Is the martingale way the only way in Forex?

Greetings to all fellow traders,

First of all, i know all the disadvantages about martingale trading style and lots sizing and averaging tactics. And I am fully aware of the consequences of doing so in bad times like going against trends , or starting your buy or sell series at high or low peaks respectively,. However I believe that if you do it at the right time it would be somehow very profitable.

In my own opinion, and i repeat, MY OWN PERSONAL OPINION, I believe that there is no proven working trading system yet for retail Forex traders. Logically if there was one, the thread about that strategy will be the last thread ever in any Forex forums, like whats the point of proposing and searching for more trading systems if we had a HOLY GRAIL at hand? Unfortunately we do not have that yet, and most probably we wont have it ever. The proof for that argument is all of the dead threads here in FF and other Forex forums about strategies which worked at past times for certain periods, and were extremely popular at those times, but simply the time came where they stopped working. And most probably all of the currently trending and active trading systems threads and future ones will die out eventually. I am not saying this to piss any one off, but its simply what I think.

The reason for that is that we as retail traders have missing information and data about the markets. All technical indicators used by Forex traders are calculated based on historical data, that's it, such indicators do not give any insight what so ever about future outcomes. Retail traders however, decided that by combining such indicators together in a particular order, and following certain rules, they can predict future prices or directions. Well, it works half times, and doesn't work the other half. For example, some traders say that if the price hits the upper band in BB the price should retrace and go south, others say that if that happened it indicates a strong trend and continues north movement. By looking at charts both scenarios happened at that case, so there is no way of successfully predicting the future movement with a chance better than 50:50.

Prices moves based on ask/demand only. The ask/demand is affected by economic news, disasters, wars ... etc. But at the end, its all about ask/demand. We as retail traders do not have such information nor knowledge. Major banks and governments have them and they control them as per their own plans. Japan wants to dump the Yen value to increase exports, the government takes action by reducing asking prices, not the so called investors. A major bank wants good profits, it pumps the price of a certain currency or exotic at the right time and runs with the profits, well that's not us either. Unfortunately, the only way of profiting from that is to have an insider who provides us with such information before the actual event, not after it. So all of the analysis of why the market moved (past tense) there is useless, the event already took place, it's great to know why and how it happened. But unfortunately its useless information for traders, the thing already took place because pf so and so, get over it. However, you can find tons of those insiders and people who are in touch of them in the scam section LOL.

When it comes to martingale trading style, it's the only way in theory to have guaranteed profits. But the theory suggests that you should have enough capital to do so. The market makers are using this technique against us, aside from having the spread advantage, they are hedging our trades in hopes that we lose and they win eventually. That happens because for great risks traders undertake in their position sizing, poor money management and reckless averaging tactics. But if we do martingale correctly, we can change that.

These are my thoughts and opinions, and I would appreciate to hear yours.

Regards.

My answers are in italics.

Greetings to all fellow traders, First of all, i know all the disadvantages about martingale trading style and lots sizing and averaging tactics. And I am fully aware of the consequences of doing so in bad times like going against trends , or starting your buy or sell series at high or low peaks respectively,. However I believe that if you do it at the right time it would be somehow very profitable.

If you learn how to trade with the trend and how to trade reversals (aka buy low sell high), that is all the edge you need. You'll make money even with shitty money management.

In my own opinion, and i repeat, MY OWN PERSONAL OPINION, I believe that there is no proven working trading system yet for retail Forex traders. Logically if there was one, the thread about that strategy will be the last thread ever in any Forex forums, like whats the point of proposing and searching for more trading systems if we had a HOLY GRAIL at hand? Unfortunately we do not have that yet, and most probably we wont have it ever. The proof for that argument is all of the dead threads here in FF and other Forex forums about strategies which worked at past times for certain periods, and were extremely popular at those times, but simply the time came where they stopped working. And most probably all of the currently trending and active trading systems threads and future ones will die out eventually. I am not saying this to piss any one off, but its simply what I think.

There are working things here, but they are hard and you need a lot of practice to make it work. There never will be a fixed system, which works all the time. The working methods are subjective, so it is possible to fit it to the current environment. People on this forum look for a fixed system requiring almost no effort from them. That's why they keep running in circles on the forum.

