What Is Grid Trading in Forex?

By Rise Together FX team · 8 min read

Sideways, range-bound price line crossing evenly spaced horizontal grid levels marked buy and sell

A grid strategy places trades at set price intervals, like the lines on a sheet of graph paper. Instead of trying to pick the exact turning point, it opens more trades as price moves and closes them as a group when price comes back far enough. It can produce a long run of small wins, and it can also build up large losses when price keeps moving one way. This guide explains how forex grids work, why the type of market matters, and where the risks are.

Trading forex and CFDs is high risk and you can lose all the money you put in. Most retail CFD accounts lose money. This article is general education, not financial advice.

Grid trading in one picture

Imagine horizontal lines drawn across a price chart, a fixed distance apart. That's the grid.

A common forex version works like this:

The strategy opens a trade, say a buy.
If price falls by the grid spacing, it opens another buy at the next line down.
It keeps adding a trade at each line as price keeps falling.
The open trades are treated as one group, often called a basket. When price rises enough for the whole basket to reach its profit target, all of its trades are closed together.

Some grids work in one direction only. Others place buys below the price and sells above it. Either way, the strategy is adding to positions that are losing, in the expectation that price will come back.

Fixed spacing, take-profit per basket and maximum levels

Three settings shape how a grid behaves:

Spacing: the distance between grid lines, in pips. Tighter spacing opens trades more often, so exposure builds faster. Wider spacing opens fewer trades but needs bigger moves to recover.
Take-profit per basket: the target at which the whole group closes. Because the average entry price moves closer to the current price with each new trade, price only needs to recover part of the way for the basket to close at a profit.
Maximum levels: the most trades the grid will open. A limit stops exposure growing forever, but it doesn't stop the loss: once the last level is filled, every further pip costs the full amount on all the open trades.

Trade size is a fourth setting. In a fixed-size grid, every trade is the same size. In a martingale-style grid, later trades are larger, so losses grow even faster. Grid trading vs martingale and What is a martingale strategy? cover that in detail.

How losses build up, even with a fixed size

Illustrative example (made-up numbers to show the mechanics; not based on any real account or on our strategy):

A buy grid opens 5 trades, 30 pips apart, each making or losing £0.50 per pip.
The fifth trade opens 120 pips below the first. That's the maximum.

Price vs first trade	Trades open	Loss per further pip	Floating loss
−120 pips	5	£2.50	£150
−240 pips	5	£2.50	£450
−360 pips	5	£2.50	£750

With one trade open, a pip cost £0.50. With five open, every further pip costs £2.50, five times as much. So the floating loss doesn't grow in line with the price move: it grows faster as each new trade is added, and then at the full rate on everything once the grid is full. With martingale-style sizes, it grows faster still.

At 120 pips down, the average entry price is 60 pips below the first trade, so price only needs to rise about 60 pips for the basket to break even. That's the appeal of grids. But if price keeps falling instead, the loss keeps growing, and it can lead to a margin call, a stop out and the loss of all the money in the account. See Margin call vs stop out.

Ranges vs trends: why the type of market matters

Grid strategies behave very differently depending on how the market moves.

In a range, where price moves up and down between levels, baskets tend to fill a few levels and then close at a profit as price comes back. This is when a grid can show many small wins, which can be followed by a large loss.
In a trend, where price keeps moving one way, the grid keeps adding trades on the losing side, and the basket may not recover for a long time, or at all before the account runs out of margin.
In a sudden move, such as after unexpected news or a weekend gap, price can jump past several grid levels at once. Losses build up before the strategy can respond.

No currency pair can be relied on to stay in a range. Pairs that have moved within a range for a long time can break out of it, sometimes sharply. A grid's past record in a ranging market says little about what happens in the next strong trend. Past performance is not a reliable indicator of future results.

Open exposure and floating drawdown

Because grids hold losing trades open while waiting for a recovery, most of their risk is floating: it's in trades that haven't been closed yet.

Balance can look smooth because baskets mostly close at a profit.
Equity tells the real story. It includes the losses on trades still open, and it can fall far below the balance.
Margin used grows with every trade the grid adds, so the margin level falls from two directions at once.

When a losing basket is finally closed, by the strategy or by the broker at stop out, the floating loss becomes a realised one, and the balance can drop sharply in a single step. See Equity vs balance: what a floating loss means.

Forex grids vs crypto "grid bots"

You may see "grid bots" offered on some cryptoasset exchanges. They use the same idea of buying and selling at set price levels, but they're a different product:

A forex grid on MT5 usually trades leveraged CFDs or rolling spot forex. It's run by an Expert Advisor or a copier and is subject to margin calls and stop outs.
A crypto grid bot on an exchange often buys and sells the cryptoasset itself, and some versions use leveraged derivatives.

Cryptoassets carry their own serious risks. The FCA says crypto is largely unregulated in the UK, that you're highly unlikely to be covered by the Financial Services Compensation Scheme, and that you should be prepared to lose all the money you invest. The FCA has also banned the sale of crypto derivatives to UK retail consumers since January 2021. Don't assume anything about one kind of grid applies to the other.

Questions to ask about any grid strategy

Does trade size increase as the grid adds levels? If so, it's martingale-style and losses can grow faster than the price move.
How many levels can it open, and what happens after the last one?
How far would price have to move against it to reach a margin call or stop out on an account of your size?
Is there a point where it closes everything at a loss, or does it hold on until the broker closes trades?
What's the largest equity drawdown in its record, and how long is the record? A past drawdown isn't a limit.
What happens in a strong trend or a weekend gap?
Could you lose all the money in the account? With a grid, the honest answer is yes.

The checklist in Grid trading vs martingale goes into more detail, and Averaging down and risk of ruin explains the maths of adding to losing positions.

Our own strategy

We use a grid. Here is how we describe it on our risk page:

Our strategy is an automated grid on one currency pair, AUDCAD. When price moves against the open trades, it opens more trades, and later trades can be larger (a martingale-style approach). So when the market keeps moving one way, losses on the open trades can grow faster than the price move and add up quickly. These losses can be large, and in a strong or sudden move they can lead to the loss of all the money in your account. A high number of winning trades in the past does not mean the next losing period will be small.

Read our full risk warning.