Grid trading with very low leverage
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Thread: Grid trading with very low leverage

  1. #1
    Hey there,

    here is another attempt to somehow make some money. It is nothing fancy, it is not shiny and it is going to probably fail in the long run but I will give it a try (again).

    It is only grid trading, to be precise it is called carry grid trading, using the pair AUD/JPY only in the long way that has many tiny stop buy orders over the current price in a space with 20 pips plus a tp of 25 pips without a stop at all. This can and will get the job done for a long time without maintenance whatsoever but clearly from time to time the danglers have to get removed/closed. Order size could be 100 units for a $1k account.

    The wonderful thing about: You get interest along with your open positions and you reload the grid for every move down in that pair. As most pairs often range quite a lot that is quite a wonderful way to collect extra pips.

    Cheers!

  2. #2

  3. #3
    Thanks guys, btw: I have a tendency to use form of a stop loss that's about 500-1000 pips broad. So typically I will attempt to use made profits to shut positions that are far from the money to lower the exposure while reloading the grid over and over again. Actually that is less trading compared to more kind of exploiting ranging markets. The AUD/JPY is kind of a risk proxy, therefore decreasing stock markets will lead to a falling pair as well. The crucial thing is to make some profits through range intervals and take some bigger losses in between...

  4. #4
    Quote Originally Posted by ;
    Thanks guys, btw: I have a tendency to use form of a stop loss which is about 500-1000 pips wide. So usually I will try to use made profits to close places that are far from the money to lower the exposure whilst reloading the grid over and more. Actually that is trading than more kind of exploiting ranging markets. The AUD/JPY is kind of a risk proxy, therefore falling stock markets will result in a falling pair also. The key is to make some profits during range periods and require some bigger losses in between...
    ,

    Meaning to ask. Can you include any specific entrance criteria or is the way of trading an out and out non-directional/Grid trading?

    When you say falling stock markets,do you look at both Australia(ASX200) and Japan(Nikkei)?

    Due

  5. #5
    Hey aaven,

    I do not incorporate any specific entry criteria. I just use a directional(!) grid. Money flows into interest resources as long as items are fine. There are unwinding situations as well which can become very ugly, so that's the time where you need to close down trades which sort of a huge loss.
    Speaking about declines, a 1000 pips move would be about 1 percent DD for a single position btw.

    Appearance, over all the years I've discovered the following:
    1) I do not know when pairs will move down or up.
    Two ) I do not know how long pairs will probably go up or go down.
    3) I do not know just how much pairs will probably go up or go down.
    4) Pairs go down and up.

    So as number #4 is the only one I really know about and I know that many movements are usually bound in enormous ranges this is my only edge I have. Market motion is mostly(!) Arbitrary. I adhere with that. Put up an entire random chart and you also will not be any gap to a real one.

    So I do not look at any stock market indices.

  6. #6
    I use a similar egy and here are a few ideas to think about.

    For me its all about risk, so I ensure I can handle the drawdowns.

    Look for a pair near the all time low and use this level as a foundation, as the odds of dropping lower should be small. Better still use a commodity like Oil and utilize either the all time low or even zero as a foundation. Oil wont get to zero in my life and so we've got a defined foundation.

    Next look at where price is today in contrast to that base level and decide how many transactions you want to allow between both levels. I typically use 100 since it is the limitation that my broker has.

    So 100 trades between the current price and the base gives us the grid spacing.

    Only commerce long.

    Next figure out a lot size when applied to that 100 transactions and you can determine your maximum potential drawdown in case you don't use stops and price hits the foundation.

    Handle to get this done and you will never loose a transaction, you may endure extreme drawdowns however you know beforehand what's possible and all you need to do is ensure your pockets are deep enough to pay the DD.

    I have been conducting this egy since last Nov and my results have been attached.

    Here I have over 1500 transactions, no losers, no stops along with a max DD of around $4k.

  7. #7
    Intriguing idea you have there RLF
    what is the return on investment in % since November?
    trading GBP/USD?
    What is your DD percent when you hit 100 open trades?

    State you place long trades only.
    As time goes on and price rises, your distance from your all-time low increases and you will have over 100 trades in drawdown before price strikes the low.
    You'll have to adjust your grid space occasionally or search for a better pair.
    A positive swap pair will be important.
    Good fortune.

  8. #8
    Sounds sensible. Oil would be a terrible option since you pay quite a lot of attention over time...

  9. #9
    Quote Originally Posted by ;
    Hey , I don't include any specific entry criteria. I just use a directional(!) grid. Money generally flows into higher interest resources as long as things are fine. There are unwinding scenarios as well which may become really ugly, so that is the time in which you need to close down trades that kind of a huge reduction. Speaking about losses, a 1000 pips move will be about 1 percent DD for one position btw. Look, over all the years I've discovered the following: 1) I do not understand when pairs will go up or down. 2) I do not understand how long pairs will go up or...
    Thanks .

  10. #10
    Quote Originally Posted by ;
    interesting idea you have there RLF what is the yield on investment in % since November? trading GBP/USD? What is your DD percentage when you reach 100 open trades? Say you place long trades just. As time goes by and price increases, your distance from the all-time low increases and you'll have more than a hundred trades in drawdown before price hits the reduced. You'll have to correct your grid distance occasionally or search for a better pair. A positive swap pair will be significant. Good luck.
    ROI - piece difficult to state as I was messing around with different pairs and egies, but you could have traded this from a $10k account since the DD maxed out at $4k, therefore 40 percent DD with 80% ROI

    But if you employ the risk settings and 100 trades approach you'd have had at least a $25k account about a 30 percent ROI.

    The Majority of the return was away from the GBPCHF.

    DD in 100 trades would depend on your risk preferences and account dimensions, but you'd need to plan for about a DD of 80%. The thing to remember is that you'll simply get to 100 trades if you hit the all time low or if investing in a commodity. So I do not expect to ever see 100 trades.

    As you state the instrument to exchange should be close to the all time , and because it goes higher, there'll be a time when its no longer workable and you'll have to change tools. But consider this; because the price goes higher, you'll just have one trade on and so you are able to shut out of the one trade with no loss without a DD. During my run with this thought I changed instruments about 8 days, but I'm back to GBPCHF. Had a great day off this pair with all the UK election volatility.

    Swap definitely has an impact and if you're able to find a positive swap so much the better, but do your own numbers and you'll observe that overall swap isn't such a concern particularly if you don't shut a trade exactly on the grid but also cover the expense of the swap. This extra price move can cover the price and also at one time I had to move down three grid levels to pay the swap, but each trade closes using a small contribution.

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