What is grid trading forex? – Are you looking for an easy to execute a trading strategy for forex?
While there are quite a few but trading strategies but grid trading triumphs them all. It is not only simple but can be automated. Many intermediate traders might have heard about it already.
Today, we will delve into the more critical details of this trading strategy. Our article will make it easy to know more about grid trading.
The execution process will also be covered in this article. Our guide will make it easy to use grid trading to your advantage.
What is grid trading forex?
Grid trading involves placing multiple orders in the incremental and decremental fashion. It helps the trader place trades at predetermined levels.
For example, if you believe that once Eur/Usd Breaks $ 1.05 support, it can reduce up to $ 1.00, you can place an order below that level. You can place sell orders at every 15 pips below $ 1.05. It means that once the support breaks down, you can capture the entire downtrend.
Once the trade order gets executed, its corresponding stop-loss and target levels will be set in place. It means that you will not have to enter them after the execution of the initial trade manually.
Similarly, you can place the orders above the resistance level.
Now that you are aware of grid trading forex, let us look at some of its advantages.
Advantages of Grid Trading:
The benefits of grid trading include:
You can automate the entire trading process. You can input the trades once and let them pan out. Once the trade executes, the stop loss and target levels will be input automatically. It means that you need not intervene.
2. Capturing the entire trend:
It is not easy for many traders to capture the whole trend. They might have to monitor it. With grid trading, all they need to do is to enter the orders at the predetermined levels. Once they do so, they can capture the entire trend without having to devote their own time.
3. No limit on the number of orders:
Most brokers do not limit the number of orders which you can place. It means that even if you want to put 20 orders, you can do so. It will allow you to reduce your workload. Also, you won’t have to sit in real-time. You can input the orders and forget about them entirely.
These three advantages make it easy for you to indulge in grid trading. The disadvantage is that if you do not create the grid properly, the potential of profits is limited. You might be intrigued, how to create the grid? We will answer this question below.
Constructing a Trading Grid:
There are three steps to create a grid. These are:
Step 1: Determining the trend:
You have to determine the pattern that you want to capitalize on. It can be breaking off support or negative news of rising beyond the resistance.
Step 2: Determine the starting price:
You have to determine the starting price of the grid. Accordingly, you can place your orders.
Step 3: Determining the intervals:
You can place the orders at intervals of 10 pips, 25 pips, 50 pips, or even higher. The choice is yours.
Once you go through these three steps, creating the right grid and placing orders is easier than ever. So, to execute this technique, you need some technical knowledge. If you like grid trading, it is a good idea to opt for social trading using our platform. It will minimize any need for technical analysis or fundamental knowledge.
Grid trading can be profitable for intermediate and advanced traders. Our guide above provides you with the gist of the same. Executing this trading strategy is simple and easy if you act on our guide above.
If you are in the search for a simple trading strategy for forex markets, grid trading can fulfill your requirements.