Tuesday, February 4, 2014

Grid Trading Advantage – It Can Profit from both Trending and Ranging Markets

        Grid Trading can profit from both trending and ranging markets!
     Yes, this is correct. By using a grid trading system (or a grid portfolio) you can make profit from both trends and sideways movements. For example using a directional grid you can profit while the market is trending. And using a classic grid (fully hedged grid) you can make pips during sideways movements too. So we have grids to handle every type of market.


    Ok, but wait, how do we know what grid to apply and when? Well, this is a bit of a problem. And as with any problem there are various solutions. For example you can use an external indicator to tell you if you are in a trend or not. Or you can pre-select times that are highly likely to have trends (like when the news announcements come) or sideways movements (quiet hours of the day or right after a big trend). Then another way to approach this is to trade with a grid portfolio of both directional and classic grid(s). Let the one handle trends and the other ranging markets.



And finally there’s another type of grid that you can use to solve the above problem too. We call it “dynamically hedged grid”. Why? Because it hedges only if necessary i.e. dynamically. By default it is a directional grid, but if the price reverses then it will start hedging. It combines the strong sides of both directional and classic grids. It thrives on trends but it is capable of handling sideways markets too. And because of these it is our favorite type of grid to use.

So, yes, you can use Grid Trading to make profit from both tending and ranging markets. It is truly a versatile trading system.


Related posts:
Grid Trading Advantage – No Indicators, No Complex Charts
Grid Trading System Can Be Adjusted to Your Trading Style