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Martingaling - Looks so good until the inevitable

  • #221
  • Aug 26, 2014 6:33pm Aug 26, 2014 6:33pm
Quoting hanover
{quote} Magix, Perhaps I am too wordy and theoretical. So I’ll start calling a spade a spade. Anybody — even me — can trade a $500 account, take all the risks they want, and when they blow the account, they can easily forget their failure, re-fund the account and start over. Then, when the new account is in profit, they can jump onto FF and tell everybody that their money management is a winner. OK, let’s forget theory then, and talk about the real world. I don’t want to pick on you, but your TE just happens to be a perfect example of what I’m talking...

Here's the thing, David...

This is actually 3 EAs running a Martingale styled approach on a $500 account...and I 100% agree that I wouldn't take the same approach with a million dollar account...these kind of draws belong to the government and wallstreet.

So, is it the single EA that is drawing excessively, or the combination?

You don't actually know, do you?

All you are looking at is a single picture and drawing blind conclusions...this is the SAME market ignorance that actually creates losers, out of the best of intents.

David...I do believe that you have tried trading, but currently do not. And though this may not seem to be an issue, it actually is.

If we all read the same books and all knew the same theory on trading, would we all trade the same way?

You have miss-read me, grossly.

I am not selling a system nor service. Not trying to gain support on martingales nor their amazing performance...

All I am simply doing is trying to provide information that would allow others to make a decision for themselves.

As a non-trader, or perhaps somebody who has had their ass handed to them in market, this is something you should appreciate. Taking the time to experience the market from an actual trade perspective and apply information as is seemingly relevant, is the key to longevity in the market.

Reading a book and quoting statistics, is the key to longevity in ForexFactory.

The thing is, I really don't give a shit if people win or lose...don't even care how they trade, what they trade or why.

What I do care about is, that somebody who has a limited realm of applicable knowledge in the field, is trying to dictate to the masses how they should apply their funds. This in every same way that I don't want a doctor who has no experience in surgery, but has read the writing off of the pages of the procedure.

There is zero value in this.

It's not just martingales, David.

It is everything that can be viewed, tested and tried in the markets.

The reason for so many threads, is that each individual brave enough to trade and open a thread has gained their own market optics. It has been without the benefit of you giving a statistical analysis of what won't work.

Without saying, "Shut your Pie Hole, you Blowhard", I do really actually wish you would be more selective in your battles and encourage education over a dictatoresque, know it all, style of posting.

But, that's just my dos centavos.

From here forward, you can add me back to your iggy...I will keep you on mine.

And we never have to touch these subjects as applied to each other again.
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #222
  • Aug 26, 2014 9:02pm Aug 26, 2014 9:02pm
Quoting Magix
From here forward, you can add me back to your iggy...I will keep you on mine. And we never have to touch these subjects as applied to each other again.
No point in replying, then. I'm happy to accept that we see things differently, and leave it at that.
  • #223
  • Aug 27, 2014 1:37am Aug 27, 2014 1:37am
It is very easy to see he is just a one trick pony. Other than martingle he has nothing else to offer.

He has spent the last few years of his life chasing after martingle and variations of martingle and doesnt even know that money management techniques is not trading.

