In previous articles in this series on no stop, hedged
Forex trading we covered "Forex trading without stops" and
"Forex trading not caring which way the price moves". Below
we are going to cover what we regard as the most difficult
aspect of Forex trading: - When to exit a Forex trade.
How often have you exited a Forex trade positively and then
looked on as the price travelled another 100 pips in the
same direction? Alternatively how often have you tried to
squeeze the last 5 pips out of a good Forex deal and then
watched as the price retraced all the way back to your
entry or even beyond? We have found this area of knowing
when to exit a forex trade, one of the most frustration
parts of trading.
When you enter a Forex trade all the trading signals are
aligned and you can tick all entry criteria on your
checklist. That is why the entry is the easy part. You are
entering on your terms. When the price takes off in its
intended direction it enters a mystery zone where you are
dependent of the volatility of the move for the Forex
transaction to succeed. You very seldom have reference
points. When to cash in, or not, is always the question on
every traders mind. The fact that the price likes
revisiting previous support or resistance makes this even
more challenging.
It gets worse on Forex trading deals that go negative. You
are 30 pips down. Do you close the deal at a loss or do you
wait for a small retracement to reduce your loss? Surely
the price has gone as far as it can go?
It can't go more negative? Then suddenly (oops) the deal
goes even more negative. You start thinking: "I've lost so
much another 20 pips can't hurt I'll give it more room".
And so on. We've all gone through that at some time.
With Grid trading you don't have that problem. You would
divide the expected trading range for a particular currency
for the next say 6 months (say 4000 pips) into grid levels
with gaps of say 200 pips. Now the guesswork of when to
cash in your positive deals is taken away. Every time the
price touches a grid level you cash in your positive deals.
It is as simple as that. As soon as the total of the deals
you started with is positive, you close all your deals
positively and start again. How simple can trading be? No
ifs, buts or maybe's. That is why you don't need charts.
You trade price levels, with no stops (Because each price
level has a buy and sell active) and you don't care about
which direction the price moves.
This also answers our question of when to enter a Forex
trading transaction. You would use the same price levels
that you use to exit profitable deals (as determined above)
as the entry levels for your no stop, hedged, Forex trading
grid system strategy. The process of determining the price
levels is very important as some trading groups are
reporting gains of one thousand percent a year on capital
employed using this Forex trading technique.
The above way of determining grid levels is an example. As
you will see in future articles grid levels can be designed
to meet the trader's requirements in many more ways. For
more information (which is freely available) on this great
trading system why not search the web for "no stop Forex
trading".
This is the third in a series of seven articles on the no
stop, hedged, Forex trading technique which will be
presented in this article directory on an ongoing basis.
Ensure that you do not miss any of them in order to get the
complete picture.
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Learn how you can make money from Forex Trading by tapping
into David Lloyd's experience by visiting
http://www.forextrading-alerts.com/GRIDSystem.html or
http://www.forextradersupportservices.com/GRIDSystem.html
David and Mary McArthur have written a number of articles
on the no stop, hedged, forex trading grid system.
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