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FXTradepro: Strategy using a “Semi-Martingale” Position Sizing

  • #241
  • Sep 2, 2007 8:35am Sep 2, 2007 8:35am
Quoting AlexanderS
I hope you didnt get the idea of me trying to destroy your system publicly, i just want to understand such methods in general and therefore present my ideas that i try to make logicaly sound, i might even throw in some maths to to generalize my argument. If i will find your system strong i would be the first one to trade it, so far however i did not see any proof that it is as profitable as you claim. Obviously until such proofs are presented it is very hard to fight even light-weight critisism of your system.
Alexander......I have presented a Strategy that I trade profitably and have no need or desire to prove my success to anyone. I merely share a concept that has worked well for me and ask Traders to decide for themselves if this is something that they would like to try. Every Trader will have different results from any Trading method and this is no different. I feel that this method of Trading has given me the edge I need to remain successful. I do not trade it blindly, and I understand and accept the risks. Anyone Trading Forex should do the same regardless of the method used.

Dan
  • #242
  • Sep 2, 2007 10:18am Sep 2, 2007 10:18am
well said FXTradepro. I agree with you. there are always going to be those out there, no matter how you cut or slice it, who will not see or understand it.
  • #243
  • Sep 2, 2007 10:27am Sep 2, 2007 10:27am
Quoting criss73
well said FXTradepro. I agree with you. there are always going to be those out there, no matter how you cut or slice it, who will not see or understand it.

Thanks criss.........I appreciate your support.

Dan
  • #244
  • Sep 3, 2007 5:49am Sep 3, 2007 5:49am
Hi Mr FxTraderPro,

Is this EA ok to run on usd1000 mini account?

lot size?

thank you


ARIS
  • #245
  • Sep 3, 2007 6:26am Sep 3, 2007 6:26am
I just try this EA... set it to buy...

after hit stoploss it is making sell????
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  • #246
  • Sep 3, 2007 8:15am Sep 3, 2007 8:15am
Quoting 3013
I just try this EA... set it to buy...

after hit stoploss it is making sell????

This is correct. I suggest you study and read the entire thread. All you questions should be answered.

Dan
  • #247
  • Sep 3, 2007 11:23am Sep 3, 2007 11:23am
Hi Dan,
Thanks again for sharing. After working with the system for a few short days I have found one thing I would like to see added.
Personally, I would like to have an option to have the system stop once a certain MLOT number is reached. “Max MLOTs” defaulted to “24” if you like. If I had this option in the settings I would set it to 17. If trade of MLOT17 was not successful then I would want the EA to hibernate. I would manually control the trading of lots higher than this number once the market has stopped its ranging, large spreads or whatever has caused it to get to this point.
I understand that your EA is designed to go all the way to 24 but please consider this modification in your next release. From my view point, it would enhance and add more flexibility for the trader to adapt the EA to his/her style and trading preference.
Thanks,
StrangeGuy
  • #248
  • Sep 3, 2007 12:02pm Sep 3, 2007 12:02pm
Hi FXTradepro,

I come to know of your thread just a few hours ago from another forum and have just completed reading all the 17 pages of posts.

I will be downloading the EA and taking time to try out your strategy. From the presentation by you and your forward live tests , I want to thank you for sharing with all of us.

Rgds/Tks
Vincent
  • #249
  • Sep 3, 2007 12:46pm Sep 3, 2007 12:46pm
Quoting StrangeGuy
Hi Dan,
Thanks again for sharing. After working with the system for a few short days I have found one thing I would like to see added.
Personally, I would like to have an option to have the system stop once a certain MLOT number is reached. “Max MLOTs” defaulted to “24” if you like. If I had this option in the settings I would set it to 17. If trade of MLOT17 was not successful then I would want the EA to hibernate. I would manually control the trading of lots higher than this number once the market has stopped its ranging, large spreads or whatever has caused it to get to this point.
I understand that your EA is designed to go all the way to 24 but please consider this modification in your next release. From my view point, it would enhance and add more flexibility for the trader to adapt the EA to his/her style and trading preference.
Thanks,
StrangeGuy
StrangeGuy...........If you want the Sequence to stop at the 17th Level, just program a "0" for all the MLots after that in the EA External Parameters dialog box. You can also change the Lot Sizes in the Sequence if you like.

I hope this helps.....

Dan
  • #250
  • Sep 3, 2007 12:47pm Sep 3, 2007 12:47pm
Quoting goldcourse
Hi FXTradepro,

I come to know of your thread just a few hours ago from another forum and have just completed reading all the 17 pages of posts.

