Skip to main content

Learn How You can Make Gains from Using the Forex trading Grid Technique

The most important part of how to make money using the no stop, hedged, Forex trading strategy will now be covered. In the preceding articles in this series we reviewed trading without stops, not being concerned about which way the price moves and places to cash in on profitable transactions. We are now going to show how you would make money buying and selling simultaneously using the grid strategy.


The no stop, hedged currency trading grid system uses the rule that one should be able to close a transaction at a gain no matter which way the market moves. The only way this is logically possible is that one would have a buy and a sell transaction active simultaneously. Most traders will say that doing this is not recommended but let’s look at this in more detail. 


Assuming a grid with grid gaps of 100 pips. We are going to use the simplest formation to show the principles involved. This formation is the 100% retractment formation where the price goes up to a grid level and then returns back to the starting grid level. Regrettably things become quite mathematical from here. We are also ignoring broker spreads to keep things simple. 


Let us say that a trader enters the market with a buy (buy 1) and sell (sell 1) deal active when a currency is at a level of say 1.0100. The price then goes to level 1.0200. The buy will then be positive by 100 pips. The sell will be negative by 100 pips. Now we would cash in our positive deal and bank our 100 pips. The sell is now however is carrying a loss of -100 pips. The grid system requires one to ensure that the trader can cash in on any movement in the Forex market. To do this one would again enter into a buy (buy 2) and a sell (sell 2) deal at this level (level 1.0200). 


Now, for convenience let us say that the price moves back to level 1.0100 (the starting point). 


The second sell (sell 2) has now gone positive by 100 pips and the second buy (buy 2) is making a loss of -100 pips. According to the grid trading rules you would cash the sell (sell 2) in and another 100 pips will be added to your account. That brings the grand total cashed in at this point to 200 pips (buy 1 and sell 2). At this stage the first sell that is active has moved from level 1.0200 where it was -100 to level 1.0100 where it is now breaking even. 


The 4 transactions added together now  incredibly show a gain:- 1st buy (buy 1) cashed in +100, 2nd sell (sell 2) cashed in +100, 1st sell (sell 1) now breaking even and the 2nd buy (buy 2) is -100. This gives an overall a gain of 100 pips in total. We can liquidate all the deals and have some champagne as we have made a profit of 100 pips.


Please make sure you understand the mathematics behind the activities discussed above. You may have to reread and draw the movements on a piece of paper to make sure you understand the concept. 


This formation is the 100% retracement formation where the price goes up to a grid level and then returns back to the starting grid level and results in a nice profit for the forex trader. There are many other market movements that turn this strange Buy and Sell at the same time activity into profits. The next article will cover the 50% retractment formation which produces the same amount of profit.


There will be much more on the no stop, hedged grid trading system in future articles in this directory. Do not miss them, whatever you do.

Comments

Post a Comment

Popular posts from this blog

5 Ways To Save Money On Your Car’s Gasoline

 With gasoline prices steadily on the rise, many commuters are finding it more and more difficult to justify spending their hard earned money on the high cost of fuel rather than other necessities, including food and electricity.  With that in mind, there are five simple steps that you can take to help stretch your dollar a little bit farther when it comes to your car’s fuel consumption. Carpool.  If you have children who are in school, consider sharing the driving responsibility with other mothers that live nearby.  This is especially helpful if you can alternate days.  Perhaps you would drive the children on Monday and Wednesday, while the other women fill in on the rest of the weekdays.  This will save you money on gasoline and will also make the children’s ride to school a lot of fun because they will be riding with friends.  The same is true of commuters on their way to work, who can share in the responsibility and costs of driving amongst one ano...
Post a Comment
Read more

100 Percent Mortgages

People interested in a 100 percent refinance are looking to cash out the total value of their homes. This type of loan does not require any down payment and one can use the money for anything that they like. Fixing up one’s home, paying off bills, or going on vacation are all legitimate options. When an individual refinances the full value of your home, they are essentially taking out all of the value of the property. It will cost. One will typically be required to pay up to three percent of the home’s total value to cover closing costs. Also because one is using up all of the equity in your home, they will, in most cases, have to purchase private mortgage insurance. However, if one works with a sub-prime lender, they may be able to get the insurance waived. Refinancing will provide some tax benefits. Individuals will be able to deduct interest and closing costs. To find the very best rates, one will need to do some research. There are plenty of online mortgage websites that will pit l...
Post a Comment
Read more

10 Keys That Every Home Based Business Owner Should Implement For Success

1) Attitude-- One very important factor in running a business is your attitude towards it. You should treat your business like a business. This is very important whether you work your business full-time, or part-time. A very close friend of mine, who is also a colleague, is a mother of 4 who works her home business around her family. In this case, she has put her family first, and at the same time, still been able to develop her business.She works part-time, but she has a full-time attitude. To put it another way, if you have a lacking attitude, you'll have a lacking income. However, if you have a business attitude, you'll have a business income. Keeping your attitude in mind while running your business is one of the first steps to ensuring your success. Being successful working part-time on your business, or working full-time, is more than achievable. However in saying that, it is highly unlikely that working in your "spare time" will achieve you success. 2) The...
Post a Comment
Read more