The reason for that is that we as retail traders have missing information and data about the markets. All technical indicators used by Forex traders are calculated based on historical data, that's it, such indicators do not give any insight what so ever about future outcomes. Retail traders however, decided that by combining such indicators together in a particular order, and following certain rules, they can predict future prices or directions. Well, it works half times, and doesn't work the other half. For example, some traders say that if the price hits the upper band in BB the price should retrace and go south, others say that if that happened it indicates a strong trend and continues north movement. By looking at charts both scenarios happened at that case, so there is no way of successfully predicting the future movement with a chance better than 50:50.

You are correct, that professionals are in informational advantage to the retailers. Our luck is that they leave footrpints on the chart, so if you know what to look for, you can follow them and ride on their coattails. Price and volume contains every information you need.

Also there are a lot of situations, when your chances are not 50:50. As I mentioned, the trend and the reversals are not 50:50, one of the directions is >50, other is <50. Also trading is not that simple, because even if you trade low probability setups, if you have a high reward on your winners, you can come out positive, with more losses, than winners.

Prices moves based on ask/demand only. The ask/demand is affected by economic news, disasters, wars ... etc. But at the end, its all about ask/demand. We as retail traders do not have such information nor knowledge. Major banks and governments have them and they control them as per their own plans. Japan wants to dump the Yen value to increase exports, the government takes action by reducing asking prices, not the so called investors. A major bank wants good profits, it pumps the price of a certain currency or exotic at the right time and runs with the profits, well that's not us either. Unfortunately, the only way of profiting from that is to have an insider who provides us with such information before the actual event, not after it. So all of the analysis of why the market moved (past tense) there is useless, the event already took place, it's great to know why and how it happened. But unfortunately its useless information for traders, the thing already took place because pf so and so, get over it. However, you can find tons of those insiders and people who are in touch of them in the scam section LOL.

You are absolutely right, that the market moves on supply and demand. And retailers have that information available as well. As I said, price and volume contains every bit of this information.

The governments and national banks can't care less about the market. Commercial banks are doing the manipulation, but don't think of this as full blown manipulation, more like only shepherding the price around. Even the thinnest markets can't be constantly manipulated, let alone the currency market. It just doesn't worth it. There are speculative opportunites, when it worth to push price around. This is when you can make money. Other than these opportunities, there is simple non-speculative trading going on. If you enter in these periods, you'll get stuck in the trade, because the market keeps chopping.

Also regarding the insiders. Yes, there is inside trading, but they price in their information, when they move into the market. In other words, they are just as well visible on the charts. As I said, price and volume.

When it comes to martingale trading style, it's the only way in theory to have guaranteed profits. But the theory suggests that you should have enough capital to do so. The market makers are using this technique against us, aside from having the spread advantage, they are hedging our trades in hopes that we lose and they win eventually. That happens because for great risks traders undertake in their position sizing, poor money management and reckless averaging tactics. But if we do martingale correctly, we can change that. These are my thoughts and opinions, and I would appreciate to hear yours. Regards.

You can generate profits with martingale, but you are only delaying the inevitable. It won't make you any richer, only in theory.

How do you think a small minority of independent, non-institutional traders have been making their livings from it, some of them for decades, then?



What makes you think that either (a) what they're doing would be reduceable to a "forum thread", or (b) they'd have incentive or reason to submit one to be published in a forum?



The overwhelming majority of them never had an edge in the first place.

But that isn't "proof" of anything. It's just very highly selected anecdotal evidence that the people who post systems in forums aren't among that small minority (which is probably true, at least for the most part).



I think the words "any insight whatsoever" are an exaggeration.

What your sentiment above illustrates is the "prediction fallacy".

It's completely true that there isn't an indicator-based system (in a forum, or anywhere else) which can reliably predict the outcome of a specific trade. And the truth of that inference is blinding you to the reality that there are some indicator-based systems which can predict the collective, overall outcome of hundreds of trades reliably enough for them to be steadily profitable when traded by experts with appropriate position-sizing, market awareness and all the rest of it.



Some do, yes - and they're usually falling into the "prediction fallacy", too.

But none of that has anything to do with Martingales, at all.

