Grid Trading by Adding to Losing Positions and Trimming Winners

Summary

This compact rule set starts with configurable long and short positions. For a long position, it trims a specified quantity after price rises by a defined distance from the stored reference price, and adds quantity after price falls by a defined distance. For a short position, it trims after a decline and adds after a rise. The reference price is updated to the current price after each action, so subsequent thresholds are measured from the latest recorded trade level.

The listed defaults set both distance thresholds to two percent, with one unit added or trimmed per trigger; the initial short quantity is ten and the initial long quantity is zero. The document provides no market, timeframe, backtest, or performance results. Repeated additions as price moves against a position can increase exposure, while repeated trims can reduce a profitable position. The rules do not specify an overall exposure cap, exit condition, or risk limit, so those omissions matter when assessing the method.

Key ideas

• The rules can initialize a long position, a short position, or both according to configured quantities.
• Positions are trimmed after favorable price moves and enlarged after adverse moves.
• Each trade action resets the reference price used for the next threshold.
• The example uses two percent move thresholds and one-unit adjustments.
• No exposure cap, complete exit rule, or performance evidence is supplied.

Tags

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