency selection is very important.â.
I trade only in EUR/USD because for the Smalfi system it is the best suitable!
And I agree too with ârequires patience so I regard it as an investment systemâ
In Italy we say: Il trader che guadagna è il trader che dura!
cheers
hello friend,
have you made an EA for this grid + hedging system? Are you interested into sell or share?
How is working it?
Letâs say that you have two open positions: one long and one short; the R/R is 1:2; the positions are open either side of the market (Buy entry order is above price, and Sell entry order is below it). If the price moved up first, hit your limit, and then moved down enough to trigger your Sell entry but without hitting the limit and moved back up to hit your stop, you would still be profitable, because your loss is half your profit.
If you keep getting triggered entries and never hit your net limit before price moves the opposite way, then it is not a case of binning the grid system but rather adjusting it to the behaviour of that currency at the close of each day (e.g. widening or shortening net limit, checking for spread fluctuations, etc.)
I am new to the grid system so it is not for me to speak with authority, but for ranging markets it can work, so let us see if anyone has positive thoughts about it.
Of course there is no holy grail, so it is down to the intelligence of the trader to see the changing environment and adapt the strategy. The only issue here is differentiating between being patient with your losing streaks and being blind to a clearly failing system: that, in the end, is only up to the account holder to determine. . . :21:
Letâs put it in numbers. Youâre both long and short EUR/USD from 1.30. You have a 100 pip take profit limit for each and a 50 pip stop loss limit for each. This is in line with what youâve described, right?
If the market moves up to your long TP at 1.3100 it will have triggered your short stop at 1.3050 along the way, so youâd have a 50 pip loss on the short and a 100 pip gain on the long - excluding the spread cost incurred by initially putting the trades on in the first place. This is the same as if you just waited and put a long position on at the 1.3050 level, without the initial spread cost.
Iâm not sure where the âSell entryâ bit comes in since you were already short to begin with.
Every grid system Iâve seen is a mean reversion strategy. They will do fine in ranging markets but have serious - potentially financially fatal - problems when the market is trending. They can also be more efficiently executed using simple counter trend single trade entries (e.g. long when the market goes up 100 pips) than with these long/short straddle type âhedgeâ positions.
i have been doing demo with this strategyâŚand with some good results but not confident enough to go liveâŚcan somebody who believes in hedging throw some light on thisâŚhedgetrade.pdf (288 KB)âŚ
hedgetrade.pdf (288 KB)hedgetrade.pdf (288 KB)
as an exponent on hedge strategy, i would like to have your comments on the strategyâŚplease see attachmentâŚ
[QUOTE=rhodytrader;522733
. They will do fine in ranging markets but have serious - potentially financially fatal - problems when the market is trending. s.[/QUOTE]
hi rhody, please have a look at the post i just madeâŚif every trade is protected by a hedge trade, the potential loss is limited to the difference between a buy and a sellâŚwe close a buy and a sell together taking 100pips profit and 30 pips loss as shown in the attachment, when the market price is far from the closing pairsâŚtrue in a ranging market we can close many times with profit, in a trending market we need to wait until market reverses, with limited exposureâŚplease comment
Awesome! Quick question though, how do you determine if a pair is moving sideways? Do you use any indicator for that?
hi fezâŚno indicators involvedâŚpure price actionâŚno matter how the market moves there is opportunity to close trade with profitâŚmovement of gbpusd/eurusd works wellâŚin trending markets you wait longer until price reverses to close positions with profitâŚfloating loss will be limited if you choose the right method / trades to close a buy and a sell with profit and re-open pending orders and also open new pending orders in the same ratio towards the direction of the movementâŚyou could have an ea or script to open pending ordersâŚbut for closing positions and reopen / new orders, manual system is betterâŚi am not a programmer or a coder, so i cant think beyond this methodâŚbut the system needs more research as i cant backtestâŚi am still doing forwardtest on demo âŚcheers
Iâm struggling to understand the strategy described by the spreadsheet. Can you just describe it in written form like âI start by opening both a long and a short with an X pip target and a Y pip stop. I thenâŚâ
The âwait until market reversesâ bit is the one that will punish you very harshly with this type of strategy if the market shifts into trend mode. These âgridâ strategies were quite popular during the middle 2000s when the markets were quite narrowly trade, but got slaughtered starting in 2007.
Thank you, Rhody: I think you are experienced and I should take heed - but, as the rebellious teenager, I feel that I should go and try things out for myself⌠You have every right to say âI told you soâ if/when I come back battered and bruised, Forexically speaking!