Grid Scalping – UPDATED 2021 – Understanding No Loss Grid Trading

Last Updated on February 2, 2021 by Alphaex Capital


Investors who are looking for a no-loss trading strategy prefer grid scalping because it is extremely simple to trade and generate consistent profits.

With this type of trading, there is no guessing about where the market is going and there is no analysis involved.

You need not recognise any patterns or pay attention to any indicators.

But does grid scalping really work? In this guide, we explain in detail what grid scalping strategy is, how to get started with this no-loss grid trading system and how it works.

Grid Scalping – UPDATED 2021 – Getting Started

Grid scalping is when a grid of orders is created by increasing and decreasing prices incrementally above and below a set price.

This trading strategy is generally associated with the foreign exchange market and is popular among forex traders as it is simple and incurs no loss.

Grid scalping basically seeks to capitalise on the volatility of price by placing buy and sell orders at specific predetermined intervals below and above a set base price of an asset.

It is like an all or nothing trading strategy where you place orders at all the levels and makes money when it hits a take profit level.

This technique benefits from trends as well as ranging conditions to bring profits.

To profit from ranges, a trader places buy orders at intervals below the set price and sell orders above the set price.

And to profit from trends, buy orders are placed at intervals above the set price and sell orders below this price.

The key behind a grid trading method is that there are three scenarios for traders.

With 2 of them being profitable.

Scenario 1: A Bullish Trend

  • Price trends in your favour, hitting all the buy orders.
  • These then hit the take profit levels because the markets traded higher.
  • You can close out the pending Sell orders and look for another trade.

This example works for bearish trends too.

Scenario 2: A Large Consolidation Period

  • Price trades up and down between all of your pending buy and sell orders
  • However, prices trade low enough to take profit from the short trades
  • And high enough to take profit from the buy trades.

Giving the maximum return from this type of trade.

However, these scenarios are quite often rare.

Scenario 3: Market Uncertainty

  • Price trades higher to execute buy orders
  • Then trades lower to execute sell orders
  • This means you have both long/short orders in the market open.
  • If the market moved back higher and continue to trend higher
  • Then your sell orders would be loss-making, whilst your buy orders will be in profit.

It depends on how many sell orders that were opened, that would determine the loss.

Manual Grid Trading Strategy

No-Loss Grid Trading – How It Works?

Grid trading has an advantage that you don’t need market direction forecasting and can easily automate the technique.

However, there is a danger of incurring huge losses if the market goes in only one direction and the orders keep triggering bigger positions.

It is important to limit the grid to a number of orders otherwise the profits can reverse into losses.

It is possible to make a no-loss grid trading strategy considering a few criteria:

  • It is a Long-only grid trading strategy
  • There is no charge for holding the position
  • The market has less chance of going to zero
  • You have the funds to hold the positions to zero

With these criteria, you get a solid grid trading strategy that makes sure there is no loss.

The key to making such a strategy work is risk management.

As a simple technique, you buy as the market drops and take profit whenever it rises.

The with-the-trend grid is more profitable when the price runs in a sustained direction.

If the price is oscillating, the against-the-trend strategy of grid scalping becomes more effective.

However, here the risk is not controlled and the trader could lose money if the price runs in a single direction.

So it is essential to set a stop loss level to avoid holding a losing position forever.

Forex Hedging Grid Strategy

The Forex hedging grid strategy can be automated to stay away from any pain of pricing the trades manually.

The benefit of a grid trading system is that you can get your return on investment even when the market is volatile.

There is no need to predict the market direction and so the choice is simplified.

The Forex hedging grid strategy is the one that makes a profit on the natural movement of the market through sell and buy stop orders positioned at intervals.

It is done on set market distance with a predefined size of no stop-loss and take-profit.

This technique of trading eliminates the variable of the direction of the price move.

To implement a Forex grid trading system, you should first decide a starting point.

Then, you can select the number of levels of the Forex grid strategy.

Next, you can place buy stop orders above the price starting from the set point and sell stop orders below it.

There is no limitation to the number of levels.

Manual Grid Trading Strategy

To use a manual grid trading strategy, a trader has to construct the grid for placing orders.

There are a number of steps involved in creating a grid:

  • Selecting an interval like 10, 20 or 50 pips
  • Choose the starting price for the grid
  • Identify whether the grid will be with the trend or against the trend

Consider a trader selecting a starting point of 1.5550 and an interval of 10 pip.

They should place buy orders at 1.5560, 1.5570, 1.5580, 1.5590 and 1.5600.

They should also place sell orders at 1.5540, 1.5530, 1.5520, 1.5510 and 1.5500.

This works for a with-the-trend grid.

For using an against-the-trend grid, they should place buy orders at 1.5540, 1.5530, 1.5520, 1.5510 and 1.5500.

Sell orders should be placed at 1.5560, 1.5570, 1.5580, 1.5590 and 1.5600.

This strategy would work as both the buy and sell orders are triggered but a stop loss is required when the price moves in only one direction.

Best Currency Pairs For Scalping

Grid scalping is a simple trading technique that requires no complicated analysis.

A correctly constructed grid would close profitable trades across multiple price levels and can run for months or years without supervision.

It can produce predictable, steady gains from the price movements.

Grid scalping is suitable for any currency pair and requires minimal changes for working.

Among all the available pairs, you should select only those which best suit the grid placement and prefer those that move closer to the outer edge of the historical range.

If you want to place grids on multiple forex pairs that correlate at the same time, you should calculate the maximum potential loss for the grids and ensure you have enough capital to handle the worst-case scenario.

It is also advisable to prefer more volatile instruments with lower costs of trading.

No-Loss Grid Trading

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