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Success with Martingale & Hedge - Possible?

  • #341
  • Nov 22, 2018 10:06am Nov 22, 2018 10:06am
Quoting KashifNawaz
Hundreds of threads on the same topic, thousands of posts and millions of discussions here on FF and lot of experts had already proved many times that Martingale, Grid and Hedge systems will never work in the long run unless one has huge capital in his bank. But still, there are many traders (maybe day-dreamers ) who believe that these systems can work in reality even with low capital and proper Money Management. Possible? Well, I am one of those day-dreamers who believe this is possible despite already lost so much money in this. We all...
Dear mr K,
Thank you to bringup this topic.
I am not reading the thread, because it is not a collective thinking and changing of idee's.
I am a hobby coder on MT4. (used to be a professional) But the only money i make is option spread with IB.
Believe me i wrote 100's EA's.
About Martingale and grid trading i think that must be the only way to make money with a EA.
I followed (and think i understood) your thinking and there is a lot of sence.
Allow me some contributions.
Let's say an EA will at the long run Collapse (say you play with 5000). But if you managed to take 15000 out of it, thats just fine?
Before thinking of a system i like to know as mutch as possible of the pair or equity. Can also be ES or Gold.
What is the highest point and lowest point ever. What is realy the best pair to trade?
And there is the fundamental considerations. Trading te BGP during the Brexit? The USD during Trump?
A lot is said about backtesting. I use to make may idee's visable by analising historical data.
I can test and count historical assumptions so i have a better change in the future. Say there is a low o and a high of 100.
When is start selling at 85 the grid room is only 15. Lets make it a bit higher say 25.
I know thats not garanted, but statistical it means something.
Anyway you motivated me to start some testing (hobbying, and i am open for suggestions. Oh and sorry English is not my first language.
  • #342
  • Nov 22, 2018 10:48am Nov 22, 2018 10:48am
[quote=pcorneli;11725496]{quote} Dear mr K, Thank you to bringup this topic. I am not reading the thread, because it is not a collective thinking and changing of idee's. I am a hobby coder on MT4. (used to be a professional) But the only money i make is option spread with IB. Believe me i wrote 100's EA's. About Martingale and grid trading i think that must be the only way to make money with a EA. I followed (and think i understood) your thinking and there is a lot of sence. Allow me some contributions. Let's say an EA will at the long run Collapse (say you play with 5000). But if you managed to take 15000 out of it, thats just fine? Before thinking of a system i like to know as mutch as possible of the pair or equity. Can also be ES or Gold. What is the highest point and lowest point ever. What is realy the best pair to trade? And there is the fundamental considerations. Trading te BGP during the Brexit? The USD during Trump? A lot is said about backtesting. I use to make may idee's visable by analising historical data. I can test and count historical assumptions so i have a better change in the future. Say there is a low o and a high of 100. When is start selling at 85 the grid room is only 15. Lets make it a bit higher say 25. I know thats not garanted, but statistical it means something. Anyway you motivated me to start some testing (hobbying, and i am open for suggestions. Oh and sorry English is not my first language.[/PCorneli


Hi @PCorneli
The big problems of a grid system is the DD.
Possible solution idea:
What about locking the DD with a hedge while price is against us?
Obviously when price is retracing you will need to unlock whatever was locked before.

What do you think?
Please, we need coders to work with
  • #343
  • Nov 22, 2018 11:43am Nov 22, 2018 11:43am
Thanks Corneli for your interest. I agree with you Merka , that if martingale will open many layers then only the dormant engine wakes up with locking up the profit and open the hedging positions until we are bailed out.
for example: if martin i.e Engine 1 opens 15 layers of buy trades and our margin is in danger due to accumulation of all trades multiplication,then engine 2 i.e hedge will opens the new hedge trades of sell as same lots as of martin EA opens,for example if martin opens next layer 16th with lot size of 0.87buy ,Engine 2 will open the 0.87 sell,this engine doesn't need multiplier etc,because it is just opening opposite trades of engine 1.This way we are managing the risk until martin closes all the martin trades with profit and hedge trades will close with lose or if we can manually close or keep a system that closes the hedge trades when martin starts getting into profit zone by X pips,so atleast we can still have some locked profit.

I apologize if my abstract thinking makes any sense or not.

we can add the limits for max martin trades,margin limit and news filter as well.
  • #344
  • Nov 22, 2018 12:36pm Nov 22, 2018 12:36pm
My idea is this
Let assume we are in a sell grid and grid spacing is 30 pips

0) Sell0
1) Buy0 to hedge the DD of sell0 after 15pips (this distance is for example half of grid spacing)
2) Sell1 (after 30 pips from level0)
3) Buy1 (after 15pips from sell1)
4) Sell2 (after 30pips from Sell1)
5) Buy2 (after 15 pips from Sell2)

etc....

