Order grid on : 2 variants of the popular strategy
The use of a grid of orders when trading on the foreign exchange market is popular. Many trading strategies are based on this principle and robot nettlesThe "grid" is also called "grid" from the English word "grid".
In this article, we'll break down the general concepts of trading with a grid of orders.
What types of order grids are there?
In trading, it is customary to distinguish two types of grid orders:
- A static grid of orders with a fixed step;
- Dynamic Order Grid.
Why do you need a grid of orders at all?
There are two typical cases of using a grid of orders on :
- Catching prices - In this case the grid of orders is built at a certain distance from the current price. Such a grid is called a static grid with a fixed step.
- Catching Maximum Profit - In this case, the grid of orders is constructed in such a way as to maximize the price movement within the grid and earn on it.
That doesn't sound very clear, does it? Let's get into the details of each option.
Grid #1. Static grid of orders with a fixed step
How does it work? Two trades are opened at one level - to buy and to sell. After that a grid of orders with a fixed step is built. Above the price we put the pending sell orders SellLimit, under the price we place the pending buy orders BuyLimit.
This method gives the opportunity to cover the entire range of price movement, is very profitable, but at the same time, and very risky.
How do I use a static grid to catch prices?
To catch the price with a grid of orders with a fixed step, you must first determine the level and direction of entry. After that, on the basis of the analysis of a market situation, it is necessary to set a grid of orders with the certain step.
It is worth noting that this approach implies that the trader understands the situation on the market and has a certain trading plan. It also requires knowledge of technical analysis.
It is worth noting that both options are counter-trends and are based on mathematical and statistical properties of the price. Their aim is to gain profit without taking into account external factors influencing the price and complex methods of analyzing the market situation.
How do I use a static grid to catch profits?
This variant of using the grid is more complex. Its essence is to build up profitable positions as the price moves. Often, it is used together with Antimartingale principlewhich makes it possible to make a substantial profit.
This approach is quite complex. To apply it, it is desirable to have a trader's experience and knowledge of the market.
How do I determine the distance between the orders?
As the name implies, a static grid with a fixed step implies the same distance between the placed orders.
As a rule, the orders are placed at circular levels of Х,ХХ00, i.e., the step of the grid equals 100 pips. For intraday trading, a step of 50 pips is used, then intermediate levels X,XX50 are added to the round levels.
It has been experimentally determined that the optimum step for the intraday grid of orders is 42-46 pips. Decreasing the step leads to increasing the load on the deposit, and increasing the step leads to decreasing the profitability of the orders grid.
Grid #2. Dynamic order grid
The static grid of orders with a fixed step has its disadvantages, so many traders, having accumulated sufficient experience, use a dynamic grid, in which orders are placed on the basis of technical analysis and the current market situation.
Dynamic grid orders are placed at important technical levels, which are determined graphically or using technical indicators (Fibonacci levels, Pivot Point, moving averages and others).
The dynamic grid is not built immediately, but as the price moves and the graphical analysis of the currency pair. Naturally, the orders are placed at a different distance from each other, depending on the peculiarities of currency pairThe market volatility and peculiarities of the trading session.
Total
In conclusion, it must be said that the grid of orders is not a 100% way to make a profit. Some traders, using it, increased their deposit several times. Others have lost their accounts because they did not calculate the grid step or order placement levels correctly.
Along with the grid of orders, the Martingale method is very widely used, which allows you to reduce the size of the movement to close the grid and increase its profitability. However, a rapid increase in the lot can lead to the same rapid loss of funds on the deposit.
There are no exact rules for trading with a grid of orders that guarantee a profit. The variants and approaches of its use are formed on the basis of the trader's experience and the current market situation.