Grid trading explained simply

On this page

In short

A grid sets up a lattice of buy or sell points at fixed distances. If price runs against the first position, the program buys again, level by level, always with the same lot size. When price comes back a little, all positions close together.

That works as long as the market swings. The question is never whether a grid wins often, but what happens when price does not come back.

The strategy as a schematic

A drawn price path, no market data. First the case where the rule works, then the same routine when it fails.

Closed: ±0 pips
Open: –
Open volume: –

Schematic, no market data: a drawn price path, results in pips weighted to 0.10 lots. Not a backtest and no statement about any real EA.

How the strategy trades

Open a first position, without a stop of its own.
If price moves a fixed distance against it (e.g. 15 pips), open another position of the same size.
This repeats level by level up to a maximum number.
All positions form a basket with an average price. When price is a few pips above it, the whole basket closes.
As a last line of defence, if set, a loss limit applies to the whole basket.

Where the risk sits

The individual positions have no stop. The risk sits in the basket: with every level the open volume grows, and with it the loss per pip.

A grid wins very often, because price usually comes back at some point. If it does not, many small wins turn into one large loss. The curve therefore looks smooth for a long time and then drops in one step.

What a grid really risks is shown not by the balance but by the open loss (floating) at the worst moment. A grid without a loss limit has the broker's margin call as its last boundary.

When it works, when it fails

Tends to work when …

A sideways market that swings around a mean.
Pullbacks that stay smaller than the number of levels times the distance.
Enough capital for the maximum basket size.

Tends to fail when …

A lasting trend against the basket: all levels fill and price keeps going.
Strong news moves that skip several levels at once.
An account too small for the configured number of levels.

How to recognise it in an EA

Traces in the trade log of a live account, whatever the vendor calls the EA.

Several positions in the same direction whose entries are a fixed number of pips apart.
Positions without a stop loss that close together in the same second.
Very high hit rate, small wins, rare but very large losses.
A large gap between balance and equity in weak phases.

Typical settings

Setting	Typical	Effect
Level distance	10–50 pips	Tighter = the basket fills faster.
Lot per level	constant	If it grows, it is a martingale grid.
Max. levels	5–15	Caps the volume, not the loss.
Basket target	5–20 pips above the average	Small, so the basket closes often.
Basket loss limit	e.g. 20–30 % of the account	Without it the basket ends only at the margin call.

Common ranges from EA manuals and set files, not a recommendation.

EAs in our tests built this way

57 graded EAs from our tests carry this design. Grade on a 0 to 10 scale, one formula for all; no live figures.

Showing the best 8 of 57.All EA reviews →How we grade EAs →

All strategies →All designs compared: EA strategies explained →

Frequently asked questions

What is the difference between a grid and martingale?

Both add to a position when price runs against them. A classic grid uses the same lot size on every level, martingale increases it after every loss. Many grid EAs mix both, and then the volume grows particularly fast.

Can a grid EA have a stop loss?

Single positions usually not, otherwise it would not be a grid. A loss limit for the whole basket or the account is possible. Whether it is set, and where, decides the possible loss.

Why does a grid EA's curve look so smooth?

Because the balance only shows closed baskets, and those almost always close with a small gain. The open loss of running baskets is not included. The equity curve says more.

Video: the strategy in under a minute

The same animation as a video with subtitles, for those who prefer to watch.