What are the most common problems YOU as an online Forex Trader face? (Any trader for that matter)
# YOU get the direction wrong
# The market whipsaws and takes out YOUR stop and then reaches your target.
# YOU get your stop wrong. Too small when they should be big and too big when they should be small.
# YOU cash in at the wrong time only to see the market run another 200 pips in the direction you were in.
Because of the ongoing market dynamics these problems occur with mechanical and manual trading systems
Imagine a trading system where:-
* YOU can cash in a positive deal no matter which direction the market moves.
* YOU don’t need stops because deals are hedged by other transactions / options.
* The system is so mechanical that it can be traded without charts.
Too good to be true?
Not so. Using the INVESTMENT GRID system we simply setup a series of hedges (Self financed transactions) which effectively allow you to cash in on EVERY move of the market (up or down). No need for stops.
Background to the Investment GRID System.
Many financial organisations use hedge and forex option principles to setup low risk trading processes. The Grid system sets up its own network of hedges which allow you to cash in on EVERY move of the market. Over the years we have made some changes to refine the system.
What makes this system so unique:-
We believe that the average trader is so focused on trading one transaction at a time that they lose sight of what they are try to achieve (Make lots of money from trading). They can’t see the wood for the trees.
The INVESTMENT GRID System is based on the philosophy that says: Why not invest in hedges placed above (say 1000 pips) and below (say 1000 pips) the market which allow you to cash in on every buy and sell move in the market. As the market tend to trade sideways and retrace, much more than it trends, with careful currency selection your hedges may never be hit for months, and in the meantime you are cashing in on every move of the market. The money generated can exceed the cost of the hedge very quickly and thereby eliminate the risk very quickly.
The INVESTMENT GRID system is therefore not a true trading system but more related to an Investment on which continuous returns are being generated (ROI). It has been developed by financial and actuarial people rather than traders and is therefore a different approach to maximising income from the natural movement of the market. See the examples below: Sometimes the investment can last 1 hour and sometimes the investment takes days or weeks to mature profitably.
Conventional trading
We recently mentored a competent trader who had generated 700 pips during June making over $ 6 000 in the process. Not bad for a month of skilful trading. He did 160 trades with an average stop of 40 pips. During this period the trader had invested an amazing $ 60 000 in having stop losses (160 transactions x 40pips x $9.50per pip). Some were hit and others not. Using a fraction of $ 60 000 the trader could rather have invested in a hedging system which would have allowed a much freer way of trading and would have eliminated many of the stop out encountered. The INVESTMENT GRID system can easily be adapted for further optimisation by competent traders.
Why not add up (calculate) all the negative (stopped out) transactions you have had in the last month as well as the risk you took on the positive transactions and you will be amazed at how much you risked (In $ and in pips) for the return that you made. If you do this you will start seeing the benefits of using hedging to finance stops rather than being stopped out.
The INVESTMENT GRID system investments using hedges.
Very Simple examples of the concept:
The market goes up by 100 pips and then down by 100 pips. Cashed in $200 (you benefit from all moves and no concerns about stops being hit.) less the cost of the hedge $ 100 = Profit of $100. No more risk. Start a new investment.
The market goes up by 200 pips and then down by 100 pips. Cashed in $300 (you benefit from all moves and no concerns about stops being hit) less the cost of the hedges $200 = Profit of $ 100. No more risk. Start a new investment.
You may not need any of your own capital after a number of transactions.
What are the key success factors impacting your trading returns when using the Grid system.
*You need to use currencies that have a low spreads.
*You need to use currencies that have a low over night interest charge as some currencies may not move over say 100 pips every day.
*The size of your “cash in move” should be 100 pips or more depending on the volatility of the market.
*The market must move – doesn’t matter in which direction.
How do I start trading the INVESTMENT GRID system:
The system is easy to trade as all the entry orders are preset to cover a 1000 pip movement in the market. The system only requires you to replace cashed in transactions on the GRID as soon as possible so that you can cash them in again in the future.
For the 1st month we strongly suggest that you demo trade the system. Mainly because this is not a trading system but an investment process and it takes a while for traders to get comfortable with the new concept. They for instance keep on looking at the charts and trying to manage the process.
You need either 2 trading accounts to facilitate buy transactions and sell transactions in the same currency at the same time, or alternatively a broker account that allows the above. The hedges will be created in these accounts.
What returns has the system generated.
The returns of this system are proportionate to the size of the cash in, the currencies used, the interest rates charges by brokers on overnight deals, the market phases, time started etc. Each user of the system applies these variables according to the size hedges they can afford. Adding more than 1 hedge results in exponential increase in returns rather than just doubling returns.
This is not a completely mechanical system and choosing the appropriate currency to trade, the grid size and what to do in a trending market takes trading experience.
Watch this blog for more information on No Stop, Hedged, Grid trading
Last Updated on Tuesday, 06 December 2011 21:21