To Do This One Would Again Enter Into A Buy And A Sell Transaction

Category: Finance, Currency Trading.

This article is one of a series which looks at the advantages and weaknesses of trading using the hedged, grid trading system to trade volatile markets.

Cut your losses and let your profit run and there is nothing to gained by entering into buy and sell deals at the same time. During this analysis we will look at how money can be made by breaking a number of trading truths or principles. The hedged grid trading system uses the principle that one should be able to cash in at a gain no matter which way the market moves. Most traders will say that that is trading suicide but let s take some to look at this more closely. The only way this is logically possible is that one would have a buy and sell active at the same time. Let s say that a trader enters the market with a buy and sell active when a currency is at a level of say 10The price then moves to 20The buy will then be positive by 100 and the sell will be negative by 10At this point we start breaking trading rules.

The sell is now carrying a loss of- 10 The grid system requires one to make sure that cash in on any movement in the market. We cash in our positive buy and the gain of 100 goes to our account. To do this one would again enter into a buy and a sell transaction. That brings the total cashed in at this point to 20 Now the first sell that remained active has moved from level 200 where it was- 100 to level 100 where it is now breaking even. Now for convenience let s assume that the price moves back to level 10 The second sell has now gone positive by 100 and the second buy is carrying a loss of- 10According to the rules one would cash the sell in and another 100 will be added to your account. The 4 transactions added together now magically show a gain: - 1st buy cashed in+ 100, 2nd sell cashed in+ 100, 1st sell now breaking even and the 2nd buy is- 10This gives an overall a gain of 100 in total.

There are many other market movements that turn this strange" buy and sell at the same time" activity into gains. We can liquidate all the transactions and have some champagne. These are covered in a free grid trading course which is available at the expert- 4x. com website for those whose curiosity has been prickled. There will be more on the hedged grid trading in future articles.

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