Essentially, it's crazy to allow the size for a given position to be determined by the outcome of the previous trade.

Either the way you're trading has a positive expectancy, in which case you don't need a Martingale, or it doesn't, in which case you shouldn't be trading that way and no amount of Martingale position-sizing will make it safe to trader.

Martingale appeal only to people who don't really quite understand "expectancy" (though some of them think they do) and are simply rearranging the deckchairs on the Titanic. Still, that's undeniably a lot of people.

[quote=Darastonius/quote]

very true words!

And how do you know that ?

A martingale cannot turn a losing trader into a winning trader. But a martingale can turn a winning trader into a losing trader.

If you have a strategy that works without martingale, why risk it. If your strategy does not work without a martingale, then it will for sure not work with a martingale. You cannot beat math.

You may be right about "no proven system". Because what makes a system a winner is the trader himself. So, that´s why I´d call it a trading strategy rather than a system

There is a term that describes many losers in the market.

It's:

"martingale suckers".

Thank you all for your valued interactions, I do not know how to quote exact sentences said be fellow traders posts here ( I can quote entire posts, but that would be too much hehe), so I will respond as follows:
P.S. These are my personal opinions and I could be wrong, and I welcome all kinds of opinions

I do not mean to use martingale as to double position sizes in a losing streak till I reach break even or original target profit, that is useless and no capital in the world would be enough for such strategy no matter what wining percentage it has.

I said that all indicators do not give any indication about future events because they describe what happened in the past, and I still believe so. It is true that some indicators or strategies work best in different market conditions ( trending/ ranging ). It is easy to say that one should have done a trending strategy in a trending pair at a certain time, and a ranging strategy at a ranging pair at another certain time by simply looking at previous trends or ranging charts. Its like based on the strategy we should have bought at price X and TP at price Y and so on. But the main issue is that its already in the past, it's gone. That's why most of EA's or strategies back testing is deceivingly profitable, because they were tuned to certain conditions which happened in the past, and there no guarantee what so ever that such conditions would happen again in the future, and that's why all of them eventually fail at real time live trading.

Show me a strategy which is already profiting, and I will show you 100 strategies which were profitable in the past and were as popular as your proposed strategy back then, but eventually stopped working and now dumped. And the same fate most probably awaits current strategies.

I know that a thread for a Holy Grail doesn't and wont exist. And by Holy Grail I do not mean having 100% wining trades, but enough wining rate and risk:reward ratio to make it profitable indefinitely. I wont care for paid one's either, or paid training courses to be a profitable trader, simply because if those guys (aka scammers) had it, they wont even bother sophisticating them selves into selling it or teach it's secrets for any fixed price.

I know that some people are profitable in trading, but for how long can they survive doing so? Many reputable and famous hedge fund managers took catastrophic career ending losses, and many traders lose at the end. In my point of view, this happens because they and we as retail traders are missing something, and to be honest, I don't know what it is. That's why I started this discussion at the first place.

What I know is that brokers use their massive combined capital against us as individuals, that is a form of martingale. They keep betting against us by hedging our positions till we bust one by one, and they end up at profits at the end. Some profitable traders are there for some time, but they are nothing next to massive horde of losers. The house always wins, this concept also applies to casinos when betting against individual players.

The most important rule in any trade is to buy at low and sell at high to be profitable. The problem in Forex markets is defining the high and low, but me for example I can estimate it based on my own analysis. Of course I could be right or wrong, I will never know. For example I wait for a massive continuous trend for around 1000-1200 pips in JPY pairs, I place a buy limit of 0.01 Lot if the trend was downward and a sell limit if the trend was upwards, TP is 300 pips. This way i know that I am some how near the low or the high. Then i start adding 0.01 positions if the market goes against me every 100 pips and adjusting the TP level by 50 pips. If the trend continues against me for another 1000 pips ( 2000-2200 pips total continuous trend without reversal) I would have a total open positions of 0.1 and total loss of -500$ ( My account is 10k $). Eventually the price would retrace because who ever was pushing it wants to liquidate his positions to claim profits, and the price would be considered over/under priced depending on trend direction. That's the martingale which I am talking about, not some happy go lucky trader picking a position in random and then doubling it up every 10 pips or so to gain 1 $ at the end.