Using mainly money management and simply plugging in some standard trigger logic based on multiple time frame, isnt an edge. Any tom,dick harry after 6 months would know that much. If you are/have been trading for more than a couple years and still believes money management can earn you lots of money, I guess the harsh truth is, you aint cut it for trading. Just get another line of job/hobby.
  • #224
  • Aug 27, 2014 2:19am Aug 27, 2014 2:19am
Quoting hanover
{quote} No point in replying, then. I'm happy to accept that we see things differently, and leave it at that.
Money management IS trading Kwat.
If you are good at something, never do it for free--Joker
  • #225
  • Aug 27, 2014 2:24am Aug 27, 2014 2:24am
Quoting Kuat
It is very easy to see he is just a one trick pony. Other than martingle he has nothing else to offer. He has spent the last few years of his life chasing after martingle and variations of martingle and doesnt even know that money management techniques is not trading. Using mainly money management and simply plugging in some standard trigger logic based on multiple time frame, isnt an edge. Any tom,dick harry after 6 months would know that much. If you are/have been trading for more than a couple years and still believes money management can earn...
Using money management in conjunction with an edge is how that edge is capitalised. An edge by itself yields nothing.
Enter Signature
  • #226
  • Edited 4:07am Aug 27, 2014 2:52am | Edited 4:07am
Quoting hanover
It’s currently 36% down, and that drawdown is the result of adding to a stream of consecutive losses. Anyway, you still have a great chance to prove me wrong. If the account in your current TE recovers, and then survives the next THREE YEARS worth of changing markets....
That ship has already sailed. His account hit 75% DD before adding emergency funds. So in the real world, this already would have been considered a catastrophic failure whether the guy wants to admit it or not. I read earlier on this thread that he had a 46% DD rule on the account based on lot size, so he didn't follow his own rules based on the hope of being proven right.

One of the core components of real success is accepting failure and learning from it, not having to be right at any cost. Accepting losses one of the hardest lessons for new traders to learn in trading. There's a difference between selling into a reversal and holding after price has run away. It's a difficult line for inexperienced or unskilled traders to straddle which is why so many people fail once an irreversible tipping point has been crossed. Martingale strategies prove this time and time again.

As Warren Buffet said, "The first rule is don't lose money, the second rule is not to forget rule number one."

In terms of risk mitigation, there are better approaches, but they require learning and skill to execute properly. One is trade management optimization which has statistically proven odds of providing better returns, which is why it's employed by major global funds.

Here's some core materials on risk management and trade optimization if anyone's interested in exploring it further.

http://glynholton.com/wp-content/upl...06/10/risk.pdf The Glyn Holton paper on defining market risk is considered the cornerstone of probability definition.

http://www.wu.ac.at/banking/sbwl/lvs_ws/vk4/rmguide.pdf Alan Laubsch, RMG - Risk Management Guide

(removed the trade optimization link... I don't think this PDF is legal since the book is still sold on Amazon. But there are related materials freely available on the web that cover the topic of market impact decay and volatility modeling)

Inserted Video
Alan Laubsch - Integrated Risk Management (poor sound quality, but a brilliant talk on sense and response analytics)


Inserted Video

This Tasty Trades video is an over simplistic approach to trade management optimization for options presented by Tom Sosnoff, but makes a couple of good points on capital redeployment. One of the major issues with deep draw down techniques, besides risk of ruin, is the inability to redeploy capital which results in opportunity cost.

Some of these materials are advanced, so a new trader has to work up to a level of understanding market structure to grasp them. The point is, this is all foundation material that made people like David Tepper billionaires and none of it remotely resembles any of the high risk get rich quick schemes promoted on sites like this. There are other excellent materials available on the web on this topic as well.

Inserted Video


In case anyone hasn't heard of Long Term Capital Management, this is a great documentary on the company, risk mitigation strategies, and a prime example of what can happen when someone's overexposed in the markets.
  • #227
  • Edited 4:12am Aug 27, 2014 3:19am | Edited 4:12am
Quoting jmn5611
{quote} Money management IS trading Kwat.
My definition of MM has been shaped by books I read, like Ryan Jones' The Trading Game, which is perhaps one of the best 'trading' books that I've read.
Some quotes from the section "What money management is.... and is not...." (pages 5-6):

