Grid Trading


DEFINITION of 'Grid Trading'

A foreign exchange trading technique that seeks to capitalize on normal price volatility in currency markets by placing buy and sell orders at certain regular intervals above and below a predefined base price. Such buy and sell orders, generally spaced at 10- or 15-pip intervals, create a trading grid.

BREAKING DOWN 'Grid Trading'

The biggest advantages of grid trading are that it requires little forecasting of market direction, and can be easily automated. Major drawbacks, however, are the possibility of incurring large losses if stop-loss limits are not adhered to, and the complexity associated with running multiple positions in a large grid.

  1. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches ...
  2. Limit Order

    An order placed with a brokerage to buy or sell a set number ...
  3. Take-Profit Order - T/P

    An order used by currency traders specifying the exact rate or ...
  4. Buy Stop Order

    An order to buy a security which is entered at a price above ...
  5. Stopped Out

    The execution of a stop-loss order. Stopped out refers to when ...
  6. Forex Spread Betting

    A category of spread betting that involves taking a bet on the ...
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