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Grid Trading EURGBP

  • Post #1
  • Quote
  • First Post: May 22, 2007 1:32am May 22, 2007 1:32am
Hi,

Are there any grid traders here who trade the eurgbp exclusively? I was going through the charts yesterday and collected the following statistics:

eurgbp has had an average daily range of about 39 pips, weekly average range of about 63 pips and a monthly range average of about 143 pips. These are the past 5 years averages.

Going by the numbers, isn't this the best pair to grid trade profitably and consistently. A general view from 8th September 2002 to 5th May 2003 shows a high and low of 1013 pips gained in a very painful (slow and steady) manner, and thereafter, the pair has constantly remained within that range.

Keeping the above in mind, isn't this pair, a grid traders dream come true?

Response appreciated by all, and especially by grid traders in this forum.

Thanks
Stu

P.S: Kindly do not move this to the beginner forum. I am looking at a discussion here, and not the definition of grid trading. I know what grid trading is.
What exactly is grid-trading?
Quoting WTB
What exactly is grid-trading?
I don't use it but if it's the same thing I know you'll understand it
http://www2.oanda.com/cgi-bin/msgboa...;f=15;t=003696
Great coincidence that you opened this thread as I have started trading the E/G for my range trading. Most of my profits come from trend trading the G/U. I have been looking for a good range pair.

For now I think the E/G is good.

Grid systems confuse me though. I don't think they are always reliable. I prefer a range channel instead
Well, I have to disagree that grid systems ain't reliable. I was of the same opinion few weeks back, until I started watching a friend trade it. I saw him taking his live trades and making money consistently. I think it is all about making the most out of a ranging market and the belief that nothing goes straight up or down.

I would like to hear from the grid traders here, if any.

Thanks
Stu
I currently have an account that has a grid on the EUR/GBP.

At this point, it's almost like a high interest savings account. With very little volatility, this pair adheres to the grid pattern pretty well...BUT it takes very few profit targets. Now, it could be that intervals are too large, but while there hasn't really been much volatility, the pair can trend every now and then, and those trends could easily render a grid unprofitable if the intervals are too small.

I will say this, I'm on the "lucky" side of the grid, because I'm actually collecting a little bit on the swaps due to the orphans being strictly shorts. However, I have a good feeling that we'll be turning around soon, and we might go the other way.

Quoting Stuartesque
Well, I have to disagree that grid systems ain't reliable. I was of the same opinion few weeks back, until I started watching a friend trade it. I saw him taking his live trades and making money consistently. I think it is all about making the most out of a ranging market and the belief that nothing goes straight up or down.

I would like to hear from the grid traders here, if any.

Thanks
Stu
  • Post #7
  • Quote
  • Edited at 8:32am May 22, 2007 8:31am | Edited at 8:32am
Grid trading works until what you're trading trends... in the wrong direction (usually grid traders pick whichever direction gives an interest payout on the pair, whether its all long orders or all short orders). At that point you wind up cutting your losses for a huge drawdown, or trying to hide the loss underneath a hedge.

The ways I've seen to get around this problem is to set up a grid that plays in the opposite direction on some breakout (such as switching from short orders to long orders if range goes above a resistance point), or adjusting the TP according to the discernible trend (say you have short orders; if market goes upward take smaller TPs for pullbacks, if market goes downward take the larger TPs with the trend).

The other reason why EURGBP ranges tightly, besides a slight correlation between the two currencies, has to do with value per pip. When you buy/sell 1 lot of EUR (assuming full lot on 100:1), it's not $1000 worth of margin, but whatever the EURUSD is trading... more like $1345. The price gained/lost per pip is not $10, but whatever the GBPUSD is trading... more like $19.74 per pip. Therefore, your gain/loss is something like 1.47% of your margin risked per pip. Compare this to the EURUSD, which is more like 0.74% of margin risked per pip, and you can understand why EURGBP throws very few pips per day. Most people are too lazy to calculate true value per pip, and assume everything costs $1000 per lot and returns $10 per pip.
Your grid and my grid are 2 different things. My intervals are actually in both directions, so ANY trend of significance will be a problem. However, if you can find a good ranging spot and let it run for a few weeks, you can normally get out of developing trend with profit...which is really what I'm doing...I'm just letting the grid capture ranges and then when I feel that a trend has developed that would endanger my grid, I close the grid and wait for a new signal.

On your other point regarding the "reason" why the EUR/GBP ranges...while you are correct about pip value, the actual "reason" has to do with the underlying fundamentals...those fundamentals basically tie the economies of UK and the EU very tightly, and they react very similarly against other economies. Obviously they don't react exactly the same, but they do react together, generally...which keeps their currencies in a tight range.

Quoting bluebuddha
Grid trading works until what you're trading trends... in the wrong direction (usually grid traders pick whichever direction gives an interest payout on the pair, whether its all long orders or all short orders). At that point you wind up cutting your losses for a huge drawdown, or trying to hide the loss underneath a hedge.

The ways I've seen to get around this problem is to set up a grid that plays in the opposite direction on some breakout (such as switching from short orders to long orders if range goes above a resistance point), or adjusting the TP according to the discernible trend (say you have short orders; if market goes upward take smaller TPs for pullbacks, if market goes downward take the larger TPs with the trend).

