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Martingale EA. Almost can't lose!

  • #41
  • Apr 12, 2007 8:46pm Apr 12, 2007 8:46pm
Quoting tdion
Test placing two hedges side by side, as posted (in image).... as the first loses, the second triggers a buy and wins. This occurs as the first continues into drawing down in its trap. The idea is to always win one trap as another one loses... Set traps above and below each currently drawing down trap at all times...

More advanced: set traps (hedges) up every 10 pip interval to create a highly interwoven grid.... you KNOW drawdowns will occur, but several wins happen at the same time. In fact, a crazy trader with huge nads could set a trap at a 1 pip interval to cover every price action...... that'd be the optimal return but risk would move in tandem.

Burger?
Really good idea, thanks Tdion.
  • #42
  • Edited 9:34pm Apr 12, 2007 9:11pm | Edited 9:34pm
Would be better to have this automated within the EA.... than manually keeping tracking would be a nightmare. Coding would have to be rock solid (no glitches) or you could find yourself in trouble quick.

Quoting forig
Really good idea, thanks Tdion.
  • #43
  • Apr 12, 2007 11:55pm Apr 12, 2007 11:55pm
Quoting tdion
Test placing two hedges side by side, as posted (in image).... as the first loses, the second triggers a buy and wins. This occurs as the first continues into drawing down in its trap. The idea is to always win one trap as another one loses... Set traps above and below each currently drawing down trap at all times...

More advanced: set traps (hedges) up every 10 pip interval to create a highly interwoven grid.... you KNOW drawdowns will occur, but several wins happen at the same time. In fact, a crazy trader with huge nads could set a trap at a 1 pip interval to cover every price action...... that'd be the optimal return but risk would move in tandem.

Burger?
I could not understand this part..

btw.. should we create a new thread in the MetaTrader subforum instead?
This topic does not look like a "beginner" but more for the advance traders.

Martingale Hedge strategy works with pure Money Management in mind and Only novice beginners dont know what Money Management means and to know MM implies one is not a Beginner. So why continue discussing such topic on a beginner forum?
  • #44
  • Apr 13, 2007 12:50am Apr 13, 2007 12:50am
Merlin moved the thread here because he assumes Martingale is a foolish newbie thing to do...

As for the grid.... the idea is to have two traps working simultaneously.... Example) Assume TP is 20 and the trap is 10 wide.... once the price moves for you 10 pips long, open another trap short.... that way, if the price moves long another 10, you close the first trap..... -OR- if the price moves short 20, you close the second trap (and you will be forced to open a new hedge on the first trap)

Make sense?
  • #45
  • Edited 3:02am Apr 13, 2007 2:40am | Edited 3:02am
Quoting tdion
Merlin moved the thread here because he assumes Martingale is a foolish newbie thing to do...
Foolish maybe, but heck, even Kathy Lien of FXCM (http://www.forexfactory.com/showthread.php?t=11639) wrote an article about it.. Oh yeah I forgot, thats called self interest - ie, "hey traders, do Martingale with FXCM"

One has to realize that this Martingale strategy works only with:
1. 100% Money Management.
2. Broker allowing Hedging (you dont close loosing positions, they stay in the game until it all works out)
3. 50% Hedge Margin and very high leverage, and if possible broker without swaps (as you will see in one of the example shown).

Here are examples of the trades made:
http://img148.imageshack.us/img148/8227/7deepro7.gif


http://img148.imageshack.us/img148/1...nsatingkl9.gif
This one auto-compensate the lot sizes. I initially started it with a different parameter; after the next day, I entered a different setting and it recompute the number of lots in the sequence. Likewise, I even deleted/closed some of the positions to see if it will "self-compensate".. As shown it exited with +$20 profit. -$4800? WOW thats too much to stomach? Well, I made some mistakes in the initial setup so it had to wait a longer amount of time. When I recalibrated it (thus the compensation as I was saying), it immediately exited with +$20...


http://img219.imageshack.us/img219/6801/usdjpyqk6.gif
Late already in the day yesterday and i went in long USDJPY.


The reason why this strategy works is because, you choose a currency pair that is guaranteed to move at least 25 pips in your direction or 45 pips against your direction. GBPUSD has a Daily ATR of about 100 pips. Its guaranteed to win that $20 every day.. Heck I even managed to win 3 times in a single day because I restarted it at the peak and when it retraced, I earn again. The last example (USDJPY) shows just that.

