Grid trading is a popular trading strategy that involves placing multiple orders on a currency pair or other financial instrument with the aim of profiting from price movements. This strategy is based on the idea of creating a “grid” of orders at different price levels, with the hope that as the price moves up and down, some of these orders will be executed and generate profits.
The basic principle behind grid trading is that the trader creates a series of buy and sell orders at specific intervals above and below the current market price. For example, let’s look at Alphabet Inc. (NASDAQ: GOOGL), whose current market price is $107.47. The trader might place sell orders above the current market price at $109.91, $116.52, and $123.13 and buy orders below the current market price at $103.30, $96.69, and $90.08. As the price moves up and down, some of these orders will be executed, generating profits for the trader.