Forex Grid Trading: How Good Is It of a Strategy?

Some traders in the foreign exchange market are of the opinion that forex grid trading is a profitable strategy; it is, however, a demanding approach since it requires frequent supervision.

Well, the statement is not entirely true.

Forex grid trading is actually a strategy that requires little attention. Granted you have established strong positions beforehand, you can get to the bottom of the speculation. And, if you’re the kind of trader who doesn’t prefer keeping tabs on market direction too often, it seems like the ideal approach for you.

An Intro to Forex Grid Trading

Forex grid trading is a strategy that involves capitalizing on a currency pair’s price volatility; it is a technique of knowing the best time to set buying and selling positions. The creation of a “trading grid” begins by establishing buy orders and sell orders, and distributing them between intervals of around 15 pips, in the form of a grid.

The Advantages of the Strategy

As mentioned, an advantage of forex grid trading is that little supervision is enough to keep the strategy going; you are to keep an eye on the market once in a while, but the monitoring is meant for you to only understand the nature of the forex market.

As soon as you’re already a market participant, forex grid trading is a strategy that can cut you some slack. Simply study a chart and observe price volatility, create a trading grid, and finally, establish a buying and selling position; retreat to the particular grid regularly for updates. If you’re a disciplined trader, and you are knowledgeable of your way around the forex market, the approach is likely to work in your favor.

Making Way for a Forex Hedge

Since it works alongside price volatility, forex grid trading is more reliable with a forex hedge; a hedge is a transaction that protects an existing account against the impact of a sudden change in exchange rates. With it, a forex trader can remain safe against upside and downside risks (e.g. appreciation, depreciation, etc.). Especially if the plan is to establish a position and stay in that position for a long period, the unpredictability of exchange rates needs to be considered; it is a constant threat.

The Final Word

Forex grid trading can be employed to win big in the forex market. A secret technique is to eliminate emotions when trading; stop orders must be placed to not get carried away with possible outcomes. In the event of a win, be strict when it comes to putting an end to your streak even if you assume that bigger wins are headed in your direction; conversely, if at a loss, avoid anticipating an opportunity for a comeback if a stop order is signaling you to exit the market.

Moreover, beginners in the forex market are advised to be more familiar with forex grid trading before employment. It may seem rather simple to follow, but it requires practice. Otherwise, there’s a probability of incurring huge losses.

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