2 ways of using the Grid Trend Multiplier to make above average Gains

The Grid Trend Multiplier can be used in 2 ways

• It can be traded in a single direction
• It can be traded in a Non directional, Random market way

Ideally you want to trade the single direction technique in the direction of the trend a trending market and the non directional technique in a 700 to 300 pip ranging market.

Below we discuss the Non Directional technique

 

The Non-directional GTM strategy.

 

Introduction

The GTM non directional GTM Strategy is a unique and unusual Forex trading strategy. It has been designed to basically trade any financial market that trades in a reasonable range profitably.

It is successful because:-

1. Firstly it follows a hedging approach where buy and sell directions are traded at the same time.
2. Secondly it uses the powerful multiplier effect that often can allow trades taken in a sell direction to be positive even is the price has moved in a buy direction.
3. Thirdly by trading both in a buy and sell direction the multiplier effect is in fact multiplied by 2

The biggest danger is a very quick and strong trend over 400 to 600 pips could be disastrous. A trend like that will not give the multiplier time to work and the system will fail.

When trading the non directional GTM strategy the Forex risk strategy is done by the multiplier itself and the hedging. They should over time generate enough income to compensate for loses. It is therefore best to not use any risk management approaches which will not allow the multiplier to work to its full potential.

So the general principles are:

• Use account sizing that will allow for the financing of at least 30 open trades.
• Only use risk management processes after 30 trades are open and there is a danger of more open trades developing. So the Maximum open deal setting should be used to avoid more than 30 open trades. It will allow the next trade but close the trade with the biggest loss.
• Ignore stops and variable grid sizing. They are mainly used for directional GTM trading.

So how can one manage risk? Risk can best be managed before the trading starts by appropriate

• grid size selection
• currency selection
• account sizing

Please use the links above for more information about these aspects

It is a natural for Forex traders to try to manage losses but experience and hundreds of back testing has proven that any intervention that impacts the multiplier from not working optimally is detrimental. The Maximum open deal setting has the least impact on the multiplier so that one is recommended as a last resort.

It is better to let the system fail and start again than to try and fight situations that will eventually fail. That is why a 5 bullet approach (using 20% of your capital at a time) is recommended.

That does not prevent you from using any of the risk management tools available on the Grid Trend Multiplier the way you feel appropriate to your own risk management philosophy.

 

When Does the Non Directional Strategy stop.

So you start trading the Grid trend Multiplier and it starts opening a blanket of open deals. So when does it stop – when can you cash in all your deals?

There are 3 approaches:-

1. Trade the GTM until you have a margin call. Hopefully during the time it is trading you will have many opportunities to withdraw you original capital and even some great profits. Just set the Maximum open deals and literally set and forget except for withdrawing surplus funds. Surplus funds are normally when your gains exceed your open trades by +/- 25% to 50% of your original capital.
2. Close all the trades when you think you have cashed in a sufficient number of time and you are highly profitable. The timing of this is a personal decision.
3. The market will start trending soon after you started or at some time during your PAMM which will not give the Multiplier time to work and you will get a planned margin call. That is the best stop out because you have given the multiplier all the time to succeed and it didn’t – it is not a disaster if you are using the 20% of total capital approach.

 

A practical example

There are 2 test trading accounts that reflect non directional trading. These were opened under the GTT format so there are 2 separate accounts. Under the GTM format these would be consolidated in 1 account.

At the time of writing both the Buy and Sell legs were positive. These have no restrictions whatsoever except that at some stage there was some minor pruning done.

The gain produced are well over 150% of $ 4 000 (The optimal capital for this particular strategy although $100 000 was used in the demo account). So the trader could have withdrawn say $150% of his original capital making a 50% gain already and could leave the accounts to do what they want to do and create either more withdrawal

Gains $3144 + $3148 = $ 6292

Only $4000 is required per 0.1 lots at 400:1 gearing

So $ 6000 can be withdrawn and the accounts left to continue with the risk of a margin call which would result in a net gain of $2 000 ($6000 gain withdrawn less $4000 margin call).

Or the trader can close everything and walk away with a $ 6 292 realised gain

What would you do??