The other reason why EURGBP ranges tightly, besides a slight correlation between the two currencies, has to do with value per pip. When you buy/sell 1 lot of EUR (assuming full lot on 100:1), it's not $1000 worth of margin, but whatever the EURUSD is trading... more like $1345. The price gained/lost per pip is not $10, but whatever the GBPUSD is trading... more like $19.74 per pip. Therefore, your gain/loss is something like 1.47% of your margin risked per pip. Compare this to the EURUSD, which is more like 0.74% of margin risked per pip, and you can understand why EURGBP throws very few pips per day. Most people are too lazy to calculate true value per pip, and assume everything costs $1000 per lot and returns $10 per pip.
I know this is not a grid system, but it works for me. I have started trading the E/G for basic range trades.

A. the blue channels are for entering trades
- smaller blue channel for observing price on the H1 chart (short-term trades)
- larger blue channel for observing price on the Daily chart (long-term trades)

B. the red channel is for watching where price is ranging over a period of weeks and months.

Exits: either wait till price goes to the center of a blue channel or wait till price goes to the opposite wall of a blue channel.

The channels are setup to reflect the pair characteristics of the E/G over the past couple of years.


Trading Rule: when price approaches or brakes through a blue channel line I go long if price near wall of the blue channel (whichever one I choose) or opposite for short.

The momentum filter is a basic Stoch (5,3,3,) and an RSI (21).
Attached Image (click to enlarge)
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Quoting mrmikal
On your other point regarding the "reason" why the EUR/GBP ranges...while you are correct about pip value, the actual "reason" has to do with the underlying fundamentals...those fundamentals basically tie the economies of UK and the EU very tightly, and they react very similarly against other economies. Obviously they don't react exactly the same, but they do react together, generally...which keeps their currencies in a tight range.
Yes... which is why I said besides a slight correlation between the two currencies. The EUR and CHF are more closely correlated, yet the daily range on the EURCHF is quite larger in pips per day than the EURGBP.
i do grid on usd /jpy with hope of carry, but it is dead lately, switch few to gbp-chf, which also uncertain...
from the grid, the swap gives 1/3 of the profit .
  • Post #12
  • Quote
  • Edited at 12:50am May 23, 2007 12:35am | Edited at 12:50am
In the past I have studied grid extensively. The concept really interested me for some time and I really went to work studying it. There are problems of course along with the benefits. The main problem is leverage. If you spread out your grid 30 or 40 pips and the market makes a run against you the leverage will kill you unless you are trading a very small margin.

My final system included short orders every 50 pips above price and long orders every 50 pips below price. I would also go long above price in intervals and short below price in intervals but not start these intervals until at least 200 pips out. The idea of course is that price will "roam" 50, 100, or 150 pips and come back. If it doesn't, the second interval orders will lessen the pain until price comes back as it always does to some degree. I would take profits on the second interval trades at the exact same spots as the entry of the original trades but let the original trades stand so when price comes back your equity grows extensively. Then there is the question of which second interval trades to replace. I would replace roughly every other one, but you still wanted more original trades open than second interval trades as price retreats. I still got killed on drawdown and found it would just take too long to catch up. I think if played with the right pair someone could make a go of it. I never used stop orders but there may be a place for them.

My current trading is grid to some degree. I place interest bearing trades roughly 100 pips apart whether price is going up or down. I protect loss and gain with hedge trades and use these as short term pip gain trades. My theory on Forex is price always comes back to some degree and I want trades in place to catch these moves. I limit risk with hedge trades. If price moves against the hedge trade you have your work cut out. Its an art and I am learning all of the time.
"Its not where your at, but where your coming from"
ok, i looked into grid system, i just have two questions.

1) what do you do when the market opened 80-100 pips gap down on sunday. take a look at gbp/jpy open yesterday. that is guranteed loss if you're net grid long....which i expect most grid traders to net grid long because gbp/jpy gives you positive swaps

2) what do you do with your grids during major news? if your grids are 20-30 pips using automated EA, i can see your grid system getting wiped out by the variable spread. i saw spread opening up 30-80 pips during some major news release.
grid trading means that you add additional trades/bets as the (combined trades profit) becomes more negative.

this is a very dangerous thing to do, it is very easy to run out of margin and cause account to explode.....

i am now making grid trades on the eurgbp.

this is a small live funds account.

my most recent position closed almost twenty percent profit.

breakeven price is 0.7787

Attached Image
Attached Image
trading style: grid
stop loss: not used
danger level: extreme

the low has been already been established at the 0.7653 level, so now i will add money as i push into this corner.

Attached Image (click to enlarge)
Click to Enlarge Name: setup22.png Size: 68 KB
Attached Image
  • Post #16
  • Quote
  • Edited at 4:03pm Mar 15, 2016 3:50pm | Edited at 4:03pm
position closed.

previous balance: 1174
balance now: 1253

profit gained from position: $79.00 (6.7%)

and now onto new business...

** bias is long.

** new position established.

** total lots in play: 0.02

** total margin used: $52

** total free margin: $1203

(edit: i am adding a tentative takeprofit of 0.80)

Attached Image
Put 10,000 USD in demo account and place 0.01 lots every 10 pips in 1 direction, close positions every 10 pips profit minimum and replace pending order at previosu price again. Test for 3 months.
Prince M. Golds
I used a grid system.
of course it was not positive every week, but it was effective when applied in a weekly series.
yes, and it really matters which couples they use.
because not all pairs are suitable.
I see that a grid system is not very popular.
EG pair grid transactions are also good. But, once the price has gone in the opposite direction, the account fire is also high. EG couple it goes without wanting to recover.
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