Grid Trading is a form of trading where orders are placed above and below a set price, creating a grid of orders at incrementally increasing and decreasing prices. Grid trading is most commonly associated with the foreign exchange market, but can be used in any market where prices fluctuate.The basic idea behind grid trading is to buy or sell when the price reaches one of the levels in the grid, thus locking in a profit. If done correctly, this can result in steady profits regardless of whether the market is going up or down. There are two main types of grids: horizontal and diagonal.A horizontal grid consists of evenly spaced buy and sell orders placed above and below the current market price. When the price reaches one of these levels, an order will be executed automatically. A diagonal grid uses more complex calculations to place its orders, but achieves essentially the same results as a horizontal grid.Grid traders use various indicators to determine which levels should be used in their grids, as well as how many contracts should be traded at each level. One popular indicator for foreign exchange markets is pivot points , which are calculated using previous high, low, and closing prices. Other indicators such as moving averages can also be used.Once you have determined your desired strategy, it's important to paper trade first! This involves simulating trades on charts without risking any actual money. This will help you become comfortable with your system before risking real funds.