I will be downloading the EA and taking time to try out your strategy. From the presentation by you and your forward live tests , I want to thank you for sharing with all of us.

Rgds/Tks
Vincent

Thanks Vincent....You are very welcome.

Dan
  • #251
  • Sep 4, 2007 1:18am Sep 4, 2007 1:18am
Dan,

I am setting up a new demo account to test your strategy. Correct me if I am wrong....

I am using mini a/c of $3500.00 at 200:1 leverage, using 0.1 lot , trading 7 pairs.

Right or wrong?

Appreciate your answer.

Tks
Vincent
  • #252
  • Sep 4, 2007 4:01am Sep 4, 2007 4:01am
As an ex-martingale roulette 'junky' (Saw another guy in this thread aswell) I'm obviously attracted to this system. Now let me just chime in with a few of my thoughts from a roulette Martingale POV, havent read the whole thread yet.

- In roulette martingale there is 1 thing that will kill you long-term: The pesky little Zero on the wheel. What does this zero mean? The zero means Profit/Commission/Spread for the casino!
- In roulette martingale there is 1 thing that limits your survival chance: Each table has a min/max bet amount.

Now then how does this relate to forex?

- Spread is the biggest killer of all-time in forex (get a 100% spread rebate and I guess all traders on this forum would be rich). Therefor I would suggest to not use this system with pairs that have a lower ADR:spread ratio then 35. Only EURJPY seems suitable for this system, since it's spread is only 2 and the ADR is 150-250. (that is if you use 10pip SL and 40pip TP).
It would even better to trade Futures since then your spread is only 1pip. Do it on one of the indices futures; Dow up 100pnts = 400 price movements at .25pnts each and .25pnts spread => 400 ADR:Spread ratio. Now that's more like it (instead of ~40-50 for EurUSD spot forex).
- In forex you can wager an 'unlimited' amount so this greatly ups your survival chance. However;
Your semi-martingale system Improves in profit after each sequence, and this characteristic greatly reduces your survival chance.

There is another characteristic of Forex vs. Roulette that will give you an advantage;
For instance if you keep betting in 1 trend direction (like keep betting on Red in roulette) the next trade will have a Higher chance to succeed since trends are not sustained forever (people want to take profit or fresh buyers/sellers step in). In the contrary to Roulette in which your chance to succeed will remain a little less then 50%, for every single bet no matter the wheel gave 100% Black in the last 100spins.

So I like your concept but I'm looking to change 2 things so it suits my trading/martingale experience;
- Only bet in the direction of the trend & keep betting at it using like; 1/2ADR TP and 1/5ADR SL.
- Change the lot size increments so that it gives me the same profit for each Bet stage.
  • #253
  • Sep 4, 2007 7:11am Sep 4, 2007 7:11am
Quoting FrankS
- In roulette martingale there is 1 thing that will kill you long-term: The pesky little Zero on the wheel. What does this zero mean? The zero means Profit/Commission/Spread for the casino!
- In roulette martingale there is 1 thing that limits your survival chance: Each table has a min/max bet amount.
FrankS, the zeros on the Roulette wheel will kill you whether you employ a martingale betting strategy or not. If there is one zero on the wheel, the house edge against you is 1/37 = 2.70%; if there are two zeros, the house edge against you is 2/38 = 5.26%. This expectancy does not change, no matter what betting system is applied: flat bets, martingale, anti-martingale, whatever.

In mathematical terms, expectancy and MM operate completely independently of each other. The same necessarily applies to trading. You're correct in saying that costs (spread) have the same effect as the zero on the Roulette wheel, in that they make trading a negative expectancy game. Hence it's necessary to develop and implement a method of entries and exits that turns this expectancy around. Whatever betting (position sizing) is used is irrelevant, unless it can be shown that there is serial correlation between trades, i.e. that wins and losses are not distributed randomly.

I suspect that traders turn to the martingale (or systems that progressively increase bet size) because they find it difficult to stomach losses, hence they want to return to breakeven as quickly as possible. These systems may work for a while, but escalating bet size increases risk in the sense these systems are less able to sustain a sequence of losses than flat betting (i.e. consistent position sizing). For example, at 2% flat bet size, it will take 50 losses to blow out an account. However, if one starts at 2% and (for example) doubles bet size following each losing trade, then the losses are 2%, 4%, 8%, 16%, etc, i.e. a sequence of only 6 losses will cause blowout. Even if bet size is escalated less drastically, the number of losses will still be less than with flat bet size.

