In this article you can learn how to make money with a non-stop Forex trading system, hedging by having active purchases and sales at every level of the trading box. Mathematical calculations are shown from the basic 100% retracement formation.
The most important part of how to make money using non-stop Forex trading strategies, hedging, will now be discussed. In a previous article in this series we reviewed trade without stopping, not worrying about which direction prices move and where to monetize profitable transactions. We will now show how you will make money by buying and selling simultaneously using the grid strategy.
Non-stop currency trading grid systems, hedged use the rule that someone must be able to close transactions with profits no matter which direction the market moves. The only way this is logically possible is that someone will have a buy and sell transaction that is active simultaneously. Most traders will say that doing this is not recommended but let’s look at this in more detail.
Foreign Exchange Trading
Assuming a grid with a grid gap of 100 pips. We will use the simplest formation to show the principles involved. This formation is a 100% withdrawal formation where prices rise to the grid level and then return to the initial grid level. Unfortunately things become very mathematical from here. We also ignore broker spreads to keep things simple.
Say a trader enters the market with a buy (buy 1) and sell (sell 1) transaction active when the currency is at the level of say 1.0100. The price then goes to the level of 1.0200. The later purchase will be positive at 100 pips. Selling will be negative 100 pips. Now we will cash our positive agreement and our 100 pips bank. But selling now carries a loss of -100 pips. The grid system requires someone to ensure that traders can cash in on every move on the Forex market. To do this one more will enter into a buy (buy 2) and sell (sell 2) transaction at this level (level 1.0200).
Mathematical trading method
Now, for convenience, let’s say that the price moves back to the level of 1.0100 (starting point).
The second sell (sell 2) is now positive at 100 pips and the second buy (buy 2) makes a loss of -100 pips. According to the trading rules your box will cash selling (selling 2) and another 100 pips will be added to your account. That makes the total total disbursed at the moment to 200 pips (buy 1 and sell 2). At this stage the first active sell has moved from the level of 1.0200 where -100 to the level of 1.0100 which is now breaking even.
4 transactions added together now strongly show the advantages:
– First purchase (buy 1) cashed at +100, second sale (sell 2) cashed at +100, first sale (sell 1) now break even and second purchase (buy 2)) is -100. This gives an overall total profit of 100 pips. We can liquidate all transactions and get some champagne because we have made a profit of 100 pips.
Make sure you understand the math behind the activities discussed above. You may have to reread and draw movements on a piece of paper to make sure you understand the concept.
This formation is a 100% retracement formation where prices rise to the grid level and then return to the initial grid level and generate good profits for forex traders. There are many other market movements that change this strange Buy and Sell at the same time to be an advantage. The next article will discuss the 50% withdrawal formation that produces the same amount of profit.
There will be more in the nonstop grid trading system, hedging in future articles in this directory. Don’t miss them, whatever you do.