Learn How you’ll Make Gains from Using the Forex trading Grid Technique
In this ARTICLE you’ll find out how to form money trading the no stop, hedged Forex trading system by having a buy and a sell active at each grid trading level. A mathematical calculation is shown of the essential 100% retracement formation.
The most important a part of the way to make money using the no stop, hedged, Forex trading strategy will now be covered. In the preceding articles during this session we reviewed trading without stops, not worrying about which way the worth moves and places to take advantage on profitable transactions. We are now getting to show how you’d 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 ready to close a transaction at a gain regardless of which way the market moves. The only way this is often logically possible is that one would have a buy and a sell transaction active simultaneously. Most traders will say that doing this is often not recommended but let’s check out this in additional detail.
Assuming a grid with grid gaps of 100 pips. We are getting to use the only formation to point out the principles involved. This formation is that the 100% retractment formation where the worth goes up to a grid level then returns back to the starting grid level. Regrettably things become quite mathematical from here. We also are ignoring broker spreads to stay 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 might take advantage 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 make sure that the trader can take advantage on any movement within 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 allow us to say that the worth moves back to level 1.0100 (the starting point).
The second sell (sell 2) has now gone positive by 100 pips and therefore the second buy (buy 2) is making a loss of -100 pips. According to the grid trading rules you’d cash the sell (sell 2) in and another 100 pips are going to be added to your account. That brings the grand total cashed in at now to 200 pips (buy 1 and sell 2). At this stage the primary sell that’s active has moved from level 1.0200 where it had been -100 to level 1.0100 where it’s 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 therefore 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’ve made a profit of 100 pips.
Please confirm 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 that the 100% retracement formation where the worth goes up to a grid level then returns back to the starting grid level and leads to a pleasant profit for the forex trader. There are many other market movements that turn this strange Buy and Sell at an equivalent time activity into profits. Try using this strategy in demo ac first .Go live only when you feel confident about it ..