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The opportunities of trading the Forex hedged grid system
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This article is one of a series which looks at the advantages and weaknesses
of trading using the hedged, grid trading system to trade volatile markets.
During this analysis we will look at how money can be made by breaking a
number of trading truths or principles; * cut your losses and let your profit
run and * there is nothing to gained by entering into buy and sell deals at
the same time.
The hedged grid trading system uses the principle that one should be able to
cash in at a gain no matter which way the market moves. The only way this is
logically possible is that one would have a buy and sell active at the same
time. Most traders will say that that is trading suicide but let's take some
to look at this more closely.
Let's say that a trader enters the market with a buy and sell active when a
currency is at a level of say 100. The price then moves to 200. The buy will
then be positive by 100 and the sell will be negative by 100. At this point
we start breaking trading rules. We cash in our positive buy and the gain of
100 goes to our account. The sell is now carrying a loss of -100.
The grid system requires one to make sure that cash in on any movement in the
market. To do this one would again enter into a buy and a sell transaction.
Now for convenience let's assume that the price moves back to level 100.
The second sell has now gone positive by 100 and the second buy is carrying a
loss of -100. According to the rules one would cash the sell in and another
100 will be added to your account. That brings the total cashed in at this
point to 200.
Now the first sell that remained active has moved from level 200 where it was
-100 to level 100 where it is now breaking even.
The 4 transactions added together now magically show a gain:- 1st buy cashed
in +100, 2nd sell cashed in +100, 1st sell now breaking even and the 2nd buy
is -100. This gives an overall a gain of 100 in total. We can liquidate all
the transactions and have some champagne.
There are many other market movements that turn this strange "buy and sell at
the same time" activity into gains. These are covered in a free grid trading
course which is available at the expert-4x.com website for those whose
curiosity has been prickled.
There will be more on the hedged grid trading in future articles.
The opportunities of trading the Forex hedged grid system - Mary McArthur
Mary McArthur is a Forex trader with expert-4x.com. She contibutes to input into the
page rated Forex Trading Blog, forextradeoftheday.com, and assists with the
educational and trading alert services provided by forextradersupportservices.com
She is considered an expert of the hedged grid system and has co authored a free
grid trading course available expert4x.com