Do You Ever Double Down? | Forex Factory

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Do You Ever Double Down?

  • #1
  • First Post: Dec 9, 2006 6:52pm Dec 9, 2006 6:52pm
When a trade goes against you will you double your position to try to catch up? Or as a friend once said to me "Double up and catch up". The books I've read say that this is a bad practice, but some tests I've run say it may have positive results. Have any of you practiced doubling down and how were your results?

Steve
  • #2
  • Dec 9, 2006 7:35pm Dec 9, 2006 7:35pm
Quoting ForexASDF
When a trade goes against you will you double your position to try to catch up? Or as a friend once said to me "Double up and catch up". The books I've read say that this is a bad practice, but some tests I've run say it may have positive results. Have any of you practiced doubling down and how were your results?

Steve
Sounds like a quick way to blow your account.

If you are wrong then you are wrong. Forget it and move on.

Good money management will get you much farther in the long run.

What happens if you are wrong 5 times in a row?

1 Lot
2 Lots
4 Lots
8 Lots
16 Lots
Total combined lost 31 lots

If 1 lot is only 3% of your account then by the time you have made 5 bad trades you will have lost 93% of your account.
  • #3
  • Dec 9, 2006 8:21pm Dec 9, 2006 8:21pm
ForexASDF
I read in your other thread that your testing has not proved that "the trend is your friend". By that I take it your testing is inconclusive that following a trend will make you money.
Now you are saying your testing has proved positive results using a 'martingale' betting system.
I was wondering if you have considered that your testing methodology may be in need of an overhall.
In trading, there is no bullshit. You either make money or you don't.
  • #4
  • Dec 9, 2006 8:28pm Dec 9, 2006 8:28pm
I double down in blackjack depending on the cards. Does that count?
  • #5
  • Dec 9, 2006 10:38pm Dec 9, 2006 10:38pm
Quoting ForexASDF
When a trade goes against you will you double your position to try to catch up? Or as a friend once said to me "Double up and catch up". The books I've read say that this is a bad practice, but some tests I've run say it may have positive results. Have any of you practiced doubling down and how were your results?

Steve
HAHAHAHAHA, I think I see a pattern with your posts, you wacky contrarian you.
  • #6
  • Dec 10, 2006 9:59am Dec 10, 2006 9:59am
Quoting ForexASDF
When a trade goes against you will you double your position to try to catch up? Or as a friend once said to me "Double up and catch up". The books I've read say that this is a bad practice, but some tests I've run say it may have positive results. Have any of you practiced doubling down and how were your results?

Steve
I had mixed results in stocks. Just doubled down the other day in GBP/CHF and made 58 pips.
  • #7
  • Dec 10, 2006 10:12am Dec 10, 2006 10:12am
Thank you for your replies. In response I would like to say:

willf: I said "double down" not "quintuple down".

mrgreen: I am constantly "overhalling" my backtests. I don't know what a "martingale betting system" is, but I have seen some test results where doubling down produces winners. In some systems it does not. But just so you can throw more water on my testing systems I can tell you that I have never seen a system where stops significantly increased gains.

twinchell: Yes, that counts if you are playing blackjack in euros.

Far From Average: I'm glad you've been paying attention.

mrproper: Thank you. That's the anecdotal evidence I was looking for.

Steve
  • #8
  • Dec 10, 2006 11:37am Dec 10, 2006 11:37am
Quoting ForexASDF
mrgreen: I am constantly "overhalling" my backtests. I don't know what a "martingale betting system" is, but I have seen some test results where doubling down produces winners. In some systems it does not. But just so you can throw more water on my testing systems I can tell you that I have never seen a system where stops significantly increased gains.
A martingale betting system is what you are referring to: a scheme where if you incur a loss, you increase your next position value. It's an attempt to recover from a previous loss as though it never happened. Only people who have a really big ego and refuse to take a loss use this type of money management. Also refer to averaging down. Both cases you're just kidding yourself.

As far as stops not increasing gains in pips, this could be true. However, that is just one part of trading. The other major component is money management. You have to get it through your head that pips don't mean shit in forex. Getting a lot of pips is like driving a golf ball 300 yards - it looks pretty, but it not where the winners are made.

You see, you have no idea what your maximum loss could be without a stop; it could be several hundred pips. So, if you use a fixed fraction position size, you are gaining very little because of this large maximum loss potential. The smaller your maximum loss (stop) the more you can risk and stay within a given threshold. People on this forum need to start thinking about money management when they are developing systems, not after.
  • #9
  • Dec 10, 2006 2:01pm Dec 10, 2006 2:01pm
Quoting mrproper
I had mixed results in stocks.
That would actually be like dollar cost averaging, but I only do that when I invest, not trade.
  • #10
  • Dec 10, 2006 2:28pm Dec 10, 2006 2:28pm
Of course go into any casino and you'll find idiots who think they're one of a select few to have "discovered" the martingale system and eventually lose all their money but while martingdale isn't itself a good strategy scaling into a position can be. E.g. if you're confident that EUR/USD is going down then you could open one lot now and another lot if it goes up 50 pips and another if it goes up another 50 pips. You'd still need to have a point where you would say the market was going against you and you're closing your positions.
  • #11
  • Dec 10, 2006 7:11pm Dec 10, 2006 7:11pm
dont forget the spread ! 2.5x down
  • #12
  • Dec 10, 2006 9:15pm Dec 10, 2006 9:15pm
Conventional wisdom says you never add to a losing position. I add to losing positions all the time. I'm only marginally profitable though, there are definitely more knowledgeable people on here than me.

Here's some other conventional wisdom I don't subscribe to.

1. I trade outside of 2am-1030am EST.
2. I trade against the trend.
3. I cut my winners and I let my losses run. (to a point)
4. I trade short term.
5. I take lots of trades.
6. My stop loss is bigger than my profit target.
How you act is more important than how you feel.
  • #13
  • Last Post: Dec 10, 2006 9:59pm Dec 10, 2006 9:59pm
That last one is quite sensible. I'd say the main cause of failure among newbies is having a stop loss that is way too tight and trying to "get in on the trend" when it has already come to an end. "Experts" who don't actually trade come out with nonsense like your reward:risk ratio should be 3:1 but if you set that sort of stop loss then you probably have a less than 3-1 chance of profiting so you would lose in the long run
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