"Money management is 90 percent of the game. Money management is the most important aspect in trading when it comes to the bottom line....... There are many more or less correct definitions of money management in the industry today. I am going to define the term as I use it and as you will learn it throughout this book.
........
There are definitions of money management that relate to protective stops otherwise known as “money management stops,” but this kind of definition is not used in this book. Money management, as defined here, is limited to how much of your account equity will be at risk on the next trade. It looks at the whole of the account, applies proper mathematical formulas, and lets you know how much of the account you should risk on the next trade.
........
Proper money management takes into consideration the value of the entire account. Improper money management only looks at certain account properties or characteristics such as winning percentages or win/loss ratios. Proper money management discounts all factors that cannot be mathematically proven.
........
For example, money management stops simply are telling you where to exit a market to cut your losses in any given trade. Even though this has a relationship to the money management definition, it is better defined as a “trade management stop” or “risk management stop.” Proper money management never has anything to do with where you should enter or exit a particular trade. When placing a stop on any given position, you are determining where the trade will be exited.
........
The trading method known as pyramiding also is frequently confused with money management. The trader using money management looks at the account as a whole. Pyramiding on the other hand is limited to a particular trade in a particular market regardless of the status of the account as a whole. ...... These decisions to add onto positions are not based on the overall increase in the account, just that one position. Further, buying or selling another contract in this situation is based solely on price action."


For me, trading is entries and exits; that's what separates it from other activities that likewise generate distributions of wins and losses, such as casino games. Like Dr Jones, I see MM as a function that can be treated independently, and separately, and in this way it becomes an exercise in pure math. Hence different MMs can therefore be tested by the application of math, leaving no room for guesswork or conjecture, which I find helpful. You can take a given trading system (entries and exits), and then apply any desired MM to it, without interfering with the system rules.

Of course everybody is entitled to hold a different view. But these types of discussion can become horribly confusing, and sometimes meaningless, when folk have different definitions about certain key terms or concepts, but believe they are speaking about the same thing.
  • #228
  • Edited 4:23am Aug 27, 2014 4:00am | Edited 4:23am
Quoting Luther
As Warren Buffet said, "The first rule is don't lose money, the second rule is not to forget rule number one."
Luther,

The difference is that Magix and other like-minded folk are trading nickel-and-dime accounts, hence they have no need for risk management rules, since the loss of the entire account is of no great consequence. Hence it is not 'trading' in the sense that any serious professional would recognize. I suspect that many 'forum traders' resort to techniques like martingales and pyramiding losses because finding an edge through analysis requires too much hard work (and discretionary rules can't be coded into EAs).

Many thanks for sharing the links and the videos. I've viewed a number of Tom Sosnoff's options videos before. Usually good value, but I only started experimenting with options about 12 months ago, and I'm afraid a lot of his more complex stuff goes over my head.

Cheers and profits,
David
  • #229
  • Aug 27, 2014 4:10am Aug 27, 2014 4:10am
Quoting hanover
{quote} Luther, The difference is that Magix and other like-minded folk are trading nickel-and-dime accounts, hence they have no need for risk management, since the loss of the entire account is of no great consequence. Hence it is not 'trading' in the sense that any serious professional would recognize. I believe that many 'forum traders' resort to techniques like martingales and pyramiding losses because finding an edge through analysis requires too much hard work (and discretionary rules can't be coded into EAs). Many thanks for sharing the links...
Exactly hanover. this is where it's at. In my view a successful trading method is one that is scalable up to any amount of money.

That's what I've always aspired to create personally. Liquidity is also something to consider in this. Scalpers umping in and out will struggle to do the same thing on big figure accounts depending on the price/ areas they're taking their trades from.
H.D
  • #230
  • Aug 27, 2014 5:19am Aug 27, 2014 5:19am
Quoting hanover
{quote} Luther, The difference is that Magix and other like-minded folk are trading nickel-and-dime accounts, hence they have no need for risk management rules, since the loss of the entire account is of no great consequence. Hence it is not 'trading' in the sense that any serious professional would recognize. I suspect that many 'forum traders' resort to techniques like martingales and pyramiding losses because finding an edge through analysis requires too much hard work (and discretionary rules can't be coded into EAs). Many thanks for...

definitively. this guy is starting a new trade explorer nearly every week, deleting the old one because the capital vanished. last one was named "MyMartin", -10% a day and -30% a month. martingale, peanuts-trading -> gambling...
fortis fortuna adiuvat
  • #231
  • Aug 27, 2014 5:39am Aug 27, 2014 5:39am
Some interesting conversations here. I'm not coming out for or against martingale trading per say. In effect, everyone does it to one extent or another. Probably most commonly would be the swing trader. I do that as well as other approaches. While not necessarily increasing lot size per position, adding as price moves against us is in effect, a form of a martingale approach ... no?