Of course you might counter claim it needs a big hefty $50K account to make it work. 20 pips per $50K is pathetic profit.
Well, how many of those 95% looser traders out there that is throwing $50K every single month?
No Bank is giving you $20 in interest daily for your $50K anyways.

Quote
As for the grid.... the idea is to have two traps working simultaneously.... Example) Assume TP is 20 and the trap is 10 wide.... once the price moves for you 10 pips long, open another trap short.... that way, if the price moves long another 10, you close the first trap..... -OR- if the price moves short 20, you close the second trap (and you will be forced to open a new hedge on the first trap)

Make sense?



Now THAT is a looser strategy long tested by WTA group.

Sure you will make good profit if the market stays in range for very very long time. BUT once the market starts trending, then one set (long or short side) will 100% guarantee to wipe out the whole account. Its no longer called "Hedge Martingale" but rather "HELL".
  • #46
  • Edited 4:11am Apr 13, 2007 3:11am | Edited 4:11am
No! No! No!

Trending market is just dandy.... one trap wins, the other opens a reverse hedge at the same time..... now the reverse hedge only needs 20 more pips. I call it a grid but this really isn't a traditional "grid".... I only call it a grid because it covers infinite price space.

The worst case scenario for any trap is 35 pips on either side... at least the trap I outlined.... not sure what your range and TP are, but trending markets work better than sideways....... confused how sideways helps you here.

Quoting BurgerKing
Sure you will make good profit if the market stays in range for very very long time. BUT once the market starts trending, then one set (long or short side) will 100% guarantee to wipe out the whole account. Its no longer called "Hedge Martingale" but rather "HELL".
I notice that you are doubling your lot size on your GBP trades.... you don't have to do that you know.... if you check my numbers in the original idea, it is less risky with lower lot sizes.
  • #47
  • Edited 8:03am Apr 13, 2007 5:04am | Edited 8:03am
Quoting tdion
I notice that you are doubling your lot size on your GBP trades.... you don't have to do that you know.... if you check my numbers in the original idea, it is less risky with lower lot sizes.
Its doubling/trippling because THAT IS what the math told it to do. I did not plug the lot sizes, the script count the lot sizes on its own. I have received several comments telling that my lot sequence is wrong. Well, those actual trades shown earlier and below dont lie. How I wish that the lots does not double or tripple. But that is the fact. Besides, the most I get was 7 positions before it wins (which means it touches the 20 pip gap 7 times). As you see below, the 0.6 lot cancelled out by the 0.3 lot leaving the original 0.1 lot to win $20.

In my martingale hedge script, I can easily lessen the "lot size" sequence by increasing the "BreakEven" number. If the BE number is zero, the lot size is as shown on my above snapshots. If the BE number is as big as TakeProfit, then it will be reduced significantly, but the running duration is lengthen considerably too and may be even a risk as wider range = less chance to win in the immediate term.

Again, my math modeling is true.. I just won another $20 as shown below. I sure hope someone could come up with concrete numbers to show how it is done. The trade below is based on TakeProfit = 20, BreakEven=0, HedgeGap=20.. You might wonder why the gap is only 16 instead of 20; the spread is taken into consideration (20 - 4 = 16).

Likewise, if you lessen the TakeProfit to just 10, and the HedgeGap to 15, then it will lessen the lot sizes as well. BUT remember, 15 pips Gap is too small, it can fluctuate many times in this small channel causing more lots used in the long run.
Attached Image (click to enlarge)
Click to Enlarge Name: Friday13th.jpg Size: 23 KB
  • #48
  • Apr 13, 2007 1:00pm Apr 13, 2007 1:00pm
With all due respect, doubling and tripling is effectively old-school Martingale. High risk, low return. My lot sizing keeps the drawdowns lower....

Also, I want to clear up some confusion. In my previous example, I talked about setting up two traps side by side. Because you set the trap 10 pips into profit, you are GUARANTEED a winner at the next hedge reversal, whether it goes 10 more pips or reverses back 30 (because the new hedge opens short, while the original is long.) This will probably take some time to wrap your mind around, but the idea is to guarantee a winning trade instead of "hanging around" drawdown as price oscilates the original trap. This is called "keeping all irons in the fire at once."

Thanks.
  • #49
  • Apr 13, 2007 3:02pm Apr 13, 2007 3:02pm
You said to go LONG with 20 pips TP.
Once price went up 10 pips, open a SHORT 20 pips TP.

Sounds nice. Got that covered! So put a SHORT everytime price went up 10 pips!

