The grid hedge - the core version

Hey Isydeb,
I really like option #1 of your advanced system. I, fortunately, have the option to trade at work (8-5 EST). That said, I may give it a go, opening the orders up before the US session. I really liked your system, but have never been comfortable with letting trades run through the night. I'll keep you updated on my progression. I will be demoing, as I am with mb trading, and don't have a subaccount at the time. If I have time, I'll do a bit of a backtest as well, although I only trust forward testing with a live account 100%.
Bob

It does not look like it is possible, so you would have to forward test live with Oanda.

Here is a spreadsheet using FXDD history. It appears that FXDD's day starts 2 hours earlier than your brokers and the spread is 2 pips. For the test I made first entry + or - 10 pips from the Open price.
From 1/2/2007 - 4/1/2008 total loss -1704 pips.

ISY,

I am hanging in with no worries at all. At this point I now have 4 buys and 3 sells executed. Down about 250. The real question is what you do at the end of day. I was thinking that until all trades are executed you stay in, however, I am thinking you take your loss and start over, because otherwise you are very limited on the ability to come back once 9 of the trades or even 7 have been executed. Lets see what Bernake brings to me.

With about 4 hours to go, we are stuck in same range. Right now down about 250 pips. So what would you do in 4 hours? Right now 4 buys in and 3 sells. So should I close or wait??

hey scotty..... are you using onada or regular metatrader......h

regular

I would personally let the orders ride until there is a strong move in one direction or another. As was stated you do not have to close everyday maybe only twice a week or so but wait until you are in profit. If it continues to range let it range until it eventually moves. This is a very very simple strategy that way. May lose some interest but eventually the market will move one way or another. Hold on unitl then.

however, once you have almost all 10 trades executed it will take a very very large move to be profitable. So it is probably better to take loss and start again. If you have 9 trades you are only going to make 1 pip back per pip ans that wont start until a huge move at that point, so it could take hundreds of pip move to get even. Do you agree? Currently I have 7 trades so i have potrential to get 2 pips per pip on an upmove if last long executes. It may pay in tis instance but not sure. In my mind if it goes down south hard I should exit as I have 4 longs working against me at that point

Once you have 9 positions open it takes a move of between 400 to 420 pips on your best entry to break even. After that you would make 1 pip for each pip it moves in the right direction.

One option mentioned earlier is to close just your losing positions, and rebuild your grid from there. I'm still experimenting, and I have no idea if this will work or not. I'm only reminding that this is one of the options suggested -- although it was stated for those who can babysit and tweak every hour. It will seal the fate for those losing positions, but with a new grid, you'd make some of it back if price rebounds. If it does continue on your slightly winning side, you would tend to make your money back more quickly. It does seem that this extension of the rules might lead to more open positions than you want at any one time, but you could control that by closing the most in the money positions as new positions open in your favor (assuming it continues the way it is currently - though slightly - leaning). If it does reverse you wouldn't have extra open positions since you've already closed them when they were losers.

Sideways movement will kill this system over time unless you tighten your review periods (more than once a day) and/or shrink the grid spacing. That is the kind of adaptation that good traders try to remain attuned to, I imagine (I'm not that good... yet). The market is constantly changing, as we all know. Back testing on this pair over the past year is not a very complete picture. Those stating that you might as well just have gone long through the whole period are presuming you would have known what the market was about to do. This system would have made money if all these Monday Morning Quarterbacks were righ, or if they were completely wrong. It takes a good portion of the decision making out of the process... But not ALL.

To get really mechanical you have to have a trigger to judge the general character of the market. An example of that is where isydeb says to close positions before really big news. Character of the market can be very different in those short periods. If you want to trade in a market with a different character you'll need to adjust from these basic rules or use another tool altogether. Knowing how and when to change will be a trick. For longer term character changes, in the days prior to making your adjustment, the market is probably going to take something from you. If you are losing consistently with a winning system, the market is trying to tell you something...

A loss for a single month is not the basis for evaluating practically any systems overall worthiness. I don't think the market is comfortable way up here. It needs a steady diet of negativity to continue on. US government, with all its flaws and faults, can't be expected to sit by and watch the markets melt down. They will intervene, maybe effectively, maybe not. While the market is digesting all of these moves, you will have some troubling weeks. Once the market decides, this system will make you a winner. While it is deciding, the original rules may not be the best match for the prevailing conditions.