Anywho, the subject that caught my eye here was the account size one. This, IMHO is totally irrelevant. Since this business (to me) is all about % gained or lost and not dollar amount, risking $10 on a $100 account is absolutely no different than risking 10k on a 100k account. It's still just 10%.

Anyone who sees that differently I'd have to say has too much emotional attachment to money and thus, regardless of having a winning method, will never be able to trade a larger account successfully. If one can trade a $100 account and make it grow, then the exact same will apply to a 100k account "unless" the trader simply can't handle the "fear" of the larger numbers. Money is a tool folks. Nothing more, nothing less. I see it no differently than my skill saw or hammer.

On one other point. MM is EVERYTHING in trading an account and steadily growing it over time. Anyone who knows even the basics of this business surely knows that...no? I've had many times where over let's say a week, I had more loosing trades than winning trades and yet my account % grew. That is proper MM pure and simple.

Anyway, enjoying all the differing views here. Have a great day folks.
Ghost Rider - WWTBMD?
  • #232
  • Aug 27, 2014 5:58am Aug 27, 2014 5:58am
Quoting albchr
Some interesting conversations here. I'm not coming out for or against martingale trading per say. In effect, everyone does it to one extent or another. Probably most commonly would be the swing trader. I do that as well as other approaches. While not necessarily increasing lot size per position, adding as price moves against us is in effect, a form of a martingale approach ... no? Anywho, the subject that caught my eye here was the account size one. This, IMHO is totally irrelevant. Since this business (to me) is all about % gained or lost and...
hi chris,

good to hear your account is still growing. risking 10% is to much risk for me - but i think it´s just an example, am i right? banks and other regulated financial intermediaries are not allowed to to this - for good reasons.

anyhow - green pips to you.

all the best
fortis fortuna adiuvat
  • #233
  • Aug 27, 2014 6:33am Aug 27, 2014 6:33am
Quoting deltaone
{quote} hi chris, good to hear your account is still growing. risking 10% is to much risk for me - but i think it´s just an example, am i right? banks and other regulated financial intermediaries are not allowed to to this - for good reasons. anyhow - green pips to you. all the best
Hi Chris,

Yes just a number picked from a hat. A nice round 10 to make the example easy. You know me, I need to keep it simple.

Although I will say that between all positions, across several or many pairs, if it ALL went bad there are times it would cost me close to 10%. But what are the chances of it "all" going bad? ... LOL

Best wishes to you too my friend. Enjoy the day.
Ghost Rider - WWTBMD?
  • #234
  • Aug 27, 2014 6:39am Aug 27, 2014 6:39am
Quoting albchr
Anywho, the subject that caught my eye here was the account size one. This, IMHO is totally irrelevant. Since this business (to me) is all about % gained or lost and not dollar amount, risking $10 on a $100 account is absolutely no different than risking 10k on a 100k account. It's still just 10%. Anyone who sees that differently I'd have to say has too much emotional attachment to money and thus, regardless of having a winning method, will never be able to trade a larger account successfully. If one can trade a $100 account and make it grow, then...
I guess those that think this consider it smart to test on a $100K account then? Let's face it - testing on demo isn't the same as real money on the table, so, my opinion is totally in agreement with yours Chris - test on a live account with lower funds and smaller lot sizes. The % gain results will be the same and IMO it takes more discipline to trade under these conditions.
"Holy Grail" exists - accepting where is the first step.
  • #235
  • Aug 27, 2014 7:17am Aug 27, 2014 7:17am
Quoting albchr
. This, IMHO is totally irrelevant. Since this business (to me) is all about % gained or lost and not dollar amount, risking $10 on a $100 account is absolutely no different than risking 10k on a 100k account. It's still just 10%. Anyone who sees that differently I'd have to say has too much emotional attachment to money and thus, regardless of having a winning method, will never be able to trade a larger account successfully.
Your maths are correct, but we're actually talking about risk in a martingale method.

