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How Forex Grid Works?
Usually in all kinds of forex strategies, the operation involves single order at a time. But with forex grid strategy, multiple orders can be operated simultaneously. This is called non-indicator system which works on the principle of placing one order level at a distance on either side of the market. Getting the perfect balance between the stop level and the profit is quite unlikely which is why forex grid strategy is rarely profitable. Also, due to greed and shortened time spans, amateur traders do not take it seriously into account causing inadequate returns.
How Forex Grid Works
Yet forex grid system has made the trading process easier than ever before. A series of numbers is set for entry limit orders by the trader. These numbers are used to make the grid. A specific number of pips are used from the current price. When the market price reaches the level, trader executes the limit order. Then for a particular number of pips, one limit price order is executed. And this process is carried on. When profit is earned with price moving to the original level, another limit order is executed and the process continues. Forex grid system is quite a simple one but when it comes to closing the deal, many traders find it difficult to calculate the apt time and process to do it. To keep things simpler, many traders choose not to think of stop loss. But if you don't want to take any risk about keeping with the positions till margin call, you can use your intuition. Even if you fail initially, soon you will master it too.
The size of forex grid distance or leg plays a vital role in trading through this strategy. Safe and amateur traders use smaller legs or grid sizes. Usually they do not place their orders for more than 25 to 30 pips. As the risk is low, so is the return. In forex grid system, bigger leg sizes are needed, preferably of 200 to 300 pips. The currencies which are common in trading for them this range is highly recommended- for USD and Euro, 200 pips and for JPY and GBP, 300 pips.
Why Forex Grid System
Basically forex grid is a software. Thus it guides you through the intricacies of trading. You don't need to work your brain when you think the market conditions are not in your favor. Forex grid keeps you prepared ahead and does the needful itself so that even if you don't make windfall profit, yet you don't lose money. The biggest advantage of this software is its user friendliness. It manipulates like robot and can set the rules and goals like an automated system. You need to monitor your system. Once the positive status is reached and also the price is at its maximum of what it had been expected of the grid leg, you should cash in. This will prevent the loss. Once you are no longer bothered about any potential loss, you can analyze the trend of the market for your future endeavors.