Why They Banned Grid Trading And Martingale

Summary

The speaker discusses grid trading and its controversial reputation, explaining why it's often banned in trading challenges and prop firms. He highlights his experience with a trading challenge that disallowed grid and Martingale strategies, sparking his curiosity. Through research and experimentation, he found that grid trading, when applied with proper parameters like spacing, lot sizing, and risk management, can be profitable. Despite its risks, it is banned because it can consistently generate profits. The speaker hints that some firms ban these strategies to prevent traders from winning too easily.

Takeaways

• 😀 Grid trading and Martingale are often banned in trading challenges and funded accounts due to their effectiveness in the right conditions.
• 😯 A 2015 trading challenge had fine print disqualifying grid trading and Martingale, which piqued interest in why these methods were prohibited.
• 💡 The speaker believes that institutions and some prop firms don't want traders using grid trading because it can be highly profitable if applied correctly.
• 🤔 Grid trading, when used with proper parameters, can consistently generate profits, though it carries risks if not managed well.
• 💰 Prop firms that rely on subscription models may ban strategies like grid trading because they benefit when traders lose.
• ⚠️ Martingale strategies, while risky, can also be profitable if used with correct leverage and risk management, but can quickly lead to large losses if misused.
• 🧐 The speaker suggests that certain markets are not suitable for grid trading, and applying the wrong settings can lead to losses.
• 🔎 The speaker highlights that not all prop firms are against profitable strategies and endorses City Traders Imperium as a trustworthy one.
• 📉 Despite the risks associated with these methods, the speaker claims both grid trading and mean reversion can work well with proper setups.
• 🚀 The speaker plans to release new strategies under 'Dark Pool Technologies' and encourages traders to explore grid trading despite its risky reputation.

Q & A

What is grid trading, and why is it mentioned in the video?

Grid trading is a strategy that involves placing buy and sell orders at predetermined intervals above and below a set price, aiming to profit from market fluctuations. The video mentions it as a profitable strategy, despite being banned by some trading challenges and prop firms.

Why do trading challenges and prop firms often ban grid trading and Martingale strategies?

These strategies are banned because they can be highly profitable when applied correctly, which is not in the best interest of some prop firms that make money from traders' losses or subscriptions. Banning these strategies may protect the firms' profitability.

Who is Niall Fuller, and what relevance does he have in the video?

Niall Fuller is an Australian trader who specializes in price action trading. He won a trading challenge mentioned in the video, which piqued the speaker's interest in why strategies like grid trading were banned.

What are the risks associated with grid trading?

Grid trading can be risky if it is not set up with the correct parameters, such as market conditions, grid spacing, lot sizing, and risk management. It can lead to significant losses, especially in volatile markets.

Why does the speaker believe grid trading works well, despite being labeled risky?

The speaker believes grid trading works well because, when applied with the right parameters, it consistently generates profits by capitalizing on market fluctuations. They claim it ‘peels money out of the market’ once set up correctly.

What similarities does the speaker draw between grid trading bans and the concept of ‘the Matrix’?

The speaker likens the ban on grid trading to a conspiracy-like notion, where the financial system (like 'the Matrix') hides profitable strategies from traders because it doesn’t want them to win, similar to how 'the Matrix' hides reality from people.

What is Martingale, and why does the speaker believe it can be profitable?

Martingale is a betting strategy where you double your trade size after every loss, aiming to recover losses and make a profit when a trade eventually wins. The speaker believes it can be profitable if managed with proper risk control, lot sizing, and leverage, though it can also be very risky.

What is the speaker's stance on prop firms, and which one does he endorse?

The speaker suggests that many prop firms are structured to make money from traders' losses or subscription fees. However, he endorses City Traders Imperium as a good, trustworthy prop firm.

What advice does the speaker give regarding the use of grid trading?

The speaker advises that grid trading should be used with specific parameters, including grid spacing, market selection, and proper risk management, in order to be profitable and minimize risk.

What are the speaker’s plans regarding grid trading strategies?

The speaker mentions plans to release 'dark pool technologies strategies' in the near future, which may suggest the development of advanced trading strategies based on grid trading.