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How to Grid Trade FOREX

Grid trading allows traders to profit from market volatility.

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Forex traders use grid trading strategies to profit from the volatility of the currency markets. By placing buy and sell orders at levels above and below the current price of a currency pair, they try to profit from price moves in both directions, with zero or very little analysis.

Designing a Grid

First, you must design your grid. A Forex trader's grid design will depend upon personal strategy and risk tolerance, but most grids are fundamentally very similar. They comprise buy and sell orders placed at standard spacing above and below price. For example, if your chosen spacing is 10 pips and the current price of a currency pair is 1.2550, you place buy orders at 1.2560, 1.2570, 1.2580 and 1.2590. You place sell orders at 1.2540, 1.2530, 1.2520 and 1.2510.

Setting Your Target

Set predetermined target levels for each buy or sell entry. Forex traders use a take-profit order, which is an order to buy or sell a currency pair automatically, exiting the trade and locking in profit. Generally, traders set a take profit that's an equal number of pips away from the entry as the spacing of their grids. A pip is the smallest increment of price movement in the currency markets. If you are using 10-pip spacing, place take profit orders 10 pips above every buy order, and 10 pips below every sell order.

How It Works

When price rises to the first buy order at 1.2560, you will be entered into a long trade. A long trade produces profit as price rises. If price rises by 10 pips, you will earn 10 pips of profit. At the same time, you will be entered into a second long trade as your buy order is hit at 1.2570. This will continue as price rises. Conversely, if price falls from its initial level, your sell orders will be activated and the same process will take place in the opposite direction.

Controlling your Risk

Grid trading can be very risky because of "dangling trades." A dangling trade occurs when one of your orders is hit and price-reverses before reaching your take profit. The further the price moves from your entry, the higher your loss on that trade. One large loss from a dangling trade can wipe out a high number of gains from your winning trades. To avoid this, you can place stop-loss orders on your entry orders. A stop-loss order closes out your trade if it reaches a certain level above a buy entry or below a sell entry. Some grid traders with large accounts prefer not to use stop-loss orders; they rely upon price reversing before the loss gets too big. If you decide to use a stop-loss order at a particular level, Forex Pub suggests, "Ideally, this stop loss would not be hit unless the trade was convincingly moving away from a profit, and it will also not make the (possibly large) loss exceed the numerous small wins that a grid system generally earns."

References (3)

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  • Digital Vision./Photodisc/Getty Images

About the Author

Samuel Rae is an experienced finance journalist whose work has been published across a range of different sites and publications in the financial space including but not limited to Seeking Alpha, Benzinga, iNewp, Trefis and Small Cap Network. He holds a BSc degree in economics.

Best Forex Strategies That Actually Work Right Now

Right now is a glorious time to be a forex trader. The charts are ripe with easy pips. We’ve spent the last few weeks testing the best forex strategies that are having the most success in today’s markets. And we’ve nailed it down to three best forex strategies. These are making real pips for real traders. We’ve also include some tips to start using them quickly.

Grid trading forex strategies

Grid trading has been around forever. It’s highly reliable but also very complex without software. Thankfully Odin does all the hard work for us with its new code just released in 2017. It works by assigning quadrants to a section of your forex charts. Then it gives each quadrant a probability value based on how many times the price has been there before. Using these values we can see where the price has been and where it is likely going.

Grid trading is one of the best forex strategies for the current markets. Odin trades grids for you.

Odin has very low draw down with high percentage wins thanks to tight stops.

Fibonacci forex strategies

Vader uses an advanced Fibonacci system to pinpoint fresh price movements coming and going. Each day it draws a center line and fib levels outward in both directions. Vader can accurately predict movements as they happen using these levels combined with its trend detection system. The fib levels also act as easy stop loss and take profit levels. All of this is full automated and handled for you.

Vader uses automatic fib levels with a trend system to find large moves coming and going.

Vader is a pip killer on any chart with its powerful logic.

Trend forex strategies

The trend is your friend more than ever this year. If you manage to get in early on a solid trend you can walk away with a load of pips for very little effort. The hard part for most traders is finding trends or trend based strategies that actually work. What trends are worthy? And how do you know when to exit? The answer is easy: Ganon.

The Ganon Forex Robot uses its new Strand Theory™ code base to find the best trend for you on any forex chart.

Ganon’s trend trading performance is unmatched.

Runner up: Breakout forex strategies

The more forex trades you have open, the higher the risk of loss. So wise traders go after the biggest forex trades and skip the small frys. Breakout strategies go hand-in-hand with this mentality. They use price boundaries to get in on huge surges of movement when they happen. You can use Reaper to do this for you with great accuracy.

Reaper has made the best forex robot list for some time now. It makes trading breakouts a snap.

Reaper’s breakout performance shows why this EA is red hot.

Runner up: Price action forex strategies

Throw those technical indicators out the window and start trading “organically”. Sounds great, right? Unfortunately not many forex traders ever really get a firm grasp on using price action to find trades. We don’t blame them; it’s very hard. However it is a wonderful strategy right now and you should definitely try it out.

Falcor is an automated price action expert advisor that finds forex trades for you. It’s one of the best forex strategies to use right now.

Falcor’s price action performance is a thing of beauty.

Start using one of these best forex strategies today

Learning to trade a new forex strategy can be hard. So use the software versions of the best forex strategies above to cut out the learning curve and increase your pips. Expert advisors let you start trading these forex strategies in minutes. And that’s exactly what you need to improve your forex trading tonight.

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