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Mpowerfx - Learn How you can make Gains from Utilizing the Forex trading Grid Technique PDF Print Email
Finance - Real Estate
Written by: Gerald Halk   
Friday, 22 April 2011 13:04
The most essential part of how to earn money utilizing the no stop, hedged, Forex trading strategy will at this point be covered. In the preceding articles in this series, we looked over trading without stops, not being involved about which way the price moves and places to cash in on lucrative transactions. We're right now going to show how you would make money buying and selling simultaneously utilizing the grid strategy.


The most essential part of how to earn money utilizing the no stop, hedged, Forex trading strategy will at this point be covered. In the preceding articles in this series, we looked over trading without stops, not being involved about which way the price moves and places to cash in on lucrative transactions. We're right now going to show how you would make money buying and selling simultaneously utilizing the grid strategy.

The no stop, hedged currency trading grid system uses the rule that one ought to be able to close a transaction at a gain no matter which way the market moves. The only way this is logically possible is that one would have a buy and a sell transaction active simultaneously. Most traders will say that doing this is not advised however let us look at this in more detail.

Assuming a grid with grid gaps of one hundred pips. We are going to utilize the simplest formation to show the principles involved. This formation is the 100% retractment formation where the price goes up to a grid level after which returns back to the starting grid level. Regrettably things turn out to be quite mathematical from here. We are likewise ignoring broker spreads to keep things simple.

Let's say that a trader enters the market with a buy (buy 1) and sell (sell 1) deal active when a currency is at a level of say 1.0100. The price then goes to level 1.0200. The buy will then be positive by one hundred pips. The sell will be negative by one hundred pips. Now we would cash in our positive deal and bank our 100 pips. The sell is now however is carrying a loss of -100 pips. The grid system requires one to make sure that the trader can cash in on any movement in the Forex market. To get this done, one would again enter into a buy (buy 2) and a sell (sell 2) deal at this level (level 1.0200).

Now, for convenience let us say that the price moves back to level 1.0100 (the starting point).

The second sell (sell 2) has now gone positive by 100 pips and the second buy (buy 2) is making a loss of -100 pips. According to the grid trading rules you would cash the sell (sell 2) in and another 100 pips will be added to your account. That brings the grand total cashed in at this point to 200 pips (buy 1 and sell 2). At this time the first sell that's active has moved from level 1.0200 where it was -100 to level 1.0100 where it is now breaking even.

The four transactions added together now extremely show a gain:- 1st buy (buy 1) cashed in +100, 2nd sell (sell 2) cashed in +100, 1st sell (sell 1) now breaking even and the 2nd buy (buy 2) is -100. This provides an overall a gain of 100 pips in total. We are able to liquidate all the deals and have some champagne as we have made a profit of 100 pips.

You should make certain you understand the mathematics behind the activities discussed above. You might have to reread and draw the movements on a piece of paper to make sure you understand the concept.

This formation is the 100% retracement formation where the price goes up to a grid level and then returns back to the starting grid level and results in a nice profit for the forex trader. There are many other market movements which turn this strange Buy and Sell at the same time activity into profits. The next article will cover the 50% retractment formation which produces the same amount of profit.

There'll be much more on the no stop, hedged grid trading system in future articles in this directory. Don't miss them, whatever you do.



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