Forex using casinos methods

Hi there guys, i already write a little bit of this at Tkimbles thread, but i will like to start a new thread, so there we go:
First of all is important to note that the casinos are the most dangerous bussines in the world, they are the biggest thief in the world, they will try to atract you with some fancy promotions or bonusses but at the end they will take all your money and maybe your house, your car and maybe your wife too, i been working with the forex market since monthas a go and im a gambler since almost a year, so i know how to deal with this casinos and i know how to win, but i strongly recomend that you dont even think on play with them at least after studing a lot and becoming professional, so after saying this lets focus in forex.
Is very imnpoortant that you know this bussines in forex is not designed to become millonaire in a couple of months, you have to be patience, if you make 10,20 or 30 % montly that is great, the real thing about this is the compound and of course the money management, remember this is the key.
I been using a very old mnethod in forex since almost a year, in the casino this system does not work because the table limits, but, since we have no limits in forex and since we have systems that gave us some god trades it is very useful and profitable at forex.
We have a lot of methods of progresions in some games, a lot, but in forex i been implementig the martingala.
This method consist in double your tyrade every time you get a loss.
The first thing is to find a system or a signaling service that give you exact entry points, the stop have to be clear and the target has to be mayor than the stop.
So lets say that you just suscribe to acompany for signals that is paid or free, does not matter, lets say that the company give you a signal every day at some specific time" you cant be all day long glued to your screen, that is the point of this bussines to enjoy your life", so lets say that you get a signal at 5 pm new york time for example but the same time every day, or just any system that you know.
Lets say that company is the worst company in the world or your system is the worst system.
Lets asume that you have a 50 pips stop loss and 75 or 100 pips target.
Lets imagine that you have usd 2000.
So, on monday you receive a bad signal, you lost 50 pips at 0.1 mino lots usd$50, then on tuesday you have another loss 50 pips at 0.2 mini usd$100, on wednesday you will get another bad signal of 50 pips at 0.4 mini usd$200, on thursday you will get another bad signal of 50 pips stop at 0.8 mini usd $400, so you already have usd$750 lost, then finally that piece of crap company that you suscribe give you a god signal on friday, you got a 75 pips profit at 1.6 lots usd $1200, so you take 750 out of 1200 and you will get a usd $450 for that week.
Lets supose that this is the basis of that company "1 good trade out of 5", that is very bad but we have to think in the worst scenary.
In 1 month or 4 weeeks you will get 20 signals and you only will get 4 good signals, but that will be enough to win at forex, imagine only the 20% will be enough, now what if you have a better system or better signaling company, i only think in the worst scenarios but it will be better than that.
Note: I f your signals give you 5 bad trades out of 5 in a week you must look for another company, and trust me that the worst company in this bussines will give you a least 1 god one in the week.
I remember whe i first start going to casinos i find one on my city and i was very curious because i found some kind of elder mafia, ther was a small group of very old people, about 80 years old average, and then i saw they make money every day, so i try to be close to them but they were so cautious about me, maybe because i was to young for them, but finally after some weeks a become friendly with them and i start some kind of young and elder clan to play, i remember very clear the first time i talk to them about forex and the technical aproach, they laugh on me, then i try again and then they laugh on me again, then one of them says this:
Son, you the young people try to impress the other people with all that technical stuff, in forex the macd, stochastics and all that crap, you think you look so interesting because you put a lot of indicators on your laptop and show it to your friends or your girl and then you think you are so intelligent, but let me tell you this, life is more esay than that, its all about logic, every thing in this live have an mathematic explanation, every thing even your soul, since the men is men we have an explanation for everything, we laugh on you because we see how you waste your time and your life fighting with every thing, just thing on the easy way and enjoy your life, that was what that old man told me and that was the mos accurate thing i ever heard.
I will recomend very strongly to be very moderate, use the money management, if your account is less than 2000 use micro lots 0.01.
There is some other methods, there is one if you prefer, that is the even money, this one use progresion but you do not double your trade you just increment it by unit, so it will be like this:
1 trade 0.1 lost, 2 trade 0.2 lost, 3 trade 0.3 and so on, it is very conservative, but i prefer the martingala for me because i have signaling provider that gives me a good signals almost 3 god ones out of 5.
So that is all i have to say.
1 use a good system or signaling provider, is easy if it will give you entrys at some especific time every day, thats what i do i only chek that for about 30 min a day at specific time and thats it until the next day.
2 Use money management.
3 Be patience.
4 Enjoy your life , if you like to travel take your laptopò with you and connect it at the specific time os the signaling, place your ordesr and then close it and go to some bar, casino, restaurant or something and have a good time.