Soon or later the price will retrace and during that you unlock the buys at the same price where opened before.
In this ways the buys are closed at zero profit/loss and sells are unlocked during the retracement.
You close the basket when reached the required net profit.

Mainly going up you lock the DD and unlock while retracing back.
So in this way you avoid the exponential grow of the DD with classic grid systems
  • #345
  • Nov 22, 2018 1:38pm Nov 22, 2018 1:38pm
Hi Guys,

Some remarks on the last posts.

From the moment you start locking, which freezes the DD, you need a moment to unlock.
On what is that moment based ? We unlock and the price goes again x pips in the wrong direction, we go lock again with a higher DD?
If we would know where to unlock, why start trading at all and just wait for that moment and just do one trade.

If you start at a certain moment with couple trades (buy and sell) with same volume or a little shifted, these couple trades do not increase the DD.
But the single trades still take care for more DD.
But this also means the price has to retrace a firm amount of pips.
First for resolving all couple trades and then even more for bringing all "single" trades in profit as a total.


BR
It is not important how often you fall down, but how often you get up again
  • #346
  • Nov 22, 2018 2:07pm Nov 22, 2018 2:07pm
Quoting emonts
Hi Guys, Some remarks on the last posts. From the moment you start locking, which freezes the DD, you need a moment to unlock. On what is that moment based ? We unlock and the price goes again x pips in the wrong direction, we go lock again with a higher DD? If we would know where to unlock, why start trading at all and just wait for that moment and just do one trade. If you start at a certain moment with couple trades (buy and sell) with same volume or a little shifted, these couple trades do not increase the DD. But the single trades still take...
Let me clarify
I trade manually and use grid as recovery to avoid losses.
So, when entering the market I have a bias.
Now the grid side.
Normal grid to have some profit you need price to retrace. Correct?
Even with my system I need price to retrace. No difference here.

Normal grid DD just increase exponentially more level you reach.
Here the DD still increase but linearly.

Where to unlock... I said it before
You unlock all buys at the same price level where opened before so the net result is zero apart slippage (but this you will have with any order).
What about if you unlock a buy and after price rice again? Well you lock the sell at the next level available above.
etc....

Obviously there is a downside even in this method.
Can you figure out?
  • #347
  • Edited 3:09pm Nov 22, 2018 2:58pm | Edited 3:09pm
Quoting Merka
{quote} Let me clarify I trade manually and use grid as recovery to avoid losses. So, when entering the market I have a bias. Now the grid side. Normal grid to have some profit you need price to retrace. Correct? Even with my system I need price to retrace. No difference here. Normal grid DD just increase exponentially more level you reach. Here the DD still increase but linearly. Where to unlock... I said it before You unlock all buys at the same price level where opened before so the net result is zero apart slippage (but this you will have with...
YEP,

Learned something.

BR
It is not important how often you fall down, but how often you get up again
  • #348
  • Edited 5:42pm Nov 22, 2018 5:32pm | Edited 5:42pm
" About Martingale and grid trading i think that must be the only way to make money with a EA" Bingo, people who said, about it will blow up in Trend??
Where is the f* trend??? EURUSD last year Nov Price 1.15 Today around same area 1.14.. And highest was 1000 pips higher,
With plenty retrace, you could Scalp all the Money all day long entire year with Grid and Light Martingale, you just need to
make right settings with spacing and Martingale Multiplier... Besides there is a pairs which are HIGHLY Central Bank Maintain
like CHFJPY, back and forth, - You can do NET Fishing on this all year around...
Strategy? You don't need to run for years... You need to quickly double and withdraw and rinse and repeat..
If you can double small account 8 times out of 10 and lose/blow couple of times in the short run, that's fine...
  • #349
  • Nov 22, 2018 5:46pm Nov 22, 2018 5:46pm
Thanks for the reactions.
I shortly learned of Cointegration. It used in Spread trading. It means if you compare prices of Cocacola and HD there will be a Max difference over time. This repeats.
I made a little program to test this on some equity's. Dax versus Gold. And also EURUSD and AUDNZD. The latest looks promessing.
The quotes are close so one can sell and buy 1 to 1. The max over several years turns out to be 0.1. There is also some volatility.
I sold EU and bought AN. Commission was 14. And within 15 minutes the value of this spread went from -30 to +12.
Now i am sleepy, but tomorrow i gone try this out. No need for Headging the spreads are important.
A kind of out of the box. Led's keep thinking.
  • #350
  • Nov 22, 2018 7:44pm Nov 22, 2018 7:44pm
Please take a look at what I am doing with my own martingale: https://www.myfxbook.com/en/members/...ingale/2412743

You will see some huge draw-downs but I have done something to seriously reduce that.

