Everyone wants an edge in forex. It’s understandable. This market is volatile, and it will turn on you in a heartbeat if you’re not watching your screen like a hawk. But, fortunately, you don’t have sit there and watch your screen like a hawk – not anymore. With most trading systems, you have to make a choice between whether you think the market will trend up or down. And, you have to position your entry and exits accordingly. But, with a non-directional GMT technique, you don’t need to know anything about the market or which way it will move.
The idea behind the non-directional grid trend multiplier is that you don’t have to find a trend to profit from it. In traditional forex trading, “the trend is your friend.” In other words, you find a trend and ride out the profits.
You enter where you think the trend starts and then you exit where you think the trend ends. In-between, you’re riding the trend. Of course, the idea is to profit, but if it were easy then everyone would be a winner. That’s not the case. Most people are net losers in forex trading.
Here’s where the GTM technique can help. Using it, you can profit from both upward and downward trends. Any movement in the market makes you money. The secret is in the software you use. Usually, the trading platform will have special software that allows you to employ this technique.
The robot cashes in on every profitable move. So, while the profits themselves aren’t that big, it amounts to a lot of money at the end of the day. And, because the same movement is cashed in on over and over (if the price “jitters” or moves back and forth throughout the day), you get a “multiplier effect” – you gain on the same movements throughout the day.
Of course, you can also profit from unidirectional trends, but you have to be much more skilled in trading for this to work. GTM is for inexperienced traders or traders who just don’t want to do a lot of work anymore.
How It Works In Practice
In practice, you don’t need much outside of a trading platform that allows this type of trading. Basically, the platform and broker need to be OK with you using an automated trading strategy with robots doing the executions for you.
When you set up your trades, the software will require you to set a few inputs. So, for example, let’s say you want a 20 pip transaction gap. This means the software will open up a new buy or sell transaction every time is travels 20 pips. It will create an immediate buy (or sell) and then immediately create a grid for you with a 20 pip gap above and below the transaction it just opened. Now, every transaction from here on out will have a 20 pip target and you’re free to set the stop size. The software takes every possible trade or deal in the direction of the trend, thereby multiplying that trend and your profits.
Most traders like the hands-off approach and it can result in you cashing in between 50 and 300 pips every day. You do need to leave your computer on, or use a virtual private server, as the robot needs to run 24/7 for the trades to occur. However, aside from this little detail, there’s no reason why you couldn’t do this tomorrow. When you fire up your software, and start watching the trades, what you’ll notice is that while some accounts will lose money, others will make money. So, typically, drawdowns are offset by gains. Since trades happen all throughout the day, you’re playing the odds, and usually you will come out a winner.
Of course, more experienced traders might want to use unidirectional trading. Here’s where things get really interesting. Instead of trading in both directions, you trade in just one direction. And, instead of cashing in 300 pips, your potential skyrockets to 20,000 pips. Of course, if you don’t know what you’re doing, losses can be this great too.
One of the best things about this trading strategy is that it does not require a lot of up-front capital. You can start with as little as £400 and go from there. Keep in mind that a lot of traders, especially experienced traders, are using several thousand pounds, and that’s a common strategy too.
Why use so much? Because most traders only trade with a small portion of that total lump sum. They do that because there’s always a risk of loss, regardless of how good the trading strategy is.
The biggest disadvantage to this method of trading lies in the details – if you fail to property set your stop loss, you could potentially lose a lot of money. Imagine this: you’re trading in both directions, and you have not set up your trading parameters properly.
The robot doesn’t execute the trades like you’d want it to and then it’s always executing too early or too late. Since you’re moving in both directions, your losses are multiplied. Plus, these strategies often employ leverage (the borrowing of money for trading), and so your losses are magnified when you do lose money.