This article is one of a series which looks at the advantages and
weaknesses of trading using the hedged, grid trading system to trade
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. No stops are
therefore required at all. 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
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
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, many other market movements that turn this
strange "buy and sell at the same time" activity into gains. These will
be covered in future
articles and are covered in a free grid trading course which is
available at the expert-4x.com website for those traders whose
curiosity has been aroused.