Long @ 1.9800
Short @ 1.9810
Short @ 1.9820
.
.
.
Short @ 1.9880
Current price 1.9863
Total P/L:
Long 1 lot @ 1.9800 +63 pips
Short 1 Lot @ 1.9810 -53 pips
Short 1 Lot @ 1.9820 -43 pips
Short 1 Lot @ 1.9830 -33 pips
Short 1 Lot @ 1.9840 -23 pips
Short 1 Lot @ 1.9850 -13 pips
Short 1 Lot @ 1.9860 -3 pips
Short 1 Lot @ 1.9870 +7pips
Short 1 Lot @ 1.9880 +17pips

IS THIS what you want? GEEZ! I thought After Easter was resurrection. This strategy has long been tested as I said by WTA group and everyone LOST!!!! Hell even FreedomRocks taught people to trade this way and frankly as I like to said, this is all crap!

How about Price go DOWN from where you start so, what if:
You go LONG with 20 pips TP.
Price WENT DOWN 10 pips. What do you have next? Short or Long waiting here?

Long @ 1.9800
Short or Long @ 1.9790?


Once you explained this one, I can easily tell you how I think of this system.


Quote
With all due respect, doubling and tripling is effectively old-school Martingale. High risk, low return. My lot sizing keeps the drawdowns lower....
And again old school as it may seem, no one can bend the MATH models, nor disproves the actual trades shown.

Lessen drawdown? I wonder how can that be? Honestly, counter a loosing 1 Lot position with um a 1.1 Lot? This will take you about 100~200 pips going the other way to win depending on the GAP betwen the hedge.

Again I rest my case on math models and actual trades shown. Those numbers do not lie; tested on paper, tested on actual trades. I did not invest those numbers. Ever wonder why its called OLD SCHOOL? Perhaps its because it really is?
  • #50
  • Apr 14, 2007 4:07pm Apr 14, 2007 4:07pm
This is a visual:
http://img108.imageshack.us/img108/8623/hedgecj3.gif

The above is made with TakeProfit = 20, HedgeGap = 20 and BreakEven = 0.

The BreakEven was intentionally to decrease the Lottage. However, I find that BreakEven is a curse. It lengthens the duration of the trades so much so that I eventually end up with more lots than necessary.

Be noted that TakeProfit and HedgeGap should be in multiples of each other. BUT If your broker allows 0.01 lots, then you can trade with multiples of 10 assuming you trade 0.1 lot initially. Dont make the HedgeGap small. 20 is an optimal size for GBPUSD.

A wider HedgeGap will increase the lot sizes.
A smaller TakeProfit will increase the Lot sizes too.
So tweak your trades accordingly.

I suggest you to take a position a few minutes after your broker awards swaps. But if your broker dont charge you swaps nor commission, you can take positions anytime of the day nonstop...

Margin is your primary concern; as long as you have the margin to keep going, you will win. This is why I only trade 0.1 lot per 50K 100:1 leverage. But if you have a 400:1 leverage, you can trade with just 10K earning 20~60 daily. Again the profit isnt much but sure beats putting the money in the bank.

Second concern is Swap and Commission. Dont trade if your account is charged commission. and dont open new positions after 12nn EST to avoid swaps.
  • #51
  • Apr 14, 2007 5:36pm Apr 14, 2007 5:36pm
I want to commend Burger for his pursuit of this idea.

I DO NOT retract my statement about running multiple hedges side by side as a way to generate more profit with the same risk.

Also.....

I have found a day in the GBP/USD where a 20 pip gap could cause a margin call. I am leaning more toward a 32 TP 30 gap hedge on the EURUSD (reason: smaller spreads) Also, at this time I think swaps are so inconsequential that it shouldn't matter. I could stand corrected.

Looking forward to more discussion on this topic. Has anyone considered running a grid side by side with this hedge? While one loses, the other wins....
  • #52
  • Apr 14, 2007 6:47pm Apr 14, 2007 6:47pm
Quoting tdion
I have found a day in the GBP/USD where a 20 pip gap could cause a margin call. I am leaning more toward a 32 TP 30 gap hedge on the EURUSD (reason: smaller spreads) Also, at this time I think swaps are so inconsequential that it shouldn't matter. I could stand corrected.
Of course there is a day when it consolidate within a 20 pip range.. we just dont remember when it occured do we?. Based on my math, a margin call could occur ONLY when you have more than 12 positions. So pick a day when it touches 6 times on either side. Martingale Hedging is not for the Novice. It is for the elite with good Money Management to avoid getting Margin Call. The point of Martingale Hedging is to choose a pair that moves 20+Spread in your direction and 40+spread against your direction. GBPUSD is guaranteed to do this for a day. Very Small profits for a large account and you are guaranteed win.

