Thread: Grid Lines
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Old 05-10-2008, 12:25 AM
skypilotfx skypilotfx is offline
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Grid trading flaws

Quote:
Originally Posted by PipTraderTim View Post
Hello,

have some one good tip what can one make in Trendmarket to dont lose so much money whith a grid system I have heard about lot sizing and flexsible grid levels but I dont have find so good solutions, the loses always grow up.

Tim

This thread is not about grid trading but I will answer your question anyway.

NO...there is no way to just apply a standard grid on chart and have it be profitable during trending periods. I'm sure as you have experienced, trending periods will only push buy and sell orders further and further apart until you carry these immense positions with a big empty gap in the middle (hedge distance). Meanwhile, although you have the illusion your account is growing (balance going up due to closed trades), the equity is dropping horrendously due to spread bleed with each trade and losses either side.
Even grids with some sort of 'lot sizing flexibility' as you mention experience the same issues.

The bottom line is this - GRIDS STILL REQUIRE DIRECTIONAL BIAS OTHERWISE THEY ARE NO BETTER THAN MARTINGALE.

People I know that use them do so sparingly like a tool. Breakout strategies for placing orders around news time, afterwhich you quickly deactivate. Those that use them a little more are very experienced and KNOW HOW TO TRADE ALREADY. In order for a grid to be profitable, it is like all types of entries....you must know when market goes up, down (trending) and sideways otherwise you are nothing more than a newbie with a 'shotgun tool' hoping for the best. Grids, like Martingale will lose your money quicker than anything else.

Yes....the lure of that machine churning thousands of trades is strong but if it were so simple, everybody would be millionaires.

PLEASE educate yourself on how to become a REAL trader. This takes time (years), hard work and discipline. After you have mastered it, then perhaps play with grids on the side.

Pilot
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