Your feedback is highly appreciated.

Regards

0.1 lots is one dollar per movement

At 2000 pips against you you have

2000 pips
1900 pips
1800 pips
1700 pips
1600 pips
1500 pips
1400 pips
1300 pips
1200 pips
1100 pips
1100 pips

I think that's 16500 pips. Which in your example somehow is 5% of your account. That means your initial trade size is 0.03? Which broker offers you trades that small? Your winning trade if it went with you would be 9 dollars. That's 0.09% on a good trade.

May be I'm way off base, but even then you are assuming that after the run against you it recovers to your profit point, which is only something like 200 pips lower than when you started?

The only way this makes any sense is if you are a billionaire that is trading forex because you are bored with your premier league football club.

martingale is good to maximize returns with the help of luck.

the same principle applies to no stop loss.

is it more unlikely to encounter 10 consecutive losses with a rr of 1:5 and a slight multiplier or 1 loss with a rr of 5:1 ?

it depends on the strategy... and luck.

take it easy.. nobody with a brain pretends to make any money in the long run with mg or no sl.. it's called fun trading.

This is a very uninformed and misleading post, my friend. "When it comes to martingale trading style, it's the only way in theory to have guaranteed profits" - LMAO

" I believe that there is no proven working trading system yet for retail Forex traders. Logically if there was one, the thread about that strategy will be the last thread ever in any Forex forums, like whats the point of proposing and searching for more trading systems if we had a HOLY GRAIL at hand? Unfortunately we do not have that yet, and most probably we wont have it ever. "

Wow, this is pure ignorance, man. People hop from system to system not necessarily because the system is not profitable, but because, they are either not patient enough to properly learn all the factors that make the system work and apply them accurately or they throw risk management out the window and a few inevitable losses wipe them out and then they blame the system. There are a lot of profitable systems on FF, but it's not about just the system, it's everything else.

Oh wait, do you think the so called Holy grail is not suppose to have any losses? LOL, Just LOL.

the only strategy that works for the succesful minority is patience, well money management/low risk,
run away for the next day if you see some early repeated loses, and in a day of success dont be greedy take your pre planned daily profit and go for the next day !!!!!
the majority is overtrading belevieng that its possible to become a millionaire overnight !!!
thats it from me !!!

I have this special picture on speed dial for every Martingale system I see on forums..



Read Nassim Taleb's "Black swan"

Thank you

@Darastonius, @Quickly, @BudSpencer, @Grabowski:
Good points IMO.

No offense, but like everybody else, your thoughts reflect your personal level of knowledge and experience.

Using info from trading forums like FF to gauge what is or isn't achievable is pretty meaningless. Hardly any professional traders (institutional and prop traders, fund managers, etc) post here.

Trading is about employing (1) proven strategies, (2) the experience needed to know how and when to apply different strategies, (3) proper measures to manage risk, and (4) consistent execution. Strategy is only one part of the whole equation.

No professional trader uses martingale. Martingale is gambling, not trading.

You are absolutely right, a proven way of trading should consist of more than just watching two lines crossing at the chart. I am not a fan of martingale, just discussing it in theory.

Martingale is immensely profitable, its really really difficult with spot FX but somewhat easier with exotic things like Binary Options..

Good Afternoon Thoughts

Can you give us an example trading binary options with martingale, thank you.

I'll explain in broad terms:

With Binaries come certain peculiarities: you bet with money, not lots (giving you great flexibility with risk management & 'position sizing') and the distance in profit is not relevant, just the direction within a given time (hence there's muuuuuch less work with regards to prediction for directions while maintaining a certain velocity for returns).

So, take a strategy, any strategy, try to get the win rate as close as possible to 50%, the greater the win rate, the better.

Take any Binary, the closer the risk reward to 1, the better.

Trade that Binary with your strategy and martingale when you lose; and there you go, with reasonable capitalization you're very profitable.

Thank you, I`ll take a look.

But isn't binary trading places you at a disadvantage in the long run? the best profit ratio is 90%. And it can go as low as 65% on some currencies and time frames. Even with a 50% win chance you become at a disadvantage since risk is always bigger than rewards. I haven't tried binary trading because I didn't like the math involved in it.