Grid trading strategy – dangerous or safe?fibomen
Grid trading strategy is one of the easiest and most profitable ways to trade on the Forex market. However, grid trading is also one of the most dangerous trading strategies.
Grid trading strategy - fast growth and high risk
Remember the simplest criteria for evaluating the effectiveness and risks of the grid trading strategy. The higher the profitability of grid trading, the greater the risk of this strategy. Therefore, if you see ads for a trading robot that gives a profit of more than 20% per month, then this is a high-risk strategy.
No, we are not saying that grid trading strategy cannot be used. On the contrary – it is possible and even necessary. The portfolio of a professional trader should have different trading systems, which will allow you to diversify your risks. But we do not recommend that you trust the grid robot with all your capital to the last cent.
What is grid trading?
If you do not understand what strategy we are talking about, then we will briefly describe how this system works.
So, the word “grid” tells us that this strategy uses a large number of market or pending orders, arranged on a quote chart according to a certain principle (formula).
This can be a grid of Stop orders, thanks to which the trader will be able to earn on long-term trend movements.
This can be a grid of Limit orders, thanks to which the trader will be able to earn during flat movements (on frequent price reversals).
It can also be a combined Grid trading strategy that uses both Stop orders and Limit orders at the same time. In this case, the trader will be able to earn money regardless of whether the market is in a trend or in a flat.
The advantages of Grid trading are constant and stable profits. Often, a trader can earn more than 20-60% monthly.
The disadvantages of grid trading are super-high risks. After all, if the quotes go against the open trading directions. Then instead of a big profit, you will get a huge trading drawdown… And this can lead to the automatic closing of your trading position by Stop Out. Accordingly, you will instantly lose your trading capital to the last cent.
Average between profitability and safety
For fans of grid trading, our team has created the grid trading bot THE POWER. This trading Advisor uses the grid order system, but its actions do not lead to an increase in the trading drawdown.
The profitability of this grid trading ea is about 5-15% per month. A little, but stable and safe!
Think for yourself what is more important for you – to make a big profit for a few months, and then lose all your capital. Or get a stable 5%-15% profit per month and your capital will be safe? If you are a smart person, then choose the second option! This means that THE POWER grid trading EA is exactly what you need!
Do you want your trading system to work as efficiently as possible?
Then choose a broker with the most comfortable trading conditions!! Minimum deposit and maximum trading leverage! Excellent trading conditions for beginners and professionals!