What does the grid trading method mean?

The grid trading method can also be called the arithmetic sequence incremental trading method or the proportional sequence incremental trading method. In one sentence, it is chasing down and killing up, which is characterized by small drawdown and low risk. This article will specifically introduce to you what the grid trading method means, and how the grid trading method of foreign exchange investment works.

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What does grid trading mean?

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The grid trading method is a trading method that does not predict the rise and fall of prices, and executes transactions according to the trend of prices on the grid. Usually buy when the foreign exchange price falls to one grid; sell when the price action rises to one grid. That is to say, the grid trading method is a trading method of buying down and selling up, and it is a trading method that is opposite to the price trend.

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In the foreign exchange market, when investors use the grid trading method, the grid drawn by the investor must reasonably set the upper and lower bottom lines and the width of the grid. If the width of the grid is too large, the investor's capital utilization rate will be lower. If the width of the grid is too small, although the advantage can be reflected in the shock period, when the price trend rises or falls, there will be situations where the upper limit is shorted and the lower limit has no available funds. Therefore, investors should comprehensively consider the historical volatility, historical highs and lows, capital volume, and transaction costs of the underlying underlying operations to establish a reasonable grid. Moreover, it is also necessary to divide the investment funds into a certain proportion, and then continue to buy low and sell high according to the fixed proportion of the price trend.

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How does the foreign exchange investment grid trading method work?

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There are many trading methods and trading strategies in foreign exchange trading, and grid trading method is a common one. The foreign exchange grid trading method claims to be a trading strategy that will never liquidate positions. Although it is inevitably suspected of exaggeration, it is enough to illustrate the advantages of the foreign exchange grid trading method.

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The specific operation strategy of the foreign exchange grid trading method is to take a certain point as the base point, and hang a certain number of short orders or long orders for each rise or fall of a certain point, set a profit target, but do not set a stop loss. When the price progresses in the desired direction, the Close the position at profit and place the same buy or sell order at the origin. The orders placed in this way form a fishnet-like array, profiting back and forth in the volatile foreign exchange market.

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There are also things to pay attention to when using the Forex grid trading method. What traders need to pay attention to is that the grid trading method is the most taboo for unilateral market market, it is specially designed for oscillating market, its advantage in arbitrage trading is that it can systematically manage large capital transactions.

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Why is the grid trading method so stable that no one uses it?

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The grid trading method is that investors use the trend of individual stocks to repeatedly carry out the operation of selling high and buying low. Although the grid trading method is relatively stable, in the actual trading process, few investors will use it. The main reasons are as follows:

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1. Increased transaction costs

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The grid trading method allows investors to trade frequently, increasing their transaction fees.

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2. Not suitable for unilateral market

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Grid trading is only suitable for adjusting the market, not for one-sided market, that is, in a one-sided rising market, if investors use the grid trading method, it is easy for investors to sell stocks, but in a one-sided falling market. , then using the grid trading method, it is easy for investors to buy more and lose more.

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3. It requires a lot of energy and time

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Grid trading requires investors to keep an eye on the trend of individual stocks. Once they reach a high level, they sell and buy at a low level. However, most investors do not have the energy and time to follow the market.

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Regarding the issue of grid trading method, Mutual Market introduced what grid trading method means and how to operate the grid trading method of foreign exchange investment. Now everyone should have a preliminary understanding of the grid trading method. The advantages of the grid trading method in foreign exchange investment are still relatively obvious. It is recommended that investors do more research to achieve flexible use.