Forex trading strategy #13 (Trending pairs breakout grid system)

Hi FaceReality,

as I've already pointed out, this strategy only works with violent breakouts and strong trends in ONE direction. Therefore you have to find decision points where the market decides if it wants to go straight up or down. Of course a ranging market will whipsaw this strategy to death but that was never in question. We all knew that before.

"This is a breakout strategy, not a ranging strategy, as I read it."

That's right! This works with trends but not in a ranging market.

Claus

"Its a good system when the market is choppy or ranging. A strong trend will blow your account and with exponential losses."

I think you're confusing the Buy Stop above the current price and Sell Stop below with limit orders on the opposing side as the strategy as laid out. This is a breakout strategy, not a ranging strategy, as I read it.

I agree with above. it may blow up. i saw the pivot scalping system on here as well. we could combine this grid system and that pivot system to make a really strong system. instead of using trend which may fail and have huge drawdowns, we could use daily pivots that start at 0GMT. just wait for it to touch the pivot, break though and then put on buy and sell stops. then have it scalp fo about 3-5 pips at a time. shuold work in any market as long as it touches a pivot levels S1 S2 S3 or R1 R2 R3

any thoughts claus?

Its a good system when the market is choppy or ranging. A strong trend will blow your account and with exponential losses.

Interesting system. I am confused as of the "cancel" aspect. Can anyone help? Do we place the orders as oco or does the author mean that when a buy order turns and hits the sell point, we are essentially without a position (therefore canceling) because the buy order is neutralized by the sell order. If we did oco then a turn would need to be twice as large as a prior move to "neutralize the position". Example: In the grid given, let#s say we get a buy order at 1.7820. Is the opposing 1.7780 order gone as well or does it stand until the bought lot hits the price and then gets neutralized? In one case the loss would come at 40 pips, in the other at 60 pips (next step at 1.7760)

I am sorry but I do not understand that system. If we buy/sell lot after lot and price reverse what happen. And "Since the orders are
canceling their opposites, margin is a very small issue here." what does it mean? Are we using O.C.O.? And why? Could you please explain in a manner understandable for a newbie!

Hi Claus i think this should be a very nice strategy,but i am just hearing about the system for the first time so i dont know if can make it clear enough for a better understanding. thanks and hoping to hear from you soon.

Hi Claus
Im just wondering how your system is performing lately....... Im checking different methods and thoughts but still Indecisive. Have you make any discovery recently?

I hope to hear from you

Dachel

Hi Elle,

#Do we wait till we are in profit?#

Yes! I prefer small profits although the spreads bite. Broker costs are a downside of all grid systems. When you trust the current trend you may want to wait a bit longer before you close positions and prefer more spacing between the orders. That's in fact a discretionary part of the system because it's always dependent on your own risk tolerance.

I'm trading this since a few weeks. London opening, NY opening and after the announcement of news (volatility!). Mainly GBP/USD and EUR/USD. Of course other pairs are possible too.

Claus

Claus,
Just to clarify one more thing.
When do we exit?
Do we wait till we are in profit or when do we accept losses?

Thank you for sharing the system.
How long have you been trading it?

Cheers,
Elle

#The orders buy and sell don't cancel each other, right? Whichever is open stays open till we come to close all positions some time later.#

Hi Rich,
the orders are canceling their opposites. When a buy order hits a sell order both orders are gone.

#Also, in your example you suggest 7 pairs of orders for the grid. Is this a recommended number or even required as long as the math goes?#

The number of orders is not limited. 7 pairs of orders was just an example. The same with GBP/USD, London opening and spacing of the grid.

You can also take EUR/USD, NY opening or a news event and a spacing of just 5 or 10 pips. I haven't figured out yet what works best here.

We just need volatility with huge ups and downs. This strategy doesn't work in a calm market.

Improvements or other ideas are welcome. Nothing is fixed yet. :-)

Claus

Hi Claus,

First of all, thank you for the system.
It is probably the first grid system that makes sense to me. I want to test it starting next Monday and I'd need to confirm few details, please.

The orders buy and sell don't cancel each other, right? Whichever is open stays open till we come to close all positions some time later.

Also, in your example you suggest 7 pairs of orders for the grid. Is this a recommended number or even required as long as the math goes?

Thank you!
Rich

#It sounds good in theory, but you will normally start accumulating losing positions that amount to hundreds of pips with no hope of retracements that will recoup your losses.#

My system has nothing to do with your Martingale. There is NO accumulating losing position here. We don't wait for a reversal but always trade with the trend and not against it. Therefore its called 'Trending pairs breakout grid system'.

@ All
No offense intended, but please try to understand the basic idea of the strategy and think it through first before you start to post. Otherwise we just waste time.

Claus

All grid systems I have seen will eventually blow out your account. It sounds good in theory, but you will normally start accumulating losing positions that amount to hundreds of pips with no hope of retracements that will recoup your losses. I strongly suggest trying this on a demo for at least 3 months continuously before you think about using it with a live account.