How to optimize a Grid/Martingale ?

New comment
 

Hi all 

The Grid strategy has a number of stages

1) The entry strategy when no trades are active

2) Closing the initial trade in profit (Using TP / Trailing Stop)

3) Opening additional trade when the previous trade is in loss

4) Closing the basket of trades when their average profit is in profit (Potentially also trailing their profit).


Is this possible or does it make sense to optimize the grid part?

The grid part parameters usually involves  

- Gap at which the next trade opens

- Multiplier of what the next lot will be (can be 1 to use the same lot)

- TP at which the basket of grid trades close.


Trying to optimize would likely put a really small gap with a bigger multiplier, that will most likely have the basket close faster and start a new trade. Hence in this way more trades happen that will generate bigger profit.  This however will cause a bigger draw-down or when run over a different timeframe would cause stop out.  

Or opposite optimizing to reduce the drawdown would likely put a massive gap between the trade .

My opinion is that it does not really make sense to optimize the grid part.


Please refrain from using arguments like Grids are risky and will always lose all money from account.

Any views or this ?

 

i believe Grid/Martingale/Average EAs can't be optimized because most of time you have no stop loss

and they are based on opening more orders when price went against you, So, there will be no idea 

how price will go against you nor how many orders will open.

This is my own opinion based on long years of experience doing such EAs.  :(

 
Osama Shaban:

i believe Grid/Martingale/Average EAs can't be optimized because most of time you have no stop loss

and they are based on opening more orders when price went against you, So, there will be no idea 

how price will go against you nor how many orders will open.

This is my own opinion based on long years of experience doing such EAs.  :(


Yes these type of EAs will get you into deep water if a trend goes on for too long.  And every once in awhile this happens.  I'm not  saying I'm against the concept it just needs to be monitored and used at the right times.
 
Osama Shaban:

i believe Grid/Martingale/Average EAs can't be optimized because most of time you have no stop loss

and they are based on opening more orders when price went against you, So, there will be no idea 

how price will go against you nor how many orders will open.

This is my own opinion based on long years of experience doing such EAs.  :(

Yes 
I do share same opinion
 

4) Closing the basket of trades when their average profit is in profit (Potentially also trailing their profit).

maybe you can consider to close trades that can cancel off each other not waiting for the basket to be in profit?

 
Michalis Phylactou:
Yes 
I do share same opinion

How about the idea of controlling risk / drawdown using Loss Recovery Trader? It seems to me it is a viable solution but I have yet to learn the configuration.

Cheers

Sunny

 
Osama Shaban: So, there will be no idea how price will go against you nor how many orders will open.
 Yes you do. If you have a $10,000 account and open 0.01 lots, you will use up all free margin in ~10 trades. (More outside the US because of higher allowed leverage.) At that point, no new orders, and existing orders will begin to close (margin calls.) Account blown. Martingale, guaranteed to blow you account eventually.
 
Sunny Ho:

How about the idea of controlling risk / drawdown using Loss Recovery Trader? It seems to me it is a viable solution but I have yet to learn the configuration.

Cheers

Sunny


Loss Recovery is not the (all time/always)  complete solution for DD. You still need big capital to resist opening more and more bigger contacts. 

Also, in the side way market for longer than expected periods you will add more stress on the account.

Again, this is my own opinion :)

 
Michalis Phylactou:

Hi all 

The Grid strategy has a number of stages

1) The entry strategy when no trades are active

2) Closing the initial trade in profit (Using TP / Trailing Stop)

3) Opening additional trade when the previous trade is in loss

4) Closing the basket of trades when their average profit is in profit (Potentially also trailing their profit).


Is this possible or does it make sense to optimize the grid part?

The grid part parameters usually involves  

- Gap at which the next trade opens

- Multiplier of what the next lot will be (can be 1 to use the same lot)

- TP at which the basket of grid trades close.


Trying to optimize would likely put a really small gap with a bigger multiplier, that will most likely have the basket close faster and start a new trade. Hence in this way more trades happen that will generate bigger profit.  This however will cause a bigger draw-down or when run over a different timeframe would cause stop out.  

Or opposite optimizing to reduce the drawdown would likely put a massive gap between the trade .

My opinion is that it does not really make sense to optimize the grid part.


Please refrain from using arguments like Grids are risky and will always lose all money from account.

Any views or this ?

My version of grid is a bit different. I can call it trend biased grid hedging.
1- first i check the general trend direction by looking at the daily or 4h chart. If the trend is up, i will open the first pair of hedging positions accordingly. 
2- if the trend is up, i open a buy and sell position back to back at the beginning of a pull back.
3- i open the second pair of positions buy&sell at the bottom of the pull back and i take the profit of the first pairs sell. Right before the price returns to the trend direction.
4- when price heads back to the trend direction, the buy position of  the first pair in negative will be positive as well. We can ride the trend till next pull back. And we can close all open positions to take the profit.

This way we profit both from pull back of first sell and buy positions.
You thought it was the beginning of a pull back but price went up further after you opened 2 positions ? You cancel the first buy & sell positions with only spread loss and open a new pair at the beginning of a true pull back. 
Or the price did not stop at the second pair?
You take profit of the second sell and open a third or fourth or fifth pair until the pull back phase terminates and price trends up again.
Your DD will never be huge enough to blow your account beacuse of the pull back phase.
Also i increase the lot size by factor of 1 like 0.1 lot and 0.2 lot 0.3 and 0.4 etc.
This way you are in profit faster after the pull back terminates.
 
Michalis Phylactou:

Hi all 

The Grid strategy has a number of stages

1) The entry strategy when no trades are active

2) Closing the initial trade in profit (Using TP / Trailing Stop)

3) Opening additional trade when the previous trade is in loss

4) Closing the basket of trades when their average profit is in profit (Potentially also trailing their profit).


Is this possible or does it make sense to optimize the grid part?

The grid part parameters usually involves  

- Gap at which the next trade opens

- Multiplier of what the next lot will be (can be 1 to use the same lot)

- TP at which the basket of grid trades close.


Trying to optimize would likely put a really small gap with a bigger multiplier, that will most likely have the basket close faster and start a new trade. Hence in this way more trades happen that will generate bigger profit.  This however will cause a bigger draw-down or when run over a different timeframe would cause stop out.  

Or opposite optimizing to reduce the drawdown would likely put a massive gap between the trade .

My opinion is that it does not really make sense to optimize the grid part.


Please refrain from using arguments like Grids are risky and will always lose all money from account.

Any views or this ?

Have you tried grid distance multiplier and/or ATR based?
New comment
Reason: