Why They Banned Grid Trading And Martingale
Summary
TLDRThe 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.
Outlines
🤔 Why is Grid Trading Banned?
The speaker begins by sharing their past experience participating in trading challenges, notably one held by the Australian broker Axi around 2015. A key rule in the challenge was a ban on grid trading and Martingale strategies, which caught the speaker's attention. This led to curiosity about why such profitable strategies would be prohibited. Despite common claims on forums that grid trading is highly risky and ineffective, the speaker embarked on a journey to explore these strategies in more depth.
💡 Exploring Grid Trading and Its Success
After diving into grid trading, the speaker shares insights about the strategy's profitability, showing an account that’s actively generating profits using grid trading. The speaker emphasizes that despite the risks, when applied correctly—with specific parameters, grid spacing, and risk management—grid trading can consistently generate profits. They argue that this is why some trading firms disallow grid trading, as it could work against the firm's financial interests.
📜 Prop Firms and the Ban on Grid Trading
The speaker explains how some prop trading firms, particularly the less reputable ones, profit from traders losing their accounts or subscription fees. Banning strategies like grid trading or Martingale is often a tactic to prevent traders from becoming too successful and profitable. However, the speaker also mentions there are reputable firms, like City Traders Imperium, which allow and support fair trading.
📈 Why Grid Trading Works (When Applied Correctly)
The speaker highlights how grid trading, with the right approach, can continuously generate profits by exploiting market conditions. When the proper parameters are in place, grid trading ‘peels money’ out of the market. Although risky if mishandled, the speaker emphasizes that with the right risk management, the strategy works effectively.
⚠️ Risks and Markets to Avoid for Grid Trading
Despite the advantages of grid trading, the speaker warns that it doesn’t work in all markets and can result in significant losses if misapplied. They share their personal experiences of learning these lessons the hard way, cautioning that understanding the markets and conditions where grid trading is ineffective is crucial to avoid blowouts.
🤖 Martingale Strategy: A Future Discussion
The speaker briefly touches on the Martingale strategy, stating that it also works when used with proper risk management and parameters. While it has the potential to quickly lead to account blowouts if over-leveraged, Martingale can be a profitable strategy when used carefully. The speaker hints at a future video dedicated to discussing the Martingale strategy in more detail.
🏦 Why Prop Firms Ban Martingale and Grid Trading
Returning to the subject of prop trading firms, the speaker reiterates that many firms ban grid and Martingale strategies because they don’t want traders to win. By limiting the use of these effective strategies, firms can profit more from traders who lose. However, the speaker mentions there are reputable firms out there that allow for more fairness in trading.
🚀 Final Thoughts and New Strategies
The speaker concludes by reinforcing the idea that grid trading is banned because it works, if done right. They also tease upcoming content related to dark pool technologies and strategies, encouraging viewers to stay tuned for more insights on profitable trading approaches.
Mindmap
Keywords
💡Grid Trading
💡Martingale
💡Prop Firms
💡Mean Reversion
💡Risk Management
💡Price Action
💡Trading Challenge
💡Leverage
💡Profit-taking
💡Trading Evaluations
Highlights
Grid trading and Martingale are banned in many trading challenges, including those by brokers like AxiTrader.
Niall Fuller won a trading challenge despite strict rules against grid trading and Martingale.
The fine print of trading challenges often disqualifies grid trading and Martingale users immediately.
Banning grid trading raises curiosity, leading the speaker to explore its potential benefits and risks.
Grid trading, if applied with specific parameters, can work effectively and generate profits.
The speaker discovered that proper spacing, lot sizing, and risk management make grid trading successful.
Some dodgy prop firms make money when traders lose, banning profitable strategies like grid trading.
Grid trading works in specific markets but can be risky if misused or applied to the wrong markets.
Martingale strategies also work, though over-leveraging can quickly lead to losses.
Proper sequencing, leverage, and lot sizing are essential for Martingale strategies to be profitable.
Prop firms ban Martingale and grid trading because they can be highly effective when used correctly.
Not all prop firms are sketchy; City Traders Imperium is endorsed as a good firm by the speaker.
Grid trading can continuously generate profits once proper parameters are set.
Both grid trading and mean reversion strategies can work effectively if set up correctly.
The speaker plans to release strategies like dark pool technologies soon.
Transcripts
grid Trading
why is it banned
so over the years I've done a few
trading uh
challenges
um
used to be a broker around called axi
Trader based in Australia
um
they took a lot of money off me years
ago but they did a trading challenge
this is before the prop firms even come
out and a guy by the name of Niall
Fuller you can look him up Australian
guy really good I used to watch him a
fair bit when I was learning he does
price action but basically he won the
trading challenge but in that trading
challenge all those years ago it would
have been around 2015
the fine print of the challenge very
clearly stated that if you were caught
using grid trading or Martingale
you would be disqualified immediately
now that my little ears pricked up and
went hmm why would they be telling you
not to trade
grid trading style or Martingale style
so straight away it's like don't don't
touch the red button don't press the red
button and that's when I started the
Journey of looking into grid trading and
mean reversion and Martingale and all
these things that everybody on the Forum
say you know they don't work and you
shouldn't use them and it's highly risky
and foreign
excuse me
so anyway so I looked into it and um
and when I went down that path as you
can see here so this is an account
um that I've got running at the moment
look at all this blue all of these
profits this is grid Trading
so straight away when they told me that
when you would see that grid trading was
banned you're bright you've got to think
okay why is a bank clearly it works they
don't want you to know this it's almost
like the whole Andrew Tate thing you
know the Matrix doesn't want you to know
and if you ever look at a lot of the
funded trading accounts and the
evaluations and all those things if you
read the fine print they say on there
that Martingale and grid Trading
is not allowed
now why would that be
because generally speaking these trading
prop firms
um
not all of them
um
but some of the dodgier ones make money
out of you losing they're making money
of your subscription so if you start
grid trading and actually making profits
um they don't like that because you're
going to beat them
so hence why
title of this video is good trading is
banned and this is why because it
actually works if you apply specific
parameters specific grids
specific spacings and lot sizing and
risk management on the right Market at
the right times it works and it works
extremely well it
basically just keeps peeling money out
of the market once you've got those
parameters set up correctly
it just makes money as you can see here
um
it just keeps taking profits all this
green taking profits
um
Works beautifully but
like anything you can blow up you can
lose money it is risky
just like everything is risky when it's
not set up correctly
there are certain markets that you can't
use it on it doesn't work and I've
learned the hard way there but
um
yeah
grid trading and Main reversion both
work Martingale
um
probably another video I need to make
but Martingale works as well okay but
there's parameters that you need to set
in Martingale for it to work correctly
there are manga will blow your account
up very quickly if you over leverage
um 100 it doesn't work in that sense but
if you use correct leverage and correct
lot sizing and correct
sequencing with Martingale it makes
money and that's why they ban it from
all of these trading evaluations because
they don't want you to win generally
speaking there are some good prop films
out there City Traders Imperium good
prop firm check them out
um I fully endorse them
um but some of these other ones a bit
sketchy so there you go grid trading is
banned because it works
check it out dark pool Technologies
strategies coming out soon
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