Grid trading is a very controversial trading method. It requires the cooperation of a whole system to operate the grid trading perfectly, not that the basic concepts of arbitrary setup of the point interval, grid size setup, benchmark line selection can be stable profits.
Before reading this article, it is recommended that you read the historical article in this column first, to learn and learn the whole system, it is not easy to run away and help you to steady your profits.
After establishing a systemic trading framework, this article mainly explores the problem of fear of unilateral decline in the grid trading system to see if this fatal flaw can be addressed and the rate of network breakdown reduced.
First of all, if the principle of selecting investment indicators and distributed investment is implemented, it is difficult to break the net, on the one hand, the investment indicators you choose are difficult to fall, on the other hand, if you fall, your funds are distributed, other varieties do not necessarily fall, so it is very stable for the entire account.
Secondly, we can also go a little deeper and try to optimize the size of the benchmark lines, bands and grids to make the grid trading system more resistant to falling.
Baseline optimization, in general, once you decide to run the grid, then you do not need to optimize the benchmark, because on the one hand, the grid strategy is a strategy that can be cut at any price, on the other hand, the benchmark is also difficult to optimize, because if you can choose a high win rate to start the grid at the lowest point, then you can do trend trading directly, right?
So the baseline can be optimized or not optimized, if you think you can directly select the bottom, try to do it, if not, do it randomly, the results are almost the same.
The core of optimization is optimization of the size of the interval and the spacing of the grid.
First, let's take a look at some of the most common grid configurations on the market.
There are many versions of the grid trading law, the main popular ones on the market are the three types of grid, such as comparison grid, dynamic grid.
After determining the benchmark, a fixed-price mesh is used along the benchmark line, with a fixed price difference between each grid, such as 2 yuan. The advantage is that each successful run is a grid, the gain is a fixed amount, the number of grids is also clearly visible. The disadvantage is that once the price exceeds the range, the light is sold or bought.
Once the grid is defined as a reference line, a fixed proportion net is used along the reference line, with a fixed proportion between each grid, such as 5%. The advantage is one grid for each successful run, the gain is a fixed proportion, and the number of grids is theoretically infinitely divisible. The disadvantage is that the upfront trading frequency is not high, and the utilization of funds is limited.
Dynamic grids, which are price differences or proportions that are not fixed, are set by humans depending on the scenario. Dynamic grids make it possible to solve the problem of disconnection and improve the utilization of funds.
First analyze the weakness of the grid and the strength of the grid.
The number of mesh sizes is controllable, especially suitable for high-frequency trading. The frequency of trading will be higher than the mesh size if the network is not broken.
In other words, it will not break the network, for example, the Shannon version of the network is equal to the network, 5050 position capital layout, no matter how the market goes, is never broken the network, very careful.
In other words, the Shannon grid itself is not afraid of falling one-sidedly, you fall more, I still have 50% to add.
The only possibility of breaking the grid is the existence of an even-disparate grid, because the price difference is fixed. In order to improve the utilization of funds, it is generally chosen to run a range, and once the price breaks the range, the network breaks.
The frequency of trading is fast, the utilization rate is also somewhat, for fear of breaking the network will be shut down; while the net is just the opposite, will not be shut down, but the frequency of trading is relatively slower, the utilization rate is not high.
If we combine their strengths and create a dynamic rule, can we create a grid trading system that is predictable in terms of frequency and not afraid of being hacked?
The answer is quite likely.
How do you do it? The grid runs in the early stages with the same bad grid method, and the later stages with the same better grid method. So you want to see if it improves the utilization of funds and solves the problem of the broken network.
Why do you say, first of all, in the early stages with a spread grid to run, because the grid is fixed, so the trading frequency is greater than the grid. Secondly, the network runs in the late switching to the spread grid, then the funds in hand will not be used up, as long as the price fluctuates, you always have money to store the spread, will not break the network.
I'll give you a concrete example.
Assuming the baseline starts at 100 yuan, the equation is 1% of the grid, the equation is 0.5 yuan, the rule switches the time to deviate from the baseline by 20%.
When prices fluctuate in 20% of the range, it is possible to capture the accumulated profits of small fluctuations by using small price differences, since prices fluctuate most of the time.
Once the price has fluctuated in a range of more than 20%, switch to the grid. Since this situation can be considered to be out of trend, there are two situations at this time, one uptrend and one downtrend, respectively.
If the price increases by more than 20%, i.e. the price is more than 120, then the 1% grid price difference is larger than when the 100 benchmark line, at which time the start-up etc. is not easy to sell than the grid, to accumulate profits in proportion, it is reasonable.
If the price drops more than 20%, i.e. the price is below 80, then the 1% grid price difference is thought to be higher than when the 100 benchmark line was in place, at which time the start-up is faster than the network trading frequency will run faster than in the 80-100 range, and fall faster and faster.
So dynamic grids are likely to be worse or better than simple running.
Why is this so likely? Because there are also specific calculation problems for these specific parameters, such as the ratio of the grid to the dynamic grid, the difference in price, the switching time, etc.
This article does not directly explain how these three parameters combine with the highest scientific value.
If your friend is interested, why not do the math yourself, calculate the most appropriate setting for these three variables, and you'll probably have three words to yourself, master an efficient grid trading rule that isn't afraid to break the net.
The dynamic grid system, which solves the problem of unilateral decline and reduces the rate of disruption, ends here.
This article does not deal with the issue of setting the size of the underlying position, raising the position and lowering the position, these problems can play a greater role in the dynamic grid, leave to the next article.
Written by V: wgjyfyz
Some of the ideas from the network trading law:https://www.fmz.cn/bbs-topic/7567The rules of trading are detailed in the scientific principles of stable profitabilityhttps://www.fmz.cn/bbs-topic/7568Advantages and disadvantages of grid trading and strategies for optimizinghttps://www.fmz.cn/bbs-topic/7569Optimizing your trading strategy - how to choose the right investment varietieshttps://www.fmz.cn/bbs-topic/7570Optimized grid trading strategies - solving the problem of one-sided decline, reducing the network breakdown ratehttps://www.fmz.cn/bbs-topic/7571Optimization of grid trading strategies - how to use position management to quickly unlockhttps://www.fmz.cn/bbs-topic/7572Net trading is ultimately optimized - net trading yields five times higherhttps://www.fmz.cn/bbs-topic/7524The idea of a grid strategy for high-frequency brushing
The chestnutI don't understand why it's so easy to break the grid... for a grid, if it's infinite, then it can be infinite, but neither of these two funds will be infinite.
The chestnutI understand. Thank you for your reply.
LEEEEEEEEOI think the point should be that, like the equilibrium strategy (which balances the holdings and the holdings at a certain proportion of the price loss per share), it is theoretically possible to raise indefinitely. For example, if a position is balanced at a 50% fall, then the strategy can be run indefinitely, because no matter how much it falls, it is always possible to find a lower 50% position to raise. But if the equilibrium strategy is set to a clear minimum of 0, the price of the grid below the grid is almost not reasonable, because the price below the grid fluctuates more.