Directional Grid Trading Journal

Hey all,

in this thread I will show something that's quite old in trading but always fascinated me:

Grid Trading

To all of you who don't know what it is:
Basically I just place buy stop orders above the current price (if I expect an up move) or sell stop orders below the current price (if I expect a down move). I use no stops, a tp of 25 pips and a spacing of 20 pips.

Why that? Well with grid trading you will almost always have a dangler, a position where you entered at the top of an up move. Using a tp of 25 with a spacing of 20 pips is some kind of a trick to get the spread. Even though the spacing is less than the tp you will stay with one dangler in many cases but get more pips during the move.

Why gridding? No one knows how far a move will go. Using grids works incredible great in both ranging and trending markets as long as the directional bias is correct. They lose horribly if you're wrong.

I have two counter measures against this possibibilty.
1) Low leverage. I will use 100 units per order for a $1,000 account.
2) I will go with the trend in the daily chart so I won't stay in one direction forever.

I tried this before and always had interesting results, almost always better than with my manual trading only. I will place normal trades as well as I have a directional bias anyway, but those positions will be leveraged low as well, ususally more than these 100 units orders but not much more.

Let's see how this goes in the long run, I'm about to build up a very long track record here...

I'll start with a $1,000 account.

Ok, here we go:

http://www.fx-million.com/images/201...unt_021010.png

First manual entries are:
Short EUR/USD @1.37860 with 1,000 units
http://www.fx-million.com/images/2010/eurusd_021010.png

Long USD/CHF @0.97421 with 1,000 units
http://www.fx-million.com/images/2010/usdchf_021010.png

Long USD/JPY @83.274 with 1,000 units
http://www.fx-million.com/images/2010/usdjpy_021010.png

The Euro had a huge up move within a very short time and is now scratching on its upper channel trend line.
The USD/CHF is at all time lows and the USD/JPY is near intervention levels.

I will add more pairs like the Aussie but the Aussie has run so far I will wait for some correction first.

Oh, and here's the MyFXBook-Link:
http://www.myfxbook.com/members/Xaro...nal-grid/53499

Good Luck

How will you determin the change in trend?

What pair are you looking at?

I should type faster

I use simple 1-2-3 patterns for trend definition, so higher highs / higher lows for an up trend and vice versa. Plus I use some fundamental basics plus overbought/oversold scenarios (like for the USD/CHF and USD/JPY at the moment which are at insane levels)

I'll trade the majors and try to look for some not too much correlated pairs like EUR/USD, USD/JPY, USD/CHF, EUR/CHF, USD/CAD, AUD/JPY to name a few.

Hi Xaron,
I've been following your threads for some time and like your ideas.
I'm confused with one concept though.
Let's say you created you buy grid where you buy every 20 pips with TP 25 pips and no SL. So you sell one position and right away buy another same size position (ignoring 5 pip spread). How is it different then just "buy and hold" ?
Thank you in advance

Xaron,

am following your journal, as am interested in the grid system in action. from the MyFxbook you have the three orders placed, but without TP. also noticed you have 48 pending orders. are you willing to show those orders/positions taken/history on your charts? thanks.

New position: Long USD/JPY using 500 units @83.335

New grids: Long EUR/JPY, AUD/JPY, short USD/CAD

That is a good question indeed! The difference is that you never know how far the price moves. Using a tp of 25 gives me the possibility to get everything from a move. Plus the fact that I reload the grid every time the price goes against me. In range periods you can make a killing compared with a simple buy and hold.

Sure, nothing fancy. I guess MyFxBook displays them as well. These orders are just buy stop orders above the price in the USD/JPY, AUD/JPY, EUR/JPY and USD/CHF and sell stop orders below the price in the EUR/USD, USD/CAD every 20 pips with a tp of 25 pips and a size of 100 units each.

And that's the situation on Monday morning:

http://www.fx-million.com/images/201...unt_041010.png

Had a good start already, the grids are running well.

Took profit on my EUR/USD short at 1.37039

New short EUR/USD at 1.36946

Long USD/CHF @0.97184

I think I understand...Please correct me if I'm wrong
If let's say your USD/JPY buy order is filled @ 83.4 and TP 83.65 is hit, you place another 83.4 buy order in addition to the existing orders on the way up (i.e. but 83.6, 83.8, etc)
If that's the case, do you do some kind of automatic reload with some special conditional orders or EA ? Seems like of you do it manually, you have to stare at the screen to maximize price oscillations
Thanks much for sharing your ideas

interesting. .. the key is how good your directional calls would turn out. hopefully you will eventually disclose how you do that if not too much work for you. thanks.

Short EUR/USD @1.37707
Long USD/CHF @0.96835

Euro is preparing for a 300-500 pips correction down. Might go to 1.40 first, but I doubt that.

Here just a chart to show why I think the Euro tops out now technically:

http://www.fx-million.com/images/2010/eurusd_061010.png

We are at the top of the channel and we have some kind of resistance around 1.38/39. That itself wouldn't be a problem but the fact that we had this huge run up without any retracement makes me believe we will see a drop again.

Fundamentally not so much has changed. The FED hasn't even announced QE2 yet so a lot of negative stuff has been priced in already.

Same is true for Gold and Silver where I added shorts now.

New positions from yesterday and today morning:

Short EUR/USD @1.38325 and @1.38538
Short Silber @22.605, 22.757 and 23.031
Short Gold @1337.58 and 1348.91

Long USD/JPY @83.057