A Bounded Grid Strategy for Buying Dips and Selling Recoveries

Summary

This script divides a chosen price range into evenly spaced grid levels and trades only long. When price falls below a grid level, it opens a position sized from an equal share of initial capital; when price rises across the next level, it closes the associated earlier position. Multiple entries can accumulate as price falls, while exits follow the script’s described first-in, first-out behavior. The grid can use manually chosen bounds or bounds derived from recent prices or a moving average.

The author presents the method as better suited to range-bound markets and says it has no built-in stop loss. If price falls below the grid, exposure can build to the full stake; a move beyond the upper boundary leaves the strategy unable to continue trading. The document specifies commission and capital assumptions and explains that grid count affects position sizing, but reports no backtest results. Results depend heavily on selecting suitable bounds, commissions, and order settings, while changing automatic bounds can alter grid levels as conditions evolve.

Key ideas

• The strategy places evenly spaced levels between upper and lower price bounds.
• It buys as price crosses below grid levels and closes earlier positions as price recovers across levels.
• Positions are long-only and may accumulate as price falls through successive levels.
• The author describes range-bound markets as the intended setting and warns that there is no built-in stop loss.
• Grid bounds, line count, commission, and order size all affect exposure and backtest interpretation.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.