Hedge Grid Trading System

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 :cool:

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.

Ummm…Don’t 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 it’s 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 “hedge-grid” too.

I completely agree with you Alex. In particular for the state “Currency selection is very important.”.
I trade only in EUR/USD because for the Smalfi system it is the best suitable!

And I agree too with “requires patience so I regard it as an investment system”

In Italy we say: Il trader che guadagna è il trader che dura! :slight_smile:

cheers

hello friend,
have you made an EA for this grid + hedging system? Are you interested into sell or share?

How is working it?

Let’s 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:

Let’s put it in numbers. You’re 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 you’ve 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 you’d 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.

I’m not sure where the “Sell entry” bit comes in since you were already short to begin with.

Every grid system I’ve 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 “hedge” positions.

i have been doing demo with this strategy…and with some good results but not confident enough to go live…can somebody who believes in hedging throw some light on this…hedgetrade.pdf (288 KB)…

hedgetrade.pdf (288 KB)hedgetrade.pdf (288 KB)

as an exponent on hedge strategy, i would like to have your comments on the strategy…please see attachment…

[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 made…if every trade is protected by a hedge trade, the potential loss is limited to the difference between a buy and a sell…we 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 pairs…true in a ranging market we can close many times with profit, in a trending market we need to wait until market reverses, with limited exposure…please comment

Awesome! Quick question though, how do you determine if a pair is moving sideways? Do you use any indicator for that?

hi fez…no indicators involved…pure price action…no matter how the market moves there is opportunity to close trade with profit…movement of gbpusd/eurusd works well…in trending markets you wait longer until price reverses to close positions with profit…floating 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 movement…you could have an ea or script to open pending orders…but for closing positions and reopen / new orders, manual system is better…i am not a programmer or a coder, so i cant think beyond this method…but the system needs more research as i cant backtest…i am still doing forwardtest on demo …cheers

I’m struggling to understand the strategy described by the spreadsheet. Can you just describe it in written form like “I start by opening both a long and a short with an X pip target and a Y pip stop. I then…”

The “wait until market reverses” bit is the one that will punish you very harshly with this type of strategy if the market shifts into trend mode. These “grid” 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 “I told you so” if/when I come back battered and bruised, Forexically speaking!

I think the system from Dachelm is very good! The risk is limited and you have a system witch fits optimal the market.
I have read the full thread now in June 2014, i hope some people from this thread are here in 2014.
My idea is to open 2 trades in opposite direction and close one leg if the market turns, you can use MACD, Stochastics or others. But i think its not necessary to open two new trades, only wait until the second negative leg comes enough back. Even if the market goes a bit longer in the first direction, but then turns later back. You can make win even when comes only 20% back for example. Maybe the first leg is +100pips, the second leg is -80pips then you have 20 pips win! I think its better to use bigger timeframes H4 or daily then shorter, but needs patience this way, but the risk is smaller then in M15 charts. What you think all traders?

I think this is a ranging hedge grid strategy. If a strong trend will came without a retrace or reversal this strategy will fail for sure.

But lets think about Trending grid strategy that combines with this system so it makes a winning strategy
(While ranging we earn profits but when trending we have no losses but no gain too)

I tested those types of strategies but again it fails sooner or later. maybe run for a huge capital accounts for making very small profits, so now i am thinking its not worth the time. maybe in forex trading too :slight_smile:

Hello
This seems to be very good but i believe that must be automated.
Is there an expert advisor for this?

Thank you

Hi nzpenny,

Just wondering if you are still active on Babypips and still trading the Hedge Grid System? I trade in a similar style and live on the Sunshine Coast QLD. Cheers mate!!

What do you use as Market Entry in the Grid Strategy ?