What is Grid Trading? Forex Grid Trading Strategy Explained


What is a grid? The Forex grid system has become quite popular among traders because it’s easy to visualize and has some attractive advantages at first sight. These include:
It is partially an automated system: You set up a grid manually (a manual grid trading strategy)., Afterwards, it’s something like an automated strategy using buy and sell stop orders, eliminating the stress of trading strategies in which the trader must open and close positions manually.
Allows for profits in volatile markets: Another great thing about this system is that it helps you get a return on your investment even in volatile market conditions. This way, it eliminates the need to predict the market’s direction, making the choice quite simple. The trader just has to know that the market is going to make a move, and the strategy will take care of the rest.
Also allows for profits in trending markets:
Trading with this strategy can be applied to more than one instrument.
While these features may be attractive, it’s important to know that there’s never a guarantee. If you want to manually develop a successful grid trading strategy, you must also know how to execute the system correctly
If the market looks like it will move in a trend, a with-the-trend forex grid trading strategy may have a starting point of 1.1660 with 10-pip intervals. A trader may set buy orders at 1.1670, 1.1680, 1.1690, 1.1700, and 1.1710. Sell orders would be set at 1.1650, 1.1640, 1.1630, 1.1620, and 1.1610.
With this forex grid trading strategy, the trader will need to exit their position when it has become profitable to lock in their profits. If the market moves in the direction they anticipated, their position grows and they exit on time, collecting their profits, this is a successful grid trading strategy.
Assume you opt for an against-the-trend forex grid trading strategy. You also choose 1.1660 for a starting point with a 10-pip interval. You set buy orders at 1.1650, 1.1640, 1.1630, 1.1620, and 1.1610. You set sell orders at 1.1670, 1.1680, 1.1690, 1.1700, and 1.1710. Such a strategy will secure profits when both the sell and buy orders get activated.