Starting bet size at (for example) 0.2% instead of 2% allows a larger number of losses, but it reduces win sizes by a factor of 10 in the same way as loss sizes are likewise reduced.

With trading, I see two functions of position sizing:

1. Keep position sizes small, to preserve capital as long as possible, allowing the account to survive a sequence of losses long enough for a positive expectancy method to ultimately prevail.

2. Keep position sizes as consistent as possible. Obviously one doesn't want to be in the situation where (for example) one trade where 10% capital was risked, that happens to result in a loss, undo all the gains made by 5 winning trades, where only 2% was risked.


I don't wish to seem a big-head know-it-all, but I believe that these mathematical truisms are self-evident, and apply in any activity whose outcomes involve uncertainty. I respectfully challenge anybody to choose any betting system they wish, and provide a mathematical proof as to how it can improve (or otherwise alter) expectancy.

David
  • #254
  • Sep 4, 2007 8:40am Sep 4, 2007 8:40am
Quoting AlexanderS
I hope you didnt get the idea of me trying to destroy your system publicly, i just want to understand such methods in general and therefore present my ideas that i try to make logicaly sound, i might even throw in some maths to to generalize my argument. If i will find your system strong i would be the first one to trade it, so far however i did not see any proof that it is as profitable as you claim. Obviously until such proofs are presented it is very hard to fight even light-weight critisism of your system.
Here's a thought...If you do not like the system...
DO NOT trade it and move on!
I am 9 for 9 as of this morning using this system.
Last night's trade was the EUR/USD and it went to level 6 before hitting the TP. Pocketed $130. Enough said.....
  • #255
  • Sep 4, 2007 10:17am Sep 4, 2007 10:17am
Quoting goldcourse
Dan,

I am setting up a new demo account to test your strategy. Correct me if I am wrong....

I am using mini a/c of $3500.00 at 200:1 leverage, using 0.1 lot , trading 7 pairs.

Right or wrong?

Appreciate your answer.

Tks
Vincent
Which Broker are you set-up with? The above does not sound 100% correct but let me know.

Dan
  • #256
  • Sep 4, 2007 11:19am Sep 4, 2007 11:19am
Quoting FXTradepro
Which Broker are you set-up with? The above does not sound 100% correct but let me know.

Dan
Dan,

Broker is Fastbrokers. Pip value is $1 for a 0.1lot.

Vincent
  • #257
  • Sep 4, 2007 11:33am Sep 4, 2007 11:33am
Quoting goldcourse
Dan,

Broker is Fastbrokers. Pip value is $1 for a 0.1lot.

Vincent

Vincent......Here is the TABLE for use with a Mini-Account 200:1 leverage. You will require MICRO Lots to trade the full Sequence on a Mini Account, meaning 0.01 = $0.10. I don't know if Fastbrokers permits this, but you should ask them. The last column on the Right tells you how much funds you need to Trade the Strategy as I have outlined in this Thread. For example, you will need $6,390. to Trade to the 24th Level and you Trade only 1 pair at a time with this amount of funds.

I hope you understand better now.

Good Trading!

Dan

http://aycu02.webshots.com/image/270...7190974_rs.jpg
  • #258
  • Sep 4, 2007 12:23pm Sep 4, 2007 12:23pm
Does anyone know the best way to protect against the drawdowns as one moves through the progressions. Perhaps there's a way to scalp from the ranging action with a high degree of direction certainty, or enter 10 pip TP going in the opposite direction...

Thanks,

Walt
  • #259
  • Sep 4, 2007 3:11pm Sep 4, 2007 3:11pm
Dan,

Great thread! thanks for all the time you have put in!

Do you have a percentage breakdown of each level that a target is hit.
For example; how many trades close at level 1, level 2 etc....

Thanks again.
  • #260
  • Sep 4, 2007 4:01pm Sep 4, 2007 4:01pm
Quoting JRSW
Dan,

Great thread! thanks for all the time you have put in!

Do you have a percentage breakdown of each level that a target is hit.
For example; how many trades close at level 1, level 2 etc....

Thanks again.
Hello JRSW........Welcome to the Thread! I am sorry but I have not calculated the percentages you ask for. Remember that the Entry Criteria used is very subjective so everyone will have different results. Having said that, MOST of my Sequences close before the 10th Entry but I have had many go longer and 1 that went as high as 20. When re-evaluating the ones that went to a high number of Entries I have learned that many times I should have waited to start my Sequence until more volatile conditions were present.

I hope this helps you.

Dan
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