Sorry for the lecture... ... but not really. The problem with working a system or a method is that you get so into believing while it is working that you fail to look at the bigger picture. So, as soon as it hiccups, people will call it a loser because the system fails to win all the time ... ???... Maybe it is... for a week or a couple of months... or a couple of years. Knowing what to use when, and how to adjust it for the current character of the market is critically important. But we all know that, right? Okay, so why is todays losses, and last months poor performance so noteworthy? Look back at the posted record for this past year. There are some stunning drawdowns... followed by some soaring gains. Figuring out when to be in and when to be out IS THE GRAIL. There are probably 10,000 systems that will make you a millionaire within a year, if you can know when to use them and when NOT to use them. Until we find THAT grail we will all just have to live with some losses.

If you find that grail though... drop me a line. .... I had it here a couple of days ago, and then misplaced it. It really belongs to me, but I'll be happy to let the finder use it as a reward...

Ok, I ended with 8 open position (5 long, 3 short) at -180. I have decided to let it ride a little bit more but will keep an eye out and consider my options tonight. The only reason I am letting it stay is that I have 5-3 ration as opposed to 5-4. I still think closing in this case is your better option, but we will see how it all plays out. Just some things to consider to refine the system.

Qman,

I believe the closing out method was meant for when you were in a profit overall, not a loss. I could be wrong but that was how I read it.

hey abnormalone..... sounds like you've had some expierence with grids...... and you must be refering to a grid equally spaced on 20's....

after hundreds and hundreds of hours testing dreamliners deal which is somewhat similar to isy's, it still seems the best approach is to have the grid flexible in all parameters, lot size, grid spacing , profittarget and such.....


if the trend is up, the ea needs to decrease the upward grid spacing while slightly increasing the lot size for the buystop orders ....... at the same time increase the grid spacing and decrease the lot size for the sellstop orders..... converse on downtrends.....

it appears your handy with math so the positive result should be obvious.....

the prefered method might be to avoid placing any orders against the trend.....h

I have never studied any grids before but I like systems that do not use indicators so this one caught my attention. I also like systems I can test with spreadsheets and history. You have given me some ideas to get started with so I am going to play with this some just to see what I can come up with.

I pieced together an EA to trade Isydeb's GridHedge strategy. Keep in-mind that I am not a coder and would appreciate if someone could take a look and refine the code. I think the settings are self explanatory, but I will be around for any questions.

Place the EA on your chart and it will open 5 pending Buy Stop and 5 Sell Stop orders. You can also specify a dollar or pip profit taking amount. Once the specified take profit amount is reached the EA will close all open orders and start a new grid. You also have the option to manually close all open orders at anytime.

TimeFreedom

Hello Scotty, everyone. Sorry I hadn't shown up before but I have been on a business trip all day. I didn't have a chance to trade yesterday so do not have results for today but will post them on the weekend.

Scotty, in order to work with a system it is crucial that you trust it, that is why you should test it in demo till you feel comfortable with it. My best recommendation to you is that if you feel uncomfortable with this drawdown, well then close your positions and orders and demo it a little more. If you want to hang on to the trade here's what you can do.

1. Current price is very close to where we placed our orders, so we have basically gone into our worst case scenario. Now, we go into "dodging bullets mode". The bullets are in the air, we just have to dodge them. Close two or even three of your E or D positions. That is the 4th and 5th level and keep the others open. Place new orders where the ones you cancelled used to be. This is one thing you can do to minimize loss.
2. Or you can set a TP and SL. Your positions are more on the long side, so place a TP at the breakeven of the 5th order, and place SL to all at breakeven of 1st order. On the short side, where you have most of your losing positions, place a TP at the breakeven of your 5th order and a SL at th next multiple of 20 above current price. This is a quick way to minimize your losses.

Market will most likely, fluctuate on a 50 to 100 pip range before NFP, so you may keep your orders open and take advantage of the spike, you are already in the market so you are not vulnerable to spread widening.

Hope this helps, will try to update when I can.

Remember that the holy grail is money management!!

Great Bob, wish you all the luck with your demoing, I have an MBT account as well, and it doesn't work at all with this system. But you can use oanda's demo account for as long as you like. Get acquainted with the system and when you feel comfortable with it, take a shot at it on a small live account.

Thx for this, I will give it a try.

Well it turnedout worse. Now down about 375, but no new shorts haveenterred so still poissble to recover. The right move was to reset last last and take the loss. I would have gotten much of it back on the downward move. ISY, I do not mind the drawdawn and it could care less about the loss. I test real time when I like a system because I find how people including myself react in real time is very different. I will reset everything tonight.