What is a Grid Forex Trading Strategy and how to trade it

WHAT IS A Forex GRID trading strategy?

Grid trading is a strategy that aims to enter the market with a sequence of stop and limit orders. A forex grid strategy will try to benefit from market pull backs after it placed an opening position.  Grid trading is very popular because of the fact that these strategies do not care if markets move up or down. 

 

forex grid chart

Forex Grid strategies are by far the most popular strategies, cause traders like the enormous profits. However, grid strategies carry more than average risk and I will explain what grid EA’s are.

Although you might confuse grid systems with Martingale strategies there are similarities.  The difference is that martingale strategies always double up positions whereas forex grid strategies can use different entry steps.  So once you see a forex robot entering positions with the following entry steps, you are definitely looking at a Martingale strategy; 1 lots – 2 lots – 4 lots – 8 lots – 16 lots etc.  As a result you will not find any Martingale EA in the featured robot section, since doubling up lot size we consider as too risky.  Martingale does not always have to be bad as long as you understand that these strategies can “blow up ” your account. As a result you will need a lot of margin in your account.

Advantages of Grid strategies:

  • Trade 24/5
  • Minimum influence for stop loss hunting
  • Not very spread sensitive
  • Behaves well in thin markets
  • Great results in ranging markets
  • Triple digits returns
  • Can be manually managed

So to pick currency pairs that are ranging will definitely decrease your risk.

Disadvantages

  • Higher leverage required
  • No stop loss near first entry
  • Increase risk during strong market trends

 

The Grid EA’s on this website are listed as one of the best forex robots in the market. They use different steps which makes the strategy more effective in trending markets. Make sure you test a grid EA before using it in a live account.

The best forex robot to use for a grid strategy are the Piphiker, The Grid Hero EA and the Grid King EA. We sell these expert advisors in our shop and you can trade them for free in a combination with a preferred broker account.

How to trade a forex grid

There are many forex grid strategies so I will try to describe how traders use the grid EAs that we offer on our website. First you need to determine how much money you need in order to trade a specific pair(s).

So lets first have a look at the lot size and how many entries you can expect. Typically a grid strategy starts with a 0.01 lots size where it builds up its position in case the market goes the other way. Because of this a grid will usually show a minus in your account.

Depending on your account size a regular draw down of 5-10% is typical. The most successful grid users have found the ultimate solution to manually steer their EA in case markets show some waves. In case you are not a manual trader its better to simply switch off the Ea for that specific pair. Therefore its important to always be aware of the global market situation.

Ideal for lazy traders

Maybe the biggest advantage of forex grid trading is that you do not have to worry about the market direction. Whether it goes up or down, a forex grid strategy will always make sure it’s on the right side of the market by simply adding positions. So in case you are stressing out in front of a computer screen whilst trading, a forex grid strategy is the way to go.

Bear in mind that the one thing a grid does not like is a strong market trend without any pull back. Thus in case your forex grid ea does not make large steps (market entries) and you stay within ranging markets a grid strategy will do great. Typically it can happen  that you have to add funds and is well accepted by most traders. To aim for triple digit annual profits does not come for free.

Make sure you always keep an eye on your account and in some cases it doesn’t hurt to do a manual trade as well.

Conclusion

Forex grid strategies are probably the best way to start with robot trading. Once you understand the risk and fund your account sufficient you should be fine. Stay away from extreme volatile pairs and best to start with a eur.usd pair.

Compared with a trend following strategy many traders stop because of a lack of trading activity. Martingale strategies that double up positions we do not recommend, better to go the casino instead.

In case you are interested in a testing a forex grid strategy you can sign up here.

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