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Grid Hedge System

This document summarizes a grid trading system that uses past support and resistance levels to open buy and sell positions. The trader doubles the position size at each new level to decrease the break even point to 19% and ensure profit from a 20% retracement. To reduce drawdown, position sizes can be doubled every other level. The system is traded on major currency pairs using a 5 or 15 minute chart for quicker profits and to avoid large drawdowns possible on 1 hour or 4 hour charts. An expert advisor could automate this system by using past support and resistance levels for entries and adjusting position sizes at each level.

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Vindaka Karunarathne
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370 views2 pages

Grid Hedge System

This document summarizes a grid trading system that uses past support and resistance levels to open buy and sell positions. The trader doubles the position size at each new level to decrease the break even point to 19% and ensure profit from a 20% retracement. To reduce drawdown, position sizes can be doubled every other level. The system is traded on major currency pairs using a 5 or 15 minute chart for quicker profits and to avoid large drawdowns possible on 1 hour or 4 hour charts. An expert advisor could automate this system by using past support and resistance levels for entries and adjusting position sizes at each level.

Uploaded by

Vindaka Karunarathne
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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I use a similar grid hedge system.

But the levels i open buy and sell positions are determined by
the past support and resistant levels. This system makes money when the price pulls back or
retraces. Therefore it is logical to pick the past reversal levels to open new 2 hedged positions.
Not on some fixed pip distance. There are many free indicators at the meta trader market that
draws the past S/R lines. I use “supportresistance” named free indicator at mt5 market to set my
entry levels. You can use others.
My second difference from your set up is the position sizes. I double the position sizes every
time I open 2 new positions.
There is a great reason for that. By doubling the sizes, you decrease the level of break even to
%19 pull back. That means after the last level of hedging positions opened, if the market
reverses only %20, you are in profit. I use fibonacci retracement tool to monitor the level of pull
backs. The first level of fibonacci %23 is enough to put you in profit position. If you find yourself
in a trending market , the drawdown may scare you.
To cut down the DD, you can skip doubling the position sizes at every other level. For example
start with 0.02 lot, at second S/R level double to 0.04 lot…
Third level 0.04 again, forth level 0.08lot.
Fifth level 0.08 again and sixth level 0.16 lot and so on. That skipping will reduce your DD
considerably. The most number of levels I opened was 8. %30 DD are possible. Sooner or later
the price will reverse more than %20 and you will be in profit every time you trade.
I trade major pairs with min. spread like EURUSD or USDJPY. At reversal, you have to earn
back all the spreads of all opened positions to be in profit. Therefore lesser the spread earlier
you will be in profit at reversal. When you are in profit you close all open trades. To do that,
there are couple of tools that close all your open trades in a milisecond.
I use free “piptick close MT5” tool at the meta trader market to close all my open positions.
That is important because by the time you close all trades manually, your profit level may suffer
due to sudden price moves while you are closing trades. You can trade any time frame. I prefer
5min or 15min charts because I can take small profits during trending markets and I prevent
huge DDs. You can trade 1h or 4h
charts but some major pairs can move 400 pips in 1 hour (historically possible) so I want to get
out in profit on a 5min chart while that 400 pip 1 hour candle is forming. Yes, 5m chart is time
consuming and like sculping but safer than 1h and 4h charts in terms of DDs.
Who ever writes an EA for this system should use past S/R levels for entries and position sizes
should be adjustible for each level for faster profits.
Also closing all open trades should base on a adjustable percentage of reversal level or profit
level. If you set it to %38 reversal, all open trades will close at %38 retracement level in profit.
Until somebody creates an EA, i will trade manually. When you close every sequence of trades
in profit, you usually do not complain about manual trading.

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