Thread: Grid trading with very low leverage

Originally Posted by ;

I use a similar egy and here are a few ideas to consider. For me its all about risk, therefore I guarantee I can handle the drawdowns. Look for a pair near the all time low and use this amount as a foundation, as the chances of falling lower should be little. Better still use a commodity like Oil and utilize both zero or the all time low . Oil wont get to zero in my life and therefore we have a foundation. Next look at where price is in contrast to that foundation amount and decide how many transactions that you wish to allow between the two levels....

Nice mate. You have taken of sharing to new levels.

Thank you RLF for sharing your system.
Now where's the low priced commodity...

? How do you manage to exit a terrible grid positions available? Cutting many open positions on grid trading is quite costly.

As stated in another thread, grid trading is actually beutifull matter provided that your Directional BIAS is right

the majority of the times the price do retrace into a 50% of earlier swing, wich give the choice to shut all positions in BE if:
-you want to prevent trading or
-belive your BIAS for this currency is no more legitimate
-belive the price can go far too much against you until it resume to the previous planned direction (like example before an schedulled high impact event)

if you go low leverage amost all movments are going to be able to receive averaged down at a certain stage if you go low leverage and also have gut to hold large DD.

What I am trying to prevent and research today is the problem of dangler's on end of fashion scenarios and the scenarios where the Amost doesnt happen

thx, subscribed.

Intresting to manage timeframes that are higher.
Subscribed

Guido

Originally Posted by ;

Hi, what do you do with your dangler's?

I will begin to shut them if they're far out of the money. There is not any free lunch so reductions will be there and those losses will be bigger compared to the gains of course. Those big figures drops (about 1,000 pips) do not happen too frequently. But if they occur, losses will be there.

RedlineFred I have thought a little about what you've said and you are right. I have added GBP/CHF (long), Silver as commodity (which can be far too cheap atm!) For as well and long.

Great to hear.
I'm also in GBPCHF and Silver, and also WTI.
For my cash EURUSD is too far from its all time low and therefore the grid spacing is too large.

Another little twist, the very first trade that I place is sized 5x the lot dimensions of the remainder. The reason being that is price pushes up there will just be one commerce put at a time so why not make the most of ramp it up. Then the normal lot size is used.

However, after a time of drawdown when I have say 20 open transactions and price looks like its bottomed out, I efficiently park this EA, where it will close trades but not instigate any new ones, and open a new chart and reload the EA using a fresh magic number and start again. This does a few items:

1. If price continues down then transactions are inserted fairly much in precisely the exact same grid spacing and so no different, but as price increases the ability of the 5x lot dimensions kicks and cleans up, with one variant taking the new transactions at higher lots and the old transactions closing out behind giving a real acceleration to the equity curve.

Check out your maths and see if you do not agree.

cheers
Fred

Makes sense. Thanks!

What about AUD/NZD long as the potential candidate to diversify accross different tools?
You'll have to cover some swap however.
RLF's system is great, but its much safer to have about 5 different instruments to play with.
Old highs and lows can always be broken later on.
Payoff is ofcourse possible before price reaches the old high/low.

Originally Posted by ;

what about AUD/NZD long as the possible candidate to diversify across various instruments? You'll have to cover some swap though. RLF's system is great, but its much safer to have about 5 different instruments to play . Highs and lows can be broken up in the future. Hedging is of course possible before price reaches the older high/low.

Yep it is appealing to diversify but if you aren't careful it could escape hand when several of the tools are heavy underwater. You would need advice from RLF (Fred) as he's the Masterchef of his egy and continues to be trading it live since November last year with fantastic results.... However here is my take on a few points.

1. The intent is to create a consistent income earner. An instrument that get's into a significant drawdown clearly stops income generation so you need to launch another instrument to cancel and produce income. This ultimately would decide how diversified you're getting.
2. Yes, historical bottoms and tops are no guarantee however, 0 is (eg. On a commodity such as silver, gold, indices etc ). Therefore prioritize your choice to identify candidates which are 1st fail-safe. After that the historical base or top (eg. Forex pairs) is your next best bet using the tightest grid and lowest risk exposure.
3. You need to firstly identify your maximum risk of loss you're ready to tolerate. This will ascertain your standing sizing and grid spacing. Yes, there is no guarantees and when your risk target is met....that's time you need to pull the pin and accept the reduction. This target is very likely to be 50%-60% of your commerce capital and this will badly cap your capacity to diversify.
4. If it was me (a risk nazi) I'd add a very long only condition too.
5. Favorable SWAP while not appearing to be substance, really is to a tool deep in drawdown. . .and you will notice how your equity deteriorates quickly with negative SWAP for a tool deep in drawdown with a massive position dimensions. With positive SWAP, you can afford to park the under-performing instrument until market conditions change and over time allow positive SWAP assist in reducing the break even point. It's a grind but worth it in my opinion. Clearly there are not many offerings with positive SWAP so you probably out of necessity should accept negative SWAP but make sure that your instrument doesn't have a sizable bad SWAP otherwise you will pay the price.
6. Fred's idea of a 5x multiplier about the initial position is a good one based on live performance because this retains the income churning with some good licks when you choose direction well. Also in the event that you park a tool and find another cracking the new instrument is very likely to quickly cancel the drawdown impact of the prior instrument immediately. This way you can close both positions and begin again just to eliminate a little bit of risk steam.
7. There is unquestionably a temptation to diversify to increase the income churn....but you just need to be very careful that you don't overexpose yourself in doing this. Instruments are becoming more and more correlated these times and if you don't choose wisely....it could be your undoing.

I will let Fred split into this post if I have it wrong. :-)