Grid EA. Custom Trading Strategies AutomationAugust 10, 2020 2022-12-26 14:10
Grid EA. Custom Trading Strategies Automation
Grid EA or Grider is a trading robot specially adapted to the grid trading strategy. Grid trading is considered to be the tactic of creating a sequence of several pending orders instead of opening a single deal. Orders are placed above and below the current price level. This method of trading makes the best use of market volatility and facilitates the implementation of a larger number of orders. The presence of volatility is the most important condition for grid trading.
Grid trading is considered a universal trading technique that works in any market. The trading strategy implies the making of profit regardless of the direction of price movement on the account of competent management of capital, orders and averaging losses based on them.
There are many ways of using such a grid. An example would be position averaging by opening a new order in the same direction when the trade becomes unprofitable.It is possible, on the contrary, to build up positions if the price moves in the direction of the first deal. A package of orders is closed when N points of profit are reached in the amount of open positions. Essentially, it is a hedged system, since it involves a mechanism for protecting against losses. The idea is that any losing trading positions are offset by profitable ones.
The grid trading method uses a fixed (static) or dynamic step between grid orders:
- In the first case, orders are placed at fixed levels. New levels for placing orders at a predetermined distance (grid step) appear when the price rises or falls;
- The second option provides for the opening of trading positions depending on the developing market situation. The order grid is in constant motion. The dynamic step has proven itself well in trend trading.
The methods of increasing the lot may also differ. Most often, either a simple doubling (Martingale) or an exponential increase in the lot is used.
Trading manually with grid trading methods is incredibly difficult:
- Firstly, grid trading involves opening a large number of orders and will require continuous monitoring of the market;
- Secondly, as soon as the number of orders starts to increase, the possibility of an irreparable error will increase (incorrectly calculated lot, step, etc.). Which can lead to significant losses.
Grid EAs can be of great help in this case. They perform all the routine work of opening orders at a given distance and closing them upon reaching a given profit. Therefore, the main rule of all traders using grid trading is full automation
In this case, a Grid EA is the best trading option.
How Grid EA Works
The standard Grid Expert Advisor allows for entering the market using limit orders.
Stages of Grid EA work:
- After launching the trading robot, at a certain interval from the current price (taking into account the volatility of the currency pair), limit orders are set to open short and long positions;
- After one of the orders is triggered, the price can immediately jump to the profitable zone. Upon reaching certain conditions, profit is taken. All active positions are closed in order to convert the difference formed from the moment the trade was entered into free funds on the trader’s deposit;
- In some cases, after activating a pending order, the price moves to the unprofitable zone. However, the trend movement cannot continue indefinitely in one direction. Over time, it will be replaced by a rollback. After the same number of points, the Grid EA will open positions in the same direction as the previously triggered order.
In the example below, you can see how the grid of a series of three orders worked out. All trades were opened against the trend and at some point, created a loss in total. However, during a rollback, the profit from the last two positions completely covered all losses. Essentially, by ordinary averaging, even against the trend, you can have a certain profit already on a rollback.
In order to determine at what point in time the grid will become profitable, a certain calculation should be made using the formula:
( PO1 * V1 + PO2 * V2 + POi * Vi ) / ( V1 + V2 + Vi ) = Average price,
- PO1 – price of the first order;
- PO2 – price of the second order;
- POi – future order prices;
- V1 – volume of the first order;
- V2 – volume of the second order;
- Vi – volume of subsequent orders.
In the example of the chart of the GBPUSD currency pair, it can be seen that the grid of buy orders is open on an uptrend.
Substituting the data into the formula gives us:
( 1.2982 * 0.1 + 1.3013 * 0.1 + 1.3064 * 0.1 ) / ( 0.01 + 0.01 + 0.01 ) = 1.3020
Upon reaching the price level of 1.3020, losses will become zero. In the future, as the price rises, the profit will only increase.
Create Your Own Grid Expert Advisor
Our development team is engaged in the creation of trading Expert Advisors of various modifications. We can implement a Grid Expert Advisor taking into account all your wishes. It will be a unique trading tool, maximally adapted to the trader.
We offer the development of automated trading software of any scale and complexity. In strict accordance with your rules, the Grid EA will solve specific individual tasks.
The Grid Expert Advisors we have created protect traders from routine actions, adhere to the established strategy, and instantly react to changes in market trends. Grid Expert Advisors handle a large number of parameters. No trader can cope with such a volume of computational operations without automating the grid trading process.
Automate your trading method – request a free consultation from our team of professional trading software developers and find out the cost and the time frame for your project development.