Grid trading: Does it work?

[trendie]

If you don't know WHEN to quit adding to a loosing position it can sweep out entire account!

What they mean with: "WHEN" to quit? Or it can be "WHEN" to start?

WHEN is all about:

a) price
b)time
c)both

???????

since grids are driven by prices, at sup and res, it has to be price.
time comes into it when you have a losing position (even a winning one) accumulating commissions, etc.

but, basically, price.

 

[moby1]

Averaging, is generally frowned upon. It is used to suggest that initial entry wasnt as optimal as it could have been, hence the need to average. (although averaging into a winning position is accepted)

the losing position will blow the account if the number of positions are too great. so maybe limit the number of positions, or ensure they are wide apart.

this causes dissonance.
the market starts to move away from your personal position, and rather than accept that the sup/res range has broken, you end up adding to an existing losing position.
if you have 4 positions, and you're wrong, and you add a new averaging position, you now have 5 positions, and the market is going against you (faster).

the essence here is to know the point where you think you have failed, and to exit the losses.

unless, of course, if you accept the position is a losing one, 4 positions for example, you decide to offset it with a 5 positions in the new direction. here, you're just "fixing" your 4 position loss, and have a nett exposure of 1 position in the new direction.

the grid needs a point where you accept the grid has failed. thats the principle that tends not to be considered, and causes exponential failures.

(you can see I have thought about this!)

OK! But you didn't answer on my last question about "WHEN"!
From your answer I see that you talk about price only and you didn't say anything about time. So I must conclude that your answer to previous question would be "just price".

 

[moby1]

since grids are driven by prices, at sup and res, it has to be price.
time comes into it when you have a losing position (even a winning one) accumulating commissions, etc.

but, basically, price.

But you have answered exactly as I thought you would!

Wright answer is "BOTH"

Question that you didn't answer to your self is:
When (time) we have side-way trend!

 

[moby1]

When (time) we have side-way trend?
When or where (price) we have side-way trend?

 

[moby1]

You agree with me???

 

[trendie]

But you have answered exactly as I thought you would!

Wright answer is "BOTH"

question that you didn't answer to your self is:
When (time) we have side-way trend!

this is where it gets pedantic!

I think grid-trading is about trading a more chaotic market than a trending one.

if you trade WHEN its a sideways market, and you KNOW its a sideways market, you are essentially trading reversals.
in fact, you are trading the "trend" from your defined support with a known target of resistance. the difference is, rather than expect a breakout, you are expecting then to trade the reversal.

the point is, if you KNOW its a sideways market, you trade reversals.
if you KNOW its a trend market, you trade breakouts.

but, the cost of switching from trend to sideways, is taking a couple of losses before you switch. and the losses when the market eventually breaks back into trend-mode.

the crucial phrase here is "WHEN", which I believe you cant know, except after some losses.

 

[trendie]

When (time) we have side-way trend?
When or where (price) we have side-way trend?

WHEN occurs once you recognise the market state.

WHERE, in terms of price, determines the extent to which the market needs to change for you to recognise the state has changed (or your assumption is proved false)

 

[moby1]

this is where it gets pedantic!

I think grid-trading is about trading a more chaotic market than a trending one.

if you trade WHEN its a sideways market, and you KNOW its a sideways market, you are essentially trading reversals.
in fact, you are trading the "trend" from your defined support with a known target of resistance. the difference is, rather than expect a breakout, you are expecting then to trade the reversal.

the point is, if you KNOW its a sideways market, you trade reversals.
if you KNOW its a trend market, you trade breakouts.

but, the cost of switching from trend to sideways, is taking a couple of losses before you switch. and the losses when the market eventually breaks back into trend-mode.

the crucial phrase here is "WHEN", which I believe you cant know, except after some losses.

I agree with lot's of stuff you have written but let keep it simple, stick to the facts!

 

[moby1]

If I wish to help you with TIME and question WHEN then must ask you:
Is side-way trend driven on HI or LOW volatility???

 

[trendie]

If I wish to help you with TIME and question WHEN then must ask you:
Is side-way trend driven on HI or LOW volatility???

Low

 

[moby1]

Low

That is correct answer!

To avoid Hi volatility we must know when to expect Hi volatility?
Can you write all what you know WHEN we can expect Hi volatility?

 

[trendie]

That is correct answer!

To avoid Hi volatility we must know when to expect Hi volatility?
Can you write all what you know WHEN we can expect Hi volatility?

High volatility is to be expected, perhaps at the support and resistance points, as the sentiment is most likely to change, and the subsequent re-aligning of positions.

is the quiet time near the median?
must admit, never thought about it, as I tend to follow the direction!

 

[moby1]

High volatility is to be expected, perhaps at the support and resistance points, as the sentiment is most likely to change, and the subsequent re-aligning of positions.

is the quiet time near the median?
must admit, never thought about it, as I tend to follow the direction!

That is correct! I see that you have more concentration on the price then on the time!

Hi volatility is expected when (TIME):

-There are certain news (nobody knows how price would react) We can see in economic
calendar when would relevant news be published! (Avoid that time)

-Session opening - Intraday traders come to the work and they need to open their
positions which they would close at the end of the session or earlier if price touch their
profit taking order wich is money managment 1:3,1:4

-While there is working session there is always danger of large company trader
mistake.
Remember: FAT FINGER of WALL Street!

 

[moby1]

There are more questions to ask..... would we continue or ........?????

 

[trendie]

There are more questions to ask..... would we continue or ........?????

I am always happy to learn new ideas.

 

[moby1]

Question:
When do we have Low volatility?

 

[trendie]

Question:
When do we have Low volatility?

dull times in between opening sessions?
between 10am-2pm?
between 9pm (US close) and 12midnight (asian open).

holiday times perhaps, when some regions are off?

(if these answers are correct, then this is absolutely the opposite of what I have been doing so far)

Whoops! I am thinking intra-day.

as said before, at the median point, or as prices come away from sup/res towards the median?

prices, where, when looked at charts, shows no congestion zones.

 

[moby1]

dull times in between opening sessions?
between 10am-2pm?
between 9pm (US close) and 12midnight (asian open).

holiday times perhaps, when some regions are off?

(if these answers are correct, then this is absolutely the opposite of what I have been doing so far)

This is correct!

But at this times some relevant news can be scheduled ! So must keep an eye on the news!

 

[moby1]

This is not all!
It is only introduction to best time to start with averaging the position!
Every currency pair has different set of rules.

 

[trendie]

This is not all!
It is only introduction to best time to start with averaging the position!

by looking at intra-day, and session openings are just hours away, are we just going for a few dozen pips? I thought the grid plan would span several hundred pips.