Ok guys, if you have some comment or some thing to add please do it, lets try to keep this trhead alive, i know this will help a lot of traders, thats the intention. help others for free.

God bless you guys.

Hi, good post thanks...

Keep in mind though that even a system/signal that gives you
50% is still wrong 5 days in a row every 32 weeks on average.

In the end, its just about being consistent and taking more pips
out of the market than you give back. Still, this type
of plan seems to have a lot of potential especially in
psychology.

since you kmow about gambling what you are saying is a fools game. first off forex in not gambling if you treat it that way you will lose all of your money. taking signals from providers is another to lose your shirt. martingdale and all those increase lot methods after a loss is the quickest way to lose all you money you might as well donate it me lol

Greetings,

Thank you for this thread. Can you please tell us who your signal provider is, or give us information how to find them?

I do believe that all Martingale methods are the most dangerous methods around and will wipe out your account faster than any other method. That is just my opinion from trading for four years now.

Let us know your signal provider.

Hi guys, like i said first, use a good money management, if you have a good system or signaling youll be ok with this, if your system is bad, very bad, the worst you can use the even money when you do not double your trade, just increment by 1 unit, like i sayd mm, if your account is less than 2000 use micro lots 0.01, be patience, that is the key of every thing, is like when you travel in your car from point B to point A, letrs say there are 120 miles, then you want to go fast and then you pass the speed limit and you will save some minutes but your risk will be big, infractions very expensives or a fatal accident, remember every thing is about mathematics, at the end is always safe to go slow but sure about what you are doing.
if you use a good money management you ll survive even with a lot of bad trades in a row, you can make betwen 10 and 20% or maybe moore, and trust me that is a big %, use compaund and then you will make money, if yoiu want to make moore than that is better to go to the store and buy a lottery ticket, remember if your system is very bad and gives you moore than 5 in a row use the even money strategy, i hope this helps.
God bless you guys.

Ok guys, you can use any sytem, lets say that you want to use daily bars, now you have to take some style, so if is daily you have to decide: go always bullish, go always bearish or go against the day before, use a small stop lets say betwen 15 or 30 but no use target just let it go, in this way you dont have to increase your trade until almost the third day since the stop could be very small and the profit big because remember is a day.
so any system or signals, you could change and twice things a little bit, remember that any system or gignla must have a larger target than stop.

It's dangerous but i liked the method very well. I even myself had thought about this method foolishly before.

Please share more thoughts on this. Definitely am interested in more of this.

Can you take into account senarios like:-
You had more than 5 losing streaks? Will that blow up your whole account?

Martingale systems are a neat facade but offer no real advantage. Allow me to show you why:Let's say you have a system where you risk $1 on Monday to gain $1.

If you fail, you keep doubling up until Friday where you risk $16 tomake up the $1 or lose a total of $1 + $2 + $4 + $8 + $16 = $31 total.
If you won on Monday you stopped for the week. If you lost, you kept going the next day till you're ahead $1. Say you have a 50/50 shot of winning or lose on any given day. At any given time, Your chance of losing

1 in a row 50% ( 1 out of 2)

2 in a row 25% ( 1 out of 4)

3 in a row 12.5% (1 out of 8)

4 in a row 6.25% (1 out of 16)

5 in a row 3.125% (1 out of 32)

On average, every 32 weeks you would lose all 5 and be out $31. The other 31weeks you would gain a dollar each time.After 32 weeks you have broken even. Congrats.

