Forex grid hedge strategy

The biggest reason why a Forex Hedging grid strategy is so popular among preponderance of traders is because it is easy to visualize. However, just like any other trading strategy, there is no room for ignorance, greed and also impatience.

An Overview:

Forex hedging grid strategy primarily follows a simple methodology.  Traders start to Buy and sell trades and when price does move away at a predetermined grid, one cashes in on the positive scopes leaving adverse ones behind.

For newbies wanting to attain success from the market, proper knowledge about the market and familiarity with the system is quintessential.

  • One must know how the market is and will be over a period of time.

  • The probably fundamental aspects which will be the prime movers of the market

  • Comprehensive analysis on the existing market dynamics.

Following all these aspects will is sure to give traders stable return from the market no matter how volatile the existing situation is.

Digging Deeper into Forex Hedging Grid Strategy:

A Forex grid hedge strategy aid trader to make profits from markers involving natural movements resulting from Buy Stop Loss and Sell Stop Orders set on a predetermined market distance.

Example – Suppose EUR USD and its current price is 1.23560. What traders need to do first up is to determine the no. of grid Forex strategy levels. Assuming one takes 3, he/she will need to place Stop Loss orders over each of the currency prices of 1.23560 and Sell Stop Order below.

As one puts the trades, one will now need to keep a watch on the price movements. 3 scenarios can develop, 2 of them being favorable for a trader.

  1. When the price is moving in one particular way (which can be either upwards or downwards), it liquidates all trades heading in that direction and reaches the Take Profit point. Once this instance occurs, one should close down the remaining Stop Orders.

  2. Suppose when the price consolidates hitting all the Take profit orders and opening all positions.

  3. Lastly, the price opening up some positions and without even hitting the Take Profit levels, retreats to the alternative direction. In such a scenario, there is only one position which is left open and leads to the accumulation of losses.

The last situation presents ample light on one of the drawbacks of a Forex hedging grid strategy. It also points out a general phrase that a trader should have the psychological mindset to deal with losses. No system guarantees 100% profits. However, the ability to learn and turn those los experiences into winning ones is what makes an effective Forex trader.

One Good Way to Perfect Skills:

MT4 demo accounts are a great way for a new trader to refine their skills and learn how to work with a Forex hedging grid strategy. With this account, they would not have to worry too much about the losing cash. Plus they would get ample opportunity to work on their mistakes and learn how to tackle random price retreats. Knowledge is power, and with demo accounts, one can easily boost up their knowledge and have a better winning chance. So sign for one today and get to work!

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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