This grid trading system operates in daily chart. It is mechanical trading system, with low requirements on the traders: to not over-leverage himself and to not be completely wrong in his trend direction estimate. As with other grid based forex strategies, time is a friend. The longer we stay in this grid, the more profit can be accumulated. System takes advantage of market volatility.
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This daily strategy is plotted in daily chart according to traders estimate of trend. Trend confirmation is based in EMA tandem. Trend defined by trader must match the trend identified by this indicator.
EMA tandem will also safeguard the grid by closing all existing trades (accepting the loss) on trend reversal. However this daily grid system becomes much more profitable when trader manages to avoid this type situation and discontinues the grid before trend exhaustion. Grid cant profit om sharp trend reversals, however it will be doing good in range created at the end of the trend (typical situation).
The good news is, that major trend require accumulation/distribution at its end. Therefore daily trends tend to remain in range before reversal, instead of turning sharply (which is bad for the grid).
All major currency pairs can be traded by this grid system. Trader should pick the one with strongest and healthiest trend.
Grid trading is demanding and requires to use trading robot. This forex strategy can be traded automatically by Alpha proportion MT4 Expert Advisor created by theforexkings team. EA was also used for testing (all screenshots provided are result of this testing).
Used tools and indicators
Timeframe:1 Day (daily chart)
Currency pairs: EURUSD (+ all majors)
Trend: Determine the trend by any method at your disposal. It must be confirmed by EMA (exponential moving averages) tandem (100,30)
Fast trending EMA above slow - uptrend: long grid only
Fast trending EMA below fast- downtrend: short grid only
Closing the grid: Grid should be discontinued once there are signs of weakness in the trend. Failing to create new high/low, accumulation/distribution, hitting major daily support/resistance, change in fundamentals. Close all existing grid trades without exception on EMA trend reversal.
Grid spacing (averaging interval in points 150 - 300 according to risk appetite): distance in points between consecutive grid trades.
Take profit points (150 to 300 according take profit should equal grid spacing) : Take profit for each grid trade is set upon entry at 200 points.
Max number of trades: 30. Traders with substantial account balance can increase maximum number of trades, while being aware of the risk.
Lot Size: Grid should be opened with least available lot size. Instead of increasing the lot size it is preferable to launch it on multiple currency pairs and increase the number of max trades instead.
Note: In Alpha proportion, target profit input should be set to value that won't be reached by the grid. The input is used when EA trades averaging systems.
Forex strategy rules
Sell grid
Identify the trend. It must be confirmed by the EMA (fast EMA trending above slow).
Launch sell grid according to defined specification (or launch the alpha proportion with defined inputs).
Continue trading until weakness in downtrend appears, or wait for EMA crossover to close the grid.
Once the trend reverses, continue trading in new direction, or find clearer trend among other major currency pairs.
Buy grid
Identify the trend. It must be confirmed by the EMA (fast EMA trending below slow).
Launch buy grid according to defined specification (or launch the alpha proportion with defined inputs).
Continue trading until weakness in uptrend appears, or wait for EMA crossover to close the grid.
Once the trend reverses, continue trading in new direction, or find clearer trend among other major currency pairs.
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Disclaimer: Expert advisor was tested for profitability on historical data. All screen shots provided are displaying real results of the test. However past data will never guarantee future success. Every expert advisor needs to be tested properly on demo account. LIVE use only on your own risk. Read full disclaimer. TheForexKings Team does not give any financial advice. TheForexKings does not take any responsibility for any user’s investments and investment decisions. All rights reserved. Strictly for personal use.