I am making a free video on the martingale system in general but I think that is for newbies and not for most folks here, who already are very knowledgeable about the martingale system
  • #351
  • Nov 23, 2018 1:22am Nov 23, 2018 1:22am
Quoting Dafiri
Please take a look at what I am doing with my own martingale: https://www.myfxbook.com/en/members/...ingale/2412743 You will see some huge draw-downs but I have done something to seriously reduce that. I am making a free video on the martingale system in general but I think that is for newbies and not for most folks here, who already are very knowledgeable about the martingale system
The 30% DD was before or after you introduced your changes?
That amount of DD is too risky.
For me if DD less than 20% max can be considered acceptable risk
  • #352
  • Nov 23, 2018 1:35am Nov 23, 2018 1:35am
Hi alls
Kashif Regarding « part of the solution is to grow the equity. Example equity departure 1000 and equity target = equity departure + X$ or %”
In fact when you want to put a take profit you can use :
A take profit in pips
Or a take profit in money.

With common martingale system, traders used take profit in pips.

With the strategy I posted, strategy needs a take profit in money. It is due to the evolution of, first the equity and seconds the balance.
For example :
First trade is a Buy trade. At the open of the trade, I want win 5$. So if my equity departure is 1000 $, my equity target is 1005 $.
The global strategy is in action until the equity reaches 1005$.

So 1 Buy trade is open with 0.01 lot.
If equity arrive to 1005 $ or above, trade is closed. (You can if you want have a trailing , or break even system for a more complex EA)

If your 1005 $ equity is not touched, the hedge system enter in action like you can see in my precedent post. At this moment, until the equity reached 1005$, the system is in action.
So after 1 X 0.01 buy position, I hedge with 1 X 0.01 sell position. When I close the 1 X 0.01 sell position, I can closed this trade flat, with loss or with gain. As you can see at the same time I close the sell position , I open a new buy position. Result = 2 buy position are open. The first buy at 0.01 lot and the second at 0.01 lot or more (if you want apply a martingale more aggressive). If we choose always 0.01 lot we have at this moment 2 X 0.01 lot buy position open. Ect ect
Important to used a target equity in money is, due how (in the precedent demonstration) the sell trade is closed. Because there is in impact on your equity and your balance.
May be equity and balance are less then 1000 $ (initial equity.
May be equity are less and balance growth.

With the system I present, If you have a trend in your disfavor without retracement, you minimize your risk, because your position is in hedge. An when you close (in this case) the sell position after a big trend, you win money in your balance and you minimize the number of martingale position.

One problem is big ranging. But on my paper trading, it’s actually the better solution I find.

T4Trade, In fact the problem with the strategy I present is according the time frame, the indicator, the target equity and the initial lot position. On paper trading, interesting result with volatile pairs like EUR AUD or EUR NZD. Alls pairs with a big ADR. But paper trading is a very long challenge.
  • #353
  • Nov 23, 2018 3:15am Nov 23, 2018 3:15am
Quoting lenanard
Hi alls Kashif Regarding « part of the solution is to grow the equity. Example equity departure 1000 and equity target = equity departure + X$ or %” In fact when you want to put a take profit you can use : A take profit in pips Or a take profit in money. With common martingale system, traders used take profit in pips. With the strategy I posted, strategy needs a take profit in money. It is due to the evolution of, first the equity and seconds the balance. For example : First trade is a Buy trade. At the open of the trade, I want win 5$. So if my...
As you are closing the sells (are the hedge trades) yes you make some money while price is against you but the DD from buys is still exponential increment and if you get a big trend against you, for example 600 pips, you blow the account as in all normal grid systems.

I was doing exactly your idea in a manual grid but problem was DD that can easily reach 500$ or more
  • #354
  • Nov 23, 2018 6:03am Nov 23, 2018 6:03am
Quoting Merka
{quote} The 30% DD was before or after you introduced your changes? That amount of DD is too risky. For me if DD less than 20% max can be considered acceptable risk
It was after I made the changes.As a matter of fact, I have another account I am running the new modifications on and the DD has failed to hit the 10% mark so far. I expect it not to ever get to 16%.
  • #355
  • Nov 23, 2018 7:45am Nov 23, 2018 7:45am
Quoting pcorneli
{quote} Believe me i wrote 100's EA's. About Martingale and grid trading i think that must be the only way to make money with a EA. I followed (and think i understood) your thinking and there is a lot of sence.
Yes, I am also strong believer of Grid System after Manual trading (which can be done by baby sitting). You must be aware that Martingale, Anti-Martingale, Hedge (all these Stop-less strategies) are ingredients of a successful grid system.

