MGH System (Martinale Grid & Hedging)

Hi.

No big introduction, no stories about my trading or personal life, no long posts about subjective theories or techniques.

I just wanted to show you a simple system I'm using and I hope with everyone's help we can improve it.

We all know grids and martingales are dangerous, but please don't post comments arguing whether these techniques are good or bad and focus on the system.

Everyone is welcome to make your suggestions or criticisms.

Basic example of getting into the standard.

Just use an indicator that draws a 10-point grid.

Buy : When price comes from above and touches grid level (Level 1)

TP: Next level (10 points)

If price drops 10 pips, add buy (level 2)...set all TPs to level 1

If price drops another 10 pips, add buy (level 3)...set all TPs to level 1

: When price comes from below and touches grid level (Level 1)

TP: Next level (10 points).

If price rises by 10 pips, add buy (level 2)...set all TPs to level 1

If price rises another 10 pips, add buy (level 3)...set all TPs to level 1

http://oi58.tinypic.com/25jz1h1.jpg

This is another example of " Basic Entry " and simply uses the grid when our martingales and hedges are not yet necessary.

I think this time it will be clear, I don't know how to simplify it

http://oi61.tinypic.com/505p5g.jpg

This is the easiest situation.

Let's look at another simple case, let's call it " hedge x2 "

Our sales grid is now at level 4, so there is no need to close the sale...

1. We will only be open for purchase of double the final batch of items.

2. If the price goes the other way, we add 2 more grid levels for the same lot size.

3. When we reach 100 points or more, we will close all buying and selling.

http://oi62.tinypic.com/9t0gn9.jpg

So far, these are very simple cases.

We'll see some more complex situations later.

I will say up front that this system has a percentage equity stop loss and different equity take profit targets depending on the hedging multiplier. The greater the hedging multiple, the greater the return.

Now let's look at " Hedges x4 "

1. Price reaches level 4, so we start with x2 purchase and get some profit, but...

2. Price has retraced to our x1 grid sell, thus reaching the price target for the x1 trade and now we have 3 x 2 trades in the air

3. To avoid possible ranges, we will wait for further price increases.

4. Then we will start with x4 sales until we reach our target. In the case of "Hedge x4" we would need 250 pips or more to close all trades.

http://oi58.tinypic.com/w7y7nt.jpg

I will now show you when the spacing between open grids is 30 points or more. We will call this example " Hedges within grid x4 ".

1. We open 2 opposite grids (3 x1 buy and 3 x2 sell). At this point, some x2 sells have been closed (5 sells x2 = 100 pips)

2. The difference between grid level 3 for established buys and grid level 3 for established sells is 30 points.

3. Price returns to the middle of the grid separation. In this case, the mid-point will be 15 pips, so we consider the closest buy level to start the trade with x4.

4. At a certain point, the price reaches or x1 buy TP and close the position. (3 buys x 1 = 30 points)

5. We still open x4 buy until the target of 250 points or more is reached.

http://oi61.tinypic.com/2edxmok.jpg

This is the " hedge within grid x16 " example. I think the pictures speak for themselves.

By the way, the target in this example is 1000 points or more.

http://oi58.tinypic.com/2zqssn9.jpg

When we open an internal grid, we will wait for the external grid to close (in this case the x8 purchase) to open a new x32 grid.

That's " hedge within grid x32 " .... 5.000+ points DD.

Maybe it might be a good idea to start getting TP from the next level 10 points away within the grid instead of waiting for the side level to get TP.

http://oi58.tinypic.com/2mg5y0y.jpg

This is Paracelsus' (FxMasterGuru) modification of the system...

http://www.forexfactory.com/showthre...99#post7662999

Some "brainstorm" ideas for further experimentation:

1. The first batch of entries is the "trend direction":

Buy : When price comes from below and touches grid level (Level 1)
: When the price comes from above and touches the grid level (Level 1)

Reasoning: Starting from the original batch of Level 1, maintain "friendship" with the trend. (All other "H" rated entries are in the "trend direction," so why not the first one?)

2. When Level2 and Level3 transactions are activated, the original TP level is not changed.

TP: Next level (10 points)
If price drops 10 pips, add buy (level 2)... keep TP
If price drops another 10 pips, add buy (level 3)... keep TP

Reasoning: By simply keeping the original TP, we can double the profit of each original batch (after entering Level3).

For example:
Move TP to Level1: Level1+Level2+Level3 PT = 0 + 10 + 20 = +30 points
Keep the original TP: Level 1+Level 2+Level 3 PT = 10 + 20 + 30= +60 points

http://www.forexfactory.com/showthre...50#post7699050

Also, here's a thought: taking profit and re-entering with the same lot in each grid step consumes a lot of money spreads and commissions, which add up. To avoid "feeding the beast" (i.e. the broker) excessively repetitive re-entries, I recommend not closing the first trade of each smaller batch, but letting them continue running and adding the second and third steps after the 10 pip (grid size) retracement as usual.

It provides the same exact equity gain/loss at each level as the original strategy, but without closing and opening trades at each level. Considering the 1.2-point ECN fee per grid step, this could mean a 100-point move to save 12 points, or about a 12% cost savings. Not trivial. Additionally, since the "butterfly effect" also occurs in trading, this small but significant cost saving can mean the difference between being able to close the "basket" before a major market turn and closing the "basket" before higher hedging levels kick in.

Attached is GoldenEA’s EA