Grid Trading Gone wrong

When grid trading, I was wondering what peoples strategies are when the price only hits one of your orders due to the spread.

Say you have a buy and sell open at the same price. but the price only hits one of them and moves in the wrong direction. what is the plan then?

I’m sure I’ve never had a buy and a sell open order pending at the same price. Why do you do this? Isn’t it bound to lead to the conflict you’re referring to?

It’s a grid trading strategy. Call it a hedge trading strategy if you will. The idea is that you buy and sell simultaneously at the same price and somehow keep doing this until you show an overall profit. As I understand it anyway.

But when it was being demonstrated to me I asked this very same question even stating that I’d not leave it up to pending orders and a broker to execute because once they cottoned on to what you’re doing then this is exactly the kind of thing that they would do i.e. execute one side and not the other. Not to mention that maybe one of the orders got missed only by a pip or due to a change in the spread in that instant. So I’m keen to see what input our resident grid trading guru is going to give here.

First of all, I’m no Grid Guru… There is some very interesting threads from long ago here in BP that have some seriously good ideas about how to trade using a Buy and Sell at the same time.

Tom obviously doesn’t understand hedging strategies, and that’s fine, he has a solid LT system which works for him. So no issues at all.

Dale, it took about 5 posts from me last month for you to get your head around this strategy…

I use a Grid Strategy that uses hedging algorithms to protect against DD… NOT Martingale.
You use 0.01 - 0.03 Lots to keep margin under control. It is a system that you can walk away DD is limited and because direction is not critical… Whipsawing is your friend…

(Above) Bot I have running ATM (AUDUSD 5min) $73.00 profit / $8.00 DD over the last 10 hours.
The software is set so if DD gets profit down to $25.00… strategy shuts down… NO Stops…

I have a strategy (EA) which I purchased and another that I am developing myself, both have their strengths and weakness.

I’m not going to go through it all again… (many, many posts that no one bothers to read, referring to these strategies from me throughout the BP Forums)

How much easy would your trading be if you didn’t have to worry about market direction… 50%, 80%??
Grid Strategies only work while a pair is ranging, which is most of the time… a trending pair can kill a hedge strategy.

And I emphasize CAN, because I am aware of software that switches off the Grid Algo and turns on a Trend strategy once price moves outside set parameters… I can point BP members to links on this software… but I’ll be accused of trying to sell something by the infirm…

What has happened to the OP here sounds like he was using just a raw Grid which can not protect itself against DD. Possibly has set his pipstep to close or had a nasty case of spread widening… I stayed out of the conversation because without a chart and example I’m not sure what took place.

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Does anyone have any links to these other threads please

Hey hey.

Was just killing time until you got here!!! LOL!!!

Wasn’t suggesting that you rehash the system (although you’re now bound to get a boatload of queries as a result of this). Just wanted to know what your input would be on this because it’s something I did mention at the time (remember me saying that if this was up my alley I’d be doing it at market and not relying on a broker and for this very reason).

cab you explain what DD means pls?

DD = drawdown. Drawdown is the reduction of one’s capital after a series of losing trades.

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Thanks @clemmo.

12 Hours later price is attempting to trend and broken above resistance setting at 2.00am.

Like me… Bot goes to sleep. Pairs I commonly use are EURAUD, EURGBP, AUDUSD, AUDNZD…

@DanMcW, Follow this Link for a proper overview of Grid Hedge Strategy.

Then read on for a more complex application, being the Dual Grid Hedge

Do they return a profit every time… No… Just like every other position you open in the FX Market…

PM’d you with the BP links… I don’t want to accused of self promotion by the fraudulent and unruly…

Hope this is of help…

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48 Hours later and the Bot is still making profit… Buying and Selling at the same time…

Small lot size reduces margin requirements, 12 Position maximum open at one time.

All the losses (small) are the algorithm protecting itself against DD as it ticks along on the 5 min Chart.

05/06/2019 (Above)

06/06/2019 (Above)

07/06/2019 (Above)

A profit can be consistently made by trading both directions in a ranging market.

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I’ll second that. The trend is not your best friend. More like a fairweather friend…with a knife at your back.


Thanks for your help guys.

Has any one tried reversing the grid. So at each grid level you take a loss instead of the profit. If you do this at a support or resistance level. Then whether the price bounces back or breaks through you’ll have winning positions that can run and run. any thoughts would be appreciated

@DanMcW, Not sure what you are asking… A Dual Grid Hedge (Link in above Post) that opens a BUY and SELL at exactly the same time?

Continuing on from Friday, the Grid Strategy has continued on and managed to take the spike of the weakening USD in it’s stride and returned a profit of €179 from 07/06/2019 - 08/06/2019 while closing on Saturday 8.00am (UTC10) with a DD of €13. (Account with Euro Broker)

Highest DD during the Spike was €55 which was well within profit for the previous week.

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Hi Dan
I do grid trading manually makes me a living. On 15min charts no losses I am not greedy average about 80 pips a day ÂŁ1 a pip.

Where did you purchase this EA? and have you finished the EA that you are developing?

I have started using the grid trading strategy and I can see how useful it is. When the orders are placed above and below a set price, I create a grid of orders at incrementally increasing and decreasing prices. It is most commonly associated with the foreign exchange market.