Why Use a Grid Trading System - Isn't it Risky?

We have news for you... ALL forms of trading and investing carries risk. However, we can manage that risk effectively.

When it comes to trading and investing, the risk is what a person exchanges in return for their potential reward. Although we can take the necessary steps to reduce and manage our risk, it cannot be eliminated entirely.

This is where risk management plays an important role. In fact, we believe that risk management, along with a data-backed, proven strategy, forms the foundation of successful algorithmic trading.

Most commercial grid trading systems blindly add positions as trades move against them - often leading to blown accounts.

But this is where Market Master EAs set themselves apart from the competition.

Users have full control over the number of grid positions that can be opened, the intensity of the trade recovery process, and the maximum amount of drawdown that they are willing to sustain.

Why not remove the grid entirely?

Well, it's a good question. Although Market Master EAs are so customizable that they do allow you to remove the grid entirely, it is not necessarily the optimal approach.

You see, profitable trading with consistency over the long-term is extremely difficult due to how volatile the financial markets are. There is no wonder why 95% of retail traders are said to be unprofitable.

An effective way to tackle market volatility is to use Dollar Cost Averaging (DCA), which is essentially 'grid trading' in the algorithmic trading world.

In this way, we are not relying on pinpoint entries and exits (which are non-existent on a long-term and consistent basis). Instead, we are allowing our trades to flow with the volatility of the markets by dividing our positions across multiple levels - each at a more favourable price than the one prior.

The result is a much smaller favourable move required to recover a losing trade and secure an overall profit.

The ways in which we can manage our risk when using grid trading systems, are:

1. Do not overleverage (in other words, do not trade larger position sizes than your account can comfortably sustain).

2. Set a maximum drawdown limit that you are willing to tolerate.

The best way to determine a solid risk management approach is to run backtests using real historical data and realistic scenarios such as the account size and amount of leverage that you will be using in the live markets. This gives you a good idea of what you can expect going forward.