i think that couple of grid trading elements are important for consideration:
- position size management (each entry the same size, increasing, decreasing)
- grid size (the same, increasing size, decreasing size)
- criteria to define direction of grid trading (criteria to change the direction)
- TakeProfit definition
- Exit criteria definition
I am sure I have missed some ... so you guys can review/update the list....
What you write makes sense, but you are assuming your Buy set at -12 pips having been filled will continue up another 12 pips and hit your Sell SL and then continue its bullish move. One of two other things could happen your Buy is triggered and then the bearish move continues (leaving you in a permanent -12 pip drawdown until other orders are placed) or your Buy could get filled by the market spiking up which also takes out your -24 pips Sell SL before resuming its bearish move down, now you have taken a -24 pip loss and are in drawdown on your Buy.
Originally Posted by Samtastico
The above scenarios is why I hedge with smaller lot sizes than my main trade and I then build into my hedge position only placing SL's when the trades are in profit, this part is very important SL should only ever be used to protect profit within a gride/hedge system. So providing your basket of trades are in overall profit, then you can place SL's up until that point you need to use your skills to manage all your open trades.
Last edited by Robot Trader; 11-14-2012 at 10:59 PM.
RT, I have been implementing your system recently with very nice results, I might add, for which I thank you, but only on the majors. Do you also use it on the exotics and the minors?
Also, it appears, as I implement your system, that it more or less resembles a stock or bond portfolio and, I suspect, can, over time, result in numerous open positions. Is that correct?
If so, then, as with a stock or bond portfolio, one must, as you put it, "manage" the trades as conditions change. Am I on the "right track" with my thinking and observations?
I am beginning to "see the light" that, although the size of the trades is quite conservative, with a sufficient number of open trades, some ripening for profit-taking and new trades entering the portfolio as the profitable trades exit, you have, in a manner of speaking, something similar to a bond portfolio whereby each month you "clip" the interest from the bonds (profits, in this case) on a more or less monthly schedule.
I know this is a crude analogy, but is my idea something like what you have experienced over the last couple of years in your own trades?
If I am correct, your system seems to be almost stress-free and comes very close to a conservative, yet profitable, approach to the Forex market.
My "guesstimate" is that a 5-10% monthly return might well be within the range of possibilities without a great deal of stress, although I am acutely aware that there is no such thing as a truly "free lunch" and there is risk involved and that time, skill and patience are required.
Your thoughts, please, when you have a free moment or two.
Hello everyone, I'm Azim
I'm quite interested on how RT trade divergence. I just wanna ask what Timeframe do you trade?Do you trade the hourly too?
Basically, how about If D1 shows bearish divergence and H1 shows bullish divergence, do you take the bullish trade?
And I also want to ask that whether you trade Regular Divergence only?
Sorry for asking too much question, I'm just so excited to know someone who trade divergence with experience.
If you go back to the beginning of this thread, you will see a great deal of info about RT's method.
I am a newbie, 7 months demo trading, but have been implementing RT's methods with exciting results. He is the master; I am but a poor pupil, but I will share what I have done and maybe that will help you.
1. In this thread, you will see the MACD software he uses. Download it and install it. The MACD I was using gave false signals.
2. I only enter on the H4 or D1 chart, but RT may use more.
3. He mentions, in the previous pages, a number of ways he spots divergences. So far, I have only used his MACD to spot divergence, but am reading up more on Bollinger bands, etc, so that I can spot other forms of divergences.
4. He also mentions that when D1 has a bullish divergence (also called "convergence"), and H4 or H1 builds a bearish divergence, he will close his profitable trades on that pair and re-enter at better prices.
Hope this help a little bit.
Thank you for clearing it up, I really appreciate it, at least that helps me to understand more. Oh by the way, Where can I download the MACD indicator?Isn't its the default one on the MT4?
No, go back and you will see that he posted it in one of his replies to me.
Lemme know if you can't find it.
It's on page 2 of this thread.
Allright sure I'll check it out, I think I overlooked some of the posts
I found it, Thanks Glenn ^_^
Ohh yea one more thing, what's the difference between the default MACD and RT Macd?