Swaps DO matter as shown in one of my trades here:
http://www.forexfactory.com/showpost...2&postcount=45
GBPUSD should give the least swaps as both have same rates. YET those trades got screwed because after one day, the swaps overtook the 20 pip profit. I specifically took those trades just to show how SWAP can ruin this kind of trading. Of course it would be a bonus if I was trading USDJPY or GBPJPY and my long lots outweights the shorts to get swap positive.. Then again no one can predict the price volatility and could not predict if one would end up with more long lots than shorts a few seconds before 5PM EST. So instead of playing with luck, I'd rather go the safe route and trade with a swap free broker.

As for your other GRID system, i will study it carefully and see if there are any problem to it. I prefer a system that can get all positions closed before they get too complicted (like WTA's).

I personally dont do this Martingale system on a large scale because I use another higher paying Hedging system with my Pooled Hedge Fund where only investors get to see the system.
  • #53
  • Apr 14, 2007 6:59pm Apr 14, 2007 6:59pm
Good old Burger.... always sticking that jab in there.

"We don't remember when it occured, do we?"

If it is a matter of credibility, I will be happy to look it up on my chart when I get home and post it.

Oh.... and one other thing..... you claim you can handle 12 touches. By my math, that would put you at 2730 contracts.....

Touches/back contracts
1 1
2 2
3 4
4 8
5 16
6 32
7 64
8 128
9 256
10 512
11 1024
12 2048

The end result would be 2048 + 512 + 128 + 32 + 8 + 2 = 2730

Now 2730 x 20 pips (the gap.... or should I say 24 after the spread?) @ 1$/pip puts you at a $54,600 drawdown.

Want to argue that?
  • #54
  • Apr 14, 2007 8:57pm Apr 14, 2007 8:57pm
Right now I'm currently working an strategy that uses a grid system with a Lot scaling hedge. The point of the hedge in this is just to BE while the grid produces the pips. So it doesn't have to be doubled or tripled. In fact in prelim testing you really should only have to add one lot on each side to BE or better at a 20 pip move. Will post more as I get it.
  • #55
  • May 6, 2007 4:41pm May 6, 2007 4:41pm
im kinda confused...
  • #56
  • May 29, 2007 1:06am May 29, 2007 1:06am
Quoting ansh
im kinda confused...
welcome to the club

the system works in mysterious way. as far i ever read, it is crucial to determine the bottom of the martingale & grid .......
  • #57
  • May 29, 2007 2:39am May 29, 2007 2:39am
hi guys, i've developed the EA based on martingale + grid system 2 weeks ago and already forward test it for a week +

the calculation for lot increment is a bit different which i will do it an excell file and post it tonite

anyway here's the result running in on mini accoutn starting fdrom micro lot...

bare in mind this is forward test result..and it almost a disaster during tight range market last week
Attached File(s)
File Type: zip Statement.zip   5 KB | 2,126 downloads
  • #58
  • May 29, 2007 10:02am May 29, 2007 10:02am
When I download an attachment - why can I not view it? All I get is a white page with a coupld of black lines on it. I can close the page on the lower left.
  • #59
  • May 29, 2007 10:37pm May 29, 2007 10:37pm
no problem om the attacehment....

here is the sequence of the system (see attached file)

andhere how i coded the EA... the idea behind it

http://forexfactory.com/showthread.php?t=29515
Attached File(s)
File Type: zip sequence.zip   3 KB | 2,437 downloads
  • #60
  • Jun 1, 2007 2:44pm Jun 1, 2007 2:44pm
Apparently nobody thought anything about this? I think it has potential, personally.

Quoting tdion
The secret in the sauce is the hedge.... which absolutely manages risk.... that you never close any contracts..... thus ALL contracts opened in the winning direction will gain 20 pips.

In this chart, the eventual winning trade is Long 18..... notice I did not double on the losers (1, 2, 4, 8...) instead the hedge allows for (1, 2, 3, 5, 7, 12....)

The winning trade will have a total of 29 contracts that make 20 pips (580 pips) and a total loss of 570 (19 x 30 pips). Net gain: 10 pips.

Wrap your mind around this one... it's the most conservative martigale possible.

As the price ranges between 20 pips on either side of the range, the negative equity of losing contracts is offset by the opposite hedge. The drawdown is very well contained. The worst drawdown possible in this graph is (-10 x 29) = -290, occuring if the price reversed 10 pips from the final entry. This trap might have potential. What do you guys think?
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