Hear me out!
This comes from my experience of trading Binary Options and how Binary options use of martingale works with my knowledge about Grid trading.
So, in Binary options, my wish was always to have 1:1 risk to reward ratio if I am to trade with Martingale while properly managing my risk. This is not the case over there because the most you will be getting is 1:0.8 and keeps changing. So I thought, what if I brought this approach to Forex where liquidity is unlimited and I can set my own terms.
That is how I arrived at this strategy I would like to share with us here
Disclaimer: I have not traded with this and it is just an idea which someone can automate and we try it out together. So please keep your negative thoughts and energy to yourself if you are not willing to contribute positively to this effort.
THE LOGIC:
Unlike other martingale strategies I have seen around, here we do not hold a losing trade while we open a bigger one in the opposite direction. We use proper SL and TP with 1:1 risk to reward ratio. what we do instead is, when we have an open order that has reached SL, we close the open order in loss and open an opposite order with the same TP and SL. See the graph below. There's a possibility of trading without Martingale but I have not looked at it critically.
Our biggest strength is market volatility. The market always moves no matter what and that is what we want.
GRID: My idea is that there are areas where the market normally makes significant reactions (which is what I have used to back-test this) eg at 00, 25, 50, 75 levels. So Ideally, we can mark these areas and every time price reaches this area, an order is opened and if there is a running order, it is closed with the same TP and SL using the Logic above
Filters: For the 1st trade, is if the grid price is above 21 EMA, go long and if below, go short. The rest of the trades will be managed from there
Pros:
- Can be traded without Martingale too
- Trending market which ever side is good for us
- Ranging market as long as the ranges in any direction is above 50 pips are fine also.
- The only time I see weakness is December holiday when the market is not moving at all
Cons:
- Martingale is still martingale, so it can be dangerous
EA:
Anyone who wants to develop an EA, my suggestion is that the closing of trades should be by the EA not the broker's SL and TP features
This comes from my experience of trading Binary Options and how Binary options use of martingale works with my knowledge about Grid trading.
So, in Binary options, my wish was always to have 1:1 risk to reward ratio if I am to trade with Martingale while properly managing my risk. This is not the case over there because the most you will be getting is 1:0.8 and keeps changing. So I thought, what if I brought this approach to Forex where liquidity is unlimited and I can set my own terms.
That is how I arrived at this strategy I would like to share with us here
Disclaimer: I have not traded with this and it is just an idea which someone can automate and we try it out together. So please keep your negative thoughts and energy to yourself if you are not willing to contribute positively to this effort.
THE LOGIC:
Unlike other martingale strategies I have seen around, here we do not hold a losing trade while we open a bigger one in the opposite direction. We use proper SL and TP with 1:1 risk to reward ratio. what we do instead is, when we have an open order that has reached SL, we close the open order in loss and open an opposite order with the same TP and SL. See the graph below. There's a possibility of trading without Martingale but I have not looked at it critically.
Our biggest strength is market volatility. The market always moves no matter what and that is what we want.
GRID: My idea is that there are areas where the market normally makes significant reactions (which is what I have used to back-test this) eg at 00, 25, 50, 75 levels. So Ideally, we can mark these areas and every time price reaches this area, an order is opened and if there is a running order, it is closed with the same TP and SL using the Logic above
Filters: For the 1st trade, is if the grid price is above 21 EMA, go long and if below, go short. The rest of the trades will be managed from there
Pros:
- Can be traded without Martingale too
- Trending market which ever side is good for us
- Ranging market as long as the ranges in any direction is above 50 pips are fine also.
- The only time I see weakness is December holiday when the market is not moving at all
Cons:
- Martingale is still martingale, so it can be dangerous
EA:
Anyone who wants to develop an EA, my suggestion is that the closing of trades should be by the EA not the broker's SL and TP features