As you can see, without increasing your 50/50 chances, there is no real advantage to any martingale type strategy, except possibly psychologically, but whatever style you trade, you need to combine solid money management with a real edge of some kind. That's the key.

But lets do a few more calculations to explore some possiblities here...Let's say you have a system or signal that is 60% accurate.Now watch what happens to the #s:

2 losses in a row: 16% chance

3 losses in a row: 6.4% chance

4 losses in a row: 2.5% chance

5 losses in a row: 1% chance
so you could go 100 weeks without a drawdown! Now we are getting somewhere.

Did the starter of this thread ever give us his signal provider? PM it to me if you need to.

Martingale system - Gentlemen your ticket on the Titanic is in the mail.

Excellent explanation, Chester.

For some reason people seem to think that they can decrease risk with the martingale by starting out using microlots. But that cuts back the winners in exactly the same proportion. The ratio of return to drawdown is the same.

Anyway, martingale, anti-martingale and other sizing systems have been discussed in depth on many other threads.
[Edit:
http://www.forexfactory.com/showthread.php?p=198995
http://www.forexfactory.com/showthread.php?p=188593
Second link contains a table showing probability of a given number of successive losses within a 50 trade sequence, for any given win rate].

Bottom line is that MM on its own can not give us an edge. MM is about sizing positions consistently, and conservatively enough to preserve capital, and keep us in the game (assuming we want to grind out an income as a "professional" trader). Expectancy is determined by entries and exits.

David

Alvaro

You correctly state that Martingale won't work in casinos because of table limits. Does this mean you are assuming our trading accounts have no limits? Mine does.
This type of strategy has been discussed here many times. If you have a system that works well, just trade it properly using intelligent MM and correct position sizing. Why destroy it with martingale.

Thanks David, we were typing at the same time. I was hoping you'd show up here.

Chester--yes excellent example. With Martingale you keep increasing risk until you finally win, but it only gives back the amount of the first bet. Then it gets worse when you consider the spread. If you go for higher wins per trade in proportion to risk, you also decrease your expectancy of winning in direct proportion.

Hi Alvaro,

Martingale money management systems generally don't work in trading, in my opinion. Remember that your hit rate, or win percentage is the same and does not change depending on the outcome of your previous trade.

A long, but mathematically possible losing streak, will see you lose all your money.

If you have a system with 50% hit rate, then there is a very real chance that you will have a losing streak of 10. A losing streak of 5 could easily happen quite often.

Martingdale systems actually increase your risk of ruin.

The best money management algorithm for trading I have found, are essentially anti-martingdale in their nature. Ie. Methods that increase your position size when you are winning, to compound your account quicker, but at the same time, they decrease your position size when you are losing, to decrease the risk of ruin.

Such methods include fixed percent risk and percent of total equity.

For more information, I have written a post about the very important topic of money management, in my blog.

http://thetrendfollower.blogspot.com...anagement.html

Note that my blog has nothing to do with forex. Its about long term trend following for equities.

Best regards,

Nizar.

Actually I do want to chime in one bit. Please be more flexible in your thinking guys. Sometimes being a contrarian works.

Anyway I think it makes sense that if you have a system that has been backtested over and over again which proves to be let's say 60% right, I don't see why martingale wouldn't work on it.

I've always thought starting a Martingale sequence after a few losses is the safest way to go. Not that I Martingale, because I don't.

What I'm saying is, if your system would have lost the last few trades, then starting a sequence after the 5th or 6th loss might be a better entry method.

Jody, with a 60% win rate the probability of having a 6 trade losing streak in any sequence of 50 trades is about 17%. (See the link in my earlier post for the probability table).

If you start at 2% risk, and double each time using the martingale, then after six straight losses your account balance is down 2 + 4 + 8 + 16 + 32 + 64%, i.e. the account is blown. So you have about a 17% chance of blowing your account every 50 trades, with a 60% win rate.

