Grid Trading Strategy Explained
Grid trading is an automated trading technique that places multiple orders at regular intervals above and below a set price, creating a “grid” of orders that profit from natural price oscillation.
How Grid Trading Works
Imagine price is at 1.1000 and you set up a grid with 20-pip spacing:
SELL LIMIT 1.1060 TP: 1.1040
SELL LIMIT 1.1040 TP: 1.1020
SELL LIMIT 1.1020 TP: 1.1000
--- Current Price: 1.1000 ---
BUY LIMIT 1.0980 TP: 1.1000
BUY LIMIT 1.0960 TP: 1.0980
BUY LIMIT 1.0940 TP: 1.0960
As price moves up and down, orders are triggered and closed at profit. Each completed cycle generates profit equal to the grid spacing.
When Grid Trading Works Best
Ideal conditions:
- Ranging/sideways markets
- Pairs with well-defined support/resistance
- Low to medium volatility environments
Avoid grid trading when:
- Strong trending markets (price moves far in one direction)
- High-impact news events
- Low-liquidity periods (spreads widen)
Grid Trading Parameters
| Parameter | Description | Typical Range |
|---|---|---|
| Grid Size | Pips between orders | 15-50 pips |
| Grid Levels | Orders in each direction | 3-10 |
| Lot Size | Starting position size | 0.01-0.1 |
| Take Profit | Per-order profit target | = Grid Size |
Risk Management for Grid Trading
Grid trading requires strict risk management because multiple open positions can accumulate significant drawdown during trends.
Essential safeguards:
- Maximum open positions — limit total concurrent orders
- Drawdown limit — stop opening new orders if account DD exceeds threshold
- Equity protection — close everything if equity drops below safety level
- Maximum lot exposure — cap total lots across all positions
- Appropriate capitalization — ensure sufficient margin for worst-case grid usage
Grid Size Selection
The grid size should match the pair’s volatility:
Recommended Grid Size ≈ 1.5 × Average Daily Range / Number of Grid Levels
General guidelines:
- EUR/USD: 15-25 pips
- GBP/USD: 20-30 pips
- GBP/JPY: 30-50 pips
Automate Your Grid Trading
Our free GridMaster EA handles all of this automatically:
- Automatic grid placement and management
- 5 layers of built-in risk protection
- Configurable spacing, levels, and lot sizing
- Weekend protection option
Download GridMaster EA for free →
Grid trading involves significant risk, including the potential for large drawdowns during trending markets. This article is for educational purposes only. Past performance is not indicative of future results.