Maybe Magix should deposit $50K instead of $500... After all, it's no different! Or do you think he is too emotionally attached to money to do this?
H.D
  • #236
  • Aug 27, 2014 7:21am Aug 27, 2014 7:21am
Quoting Hilar
{quote} Yes it is, you're maths are correct, but we're actually talking about risk in a martingale method. Maybe Magix should deposit $5 K instead of $500... After all, it's no different! Or do you think he is too emotionally attached to money to do this?
LOL I like your examples Hilar.

Someone definitely missed the woods for the trees.

10% risk = $10 in $100
10% risk = $100 in a $1000

An elementary kid could do that math.

Demo man martingled (whatever variation he used) and had a -71% drawdown. Pls dont chime in for the sake of chiming in dude. So out of your own league
  • #237
  • Aug 27, 2014 7:23am Aug 27, 2014 7:23am
Quoting Kuat
{quote} LOL I like your examples Hilar. Someone definitely missed the woods for the trees. 10% risk = $10 in $100 10% risk = $100 in a $1000 An elementary kid could do that math. Demo man martingled (whatever variation he used) and had a -71% drawdown. Pls dont chime in for the sake of chiming in dude. So out of your own league
lol It's like beating your head against the wall! But hey, we can only try!
H.D
  • #238
  • Aug 27, 2014 7:51am Aug 27, 2014 7:51am
Quoting VaBikePacker
{quote} I guess those that think this consider it smart to test on a $100K account then? Let's face it - testing on demo isn't the same as real money on the table, so, my opinion is totally in agreement with yours Chris - test on a live account with lower funds and smaller lot sizes. The % gain results will be the same and IMO it takes more discipline to trade under these conditions.
Absolutely. When "building and testing" a system, automated or not, martingale or not, it would be rather silly to invest 10k or a 100k to do the test with. LOL

By the same token, an accurate "final" test can only be done a on a live account really. DEMOS are fine and all but the same "real life" conditions just don't exist on them for a true forward test. But going live should ONLY be once enough "logic testing" is done on a demo first to see if the triggers are working the way they were designed. In the end, the system either works or it doesn't. The dollar figure beyond that point remains irrelevant IMHO.
Ghost Rider - WWTBMD?
  • #239
  • Aug 27, 2014 7:55am Aug 27, 2014 7:55am
LOL where in the world is there ever a thread or advise which states

PLEASE START TRADING WITH $100k of REAL MONEY?

What a bloody crazy statement ...

Guess someone is really smoking something strong.

There is a big difference between trading $100-$1000 dollar accounts and trading $100,000-$1,000,000 dollar accounts. ( Guess im stating the obvious in case someone has some learning disabilities too)

No bloody arse would start with $100,000 unless of course they have $100m and $100k is nothing.

Dam noob
  • #240
  • Aug 27, 2014 4:26pm Aug 27, 2014 4:26pm
Quoting Kuat
There is a big difference between trading $100-$1000 dollar accounts and trading $100,000-$1,000,000 dollar accounts.
The difference is only in your head....provided you hear more than a voice singing "I can see for miles and miles..." from within...

If it were a difference that were supposed to mean something, wouldn't it be designated by something other than zeroes? (...which mean NOTHING last time I checked??)

Whatever strategy you arrive at that makes you "successful" will require the same diligence in money management regardless of the account size.
"Holy Grail" exists - accepting where is the first step.
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