And if you start with less than 2% risk, to try to avoid this, then your wins are proportionally lower also, so you're effectively achieving nothing. After a few losses you reach the point where you're risking a loss something like 64% just to win 1%, which speaks for itself.

For anybody who plans to trade long term, the martingale is Russian roulette. You never know when that losing sequence will occur, the one that will wipe you out.

For those who like to gamble, the anti-martingale is a better bet. See the last paragraph of my post here: http://www.forexfactory.com/showthread.php?p=1783674
If you're very lucky you win big, then quit while you're ahead. And it's definitely not recommended for those who want to take the slow, systematic approach of a "professional" trader.
__________________________________

Tom, I assume that's based on the assumption that the more losses we encounter, the greater the probability that the next trade will be a winner. That doesn't work with a coin toss. Even if you toss 100 heads in succession, the probability of the next toss being a head is still exactly 50%. (To anybody who thinks otherwise: http://en.wikipedia.org/wiki/Gamblers_fallacy)

Do wins and losses tend to cluster in trading (e.g. while market conditions go through a "favorable" or "unfavorable" cycle)? If (and I stress IF) they do, then after a series of losses, the next trade is more likely to be a loss, than a win.

And of course a series of losses might simply mean that a system is ineffective. In which case, the next trade is also more likely to be a loss.

David

I will challenge Wikipedia on this one. There is something called a "Law of Averages." The probability decreases over time, as your odds of flipping another tails are .5^(number of flips) if indeed the tails expectancy is 50%.

So, although flipping tails 50 times in a row is astronomically small, we can quantify it with .5^50 probability. This number applies to all permutations of head/tail combinations that are 50 in length. You flip 50 times, the odds were .5^50 that you would have gotten that exact sequence.

It's not just Wikipedia - Google "gambler's fallacy" and you'll see what I mean. I chose Wiki because I thought it summarized the rationale as well as anywhere else.

Here's something to consider. Suppose you've tossed 50 heads in succession, so you believe that tails is now the more likely bet? But why should the most recent 50 tosses of that one particular coin carry more weight than any other coin toss? What about the tosses that preceded those 50, or in fact the results of every other coin toss that's ever occurred in history? Or in fact every toss that's going to occur in the future?

Or let's put it another way. You toss 50 consecutive heads, and then 20 consecutive tails. Is heads now more likely (due to the most recent run of tails), or tails more likely, because 50 of the last 70 tosses were heads? Surely it's completely arbitrary as to which batch of tosses we choose to consider.

Here's another possible angle. The greater the number of tosses, the greater the probability that the ratio of heads to tails will be closer to 50/50. But to reach the point where there is 100% certainty of an exact 50/50 result would require an infinite number of tosses, which is the requirement for the "law of averages" to become effective. But no matter how many times we toss that coin, "infinity" will always lie beyond our grasp.

BTW, I agree that if I draw an Ace from a card deck, the probability of drawing a second Ace decreases. But that's because the original Ace isn't replaced. But each coin toss is a completely independent event. The key word is independent: in a random event, the past has no bearing on the future. People either see that or they don't.

Anyway, trading results are not necessarily random. A system can perform brilliantly one year, and badly the next. As an example, a trend-following system might string together a sequence of winners while the market is trending. Then the market moves sideways for a while, and a sequence of losses occurs. While the market is trending, the probability of it's continuing to do so is greater than 50% (all of the "let profits run", "cut losses short" and "trade with the trend" maxims depend on that assumption). So if our sequence of winners reflects that fact, then the probability of adding a further winner to the sequence is always > 50%.

If a boxer has won his last 10 fights, is he more or less likely to win the next one? I would say more likely, because his track record suggests that he's a good fighter. The "skill" factor creates a bias that overrides any "law of averages" or "gambler's fallacy" considerations. If - and only if - it can be shown that trading wins and losses tend to cluster together in a statistically significant manner, then we also have a bias.

David