Definition – What does Grid Trading mean?
Grid Trading is forex trading strategy, similar to scalping or a serial basis, that sets a series of positions with both open and close orders undertaken with a predetermined spread. When lined up on a chart, it appears like a grid has been placed over the trading range.
The objective is to set the first-order position and then overlay the grid above it. As each predetermined point is reached, a new order is executed, while the previous position is closed. Stops must be entered to limit loss exposure.
As in scalping, small gains add up over time. Not all brokers support this type of strategy. Also, some traders believe this forex strategy performs better in ranging markets as opposed to trending markets. In this case, the grid would be more horizontal in nature.
Forex traders follow an RSI indicator until markets fall in the 45-55 range to enter and then over the grid. As with any forex strategy, high risk is involved. Practice with free demo accounts to gain the consistency and experience necessary to be successful in the market before putting your real capital at risk.