Quoting pcorneli
{quote} Let's say an EA will at the long run Collapse (say you play with 5000). But if you managed to take 15000 out of it, thats just fine?
Yes, I do agree. With 5000$ deposit, I am okay with my martingale EA if it makes 3000$-4000$ per month and Margin Call hits twice in a year. But threat is, what if MC hits the very first month (which happened with me twice due to bad MM and bad setting)

Quoting pcorneli
{quote} Say there is a low o and a high of 100. When is start selling at 85 the grid room is only 15. Lets make it a bit higher say 25. I know thats not garanted, but statistical it means something.
can you please clarify in detail? You mean the highest and lowest price of a pair in last few years?
.................
  • #356
  • Nov 23, 2018 7:51am Nov 23, 2018 7:51am
Quoting T4Trade
Thanks Corneli for your interest. I agree with you Merka , that if martingale will open many layers then only the dormant engine wakes up with locking up the profit and open the hedging positions until we are bailed out. for example: if martin i.e Engine 1 opens 15 layers of buy trades and our margin is in danger due to accumulation of all trades multiplication,then engine 2 i.e hedge will opens the new hedge trades of sell as same lots as of martin EA opens,for example if martin opens next layer 16th with lot size of 0.87buy ,Engine 2 will open...

Current version of GWF is based on same idea. At your chosen given level, it start hedging, thats not an issue. Problem is, we want to hedge at later stages when martingale cycle is already dangerous and using higher volume lots, so off course, hedge trades will be equal to that. So if hedge trade will hit SL, it will not be minor losses but big one, maybe it will take away your profit of few weeks... but still better from margin call. In spikes and big volatility, hedging is fine but when price keep moving to one direction in stair way and slowly slowly, its kills hedging and also account
.................
  • #357
  • Nov 23, 2018 7:54am Nov 23, 2018 7:54am
Quoting Merka
My idea is this Let assume we are in a sell grid and grid spacing is 30 pips 0) Sell0 1) Buy0 to hedge the DD of sell0 after 15pips (this distance is for example half of grid spacing) 2) Sell1 (after 30 pips from level0) 3) Buy1 (after 15pips from sell1) 4) Sell2 (after 30pips from Sell1) 5) Buy2 (after 15 pips from Sell2) etc.... Soon or later the price will retrace and during that you unlock the buys at the same price where opened before. In this ways the buys are closed at zero profit/loss and sells are unlocked during the retracement. You close...
Idea is good but there is loop hole. (normally its there with every good idea )

Trend is up... Level gap is 15 pips
level 1:
Sell 0.01

level 2: (15 pips up)
Buy 0.01

Level 3: (15 pips up)
Sell 0.02

level 4:
Buy 0.02

level 5:
Sell 0.04

level 6:
Buy 0.04

What we will do with this Buy trade at level 6, if price start moving down and keep going down?
.................
  • #358
  • Nov 23, 2018 7:57am Nov 23, 2018 7:57am
Quoting emonts
Hi Guys, Some remarks on the last posts. From the moment you start locking, which freezes the DD, you need a moment to unlock. On what is that moment based ? We unlock and the price goes again x pips in the wrong direction, we go lock again with a higher DD? If we would know where to unlock, why start trading at all and just wait for that moment and just do one trade. If you start at a certain moment with couple trades (buy and sell) with same volume or a little shifted, these couple trades do not increase the DD. But the single trades still take...

Exactly,,, this is the mysterious question, when to lock and most difficult is, when to unlock..... SL & trailing is not the solution because they kill your account with mild (not sharp) knife.....
.................
  • #359
  • Nov 23, 2018 7:59am Nov 23, 2018 7:59am
Quoting Merka
{quote} You unlock all buys at the same price level where opened before so the net result is zero apart slippage (but this you will have with any order). What about if you unlock a buy and after price rice again? Well you lock the sell at the next level available above. etc.... Obviously there is a downside even in this method. Can you figure out?
Problem is the last buy trade, what if this is higher lot like 0.64 and price changed direction just after placing it.... question is, what to do with this trade. Should apply recovery zone here with hedge?
.................
  • #360
  • Nov 23, 2018 8:09am Nov 23, 2018 8:09am
Quoting zigler
people who said, about it will blow up in Trend?? Where is the f* trend??? EURUSD last year Nov Price 1.15 Today around same area 1.14.. And highest was 1000 pips higher,
Exactly.... if a martingale grid EA can survive upto 1000 pips move (spike or slow one direction) then we can really earn something from forex market.

Quoting zigler
. If you can double small account 8 times out of 10 and lose/blow couple of times in the short run, that's fine...
Yes,, thats what all we want....
.................
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