Martingale Systems?????? | Forex Factory

Options

Permalinks
Print Thread

Similar Threads

Martingale, Anti-martingale, and Compounding 40 replies

Martingale, Reverse Martingale, Modified Martingale, Maths 1 reply

How to change this Martingale to Reverse Martingale ? 3 replies

Martingale vs. Non Martingale (Simplified RoR vs Profit) 1 reply

Systems, Systems and Systems... 1 reply

Martingale Systems??????

  • #1
  • First Post: Apr 5, 2008 6:03pm Apr 5, 2008 6:03pm
As someone who comes from a gambling background the Martingale system is always frowned upon as likely to lead to big losses in the end. I assumed this would be the same in Forex, and had even heard a rumour that this was what got Societie Generale into so much trouble earlier in the year.

I seem to see it a lot dotted around here, particularly in ea's and people don't seen to question its use. Is there any situation where the martingale system can work???

thanks

Max
Gravity goes both ways in forex...
  • #2
  • Apr 5, 2008 6:18pm Apr 5, 2008 6:18pm
just found a post on this same thing from earlier this year

http://www.forexfactory.com/showthread.php?t=66849

max
Gravity goes both ways in forex...
  • #3
  • Apr 5, 2008 6:24pm Apr 5, 2008 6:24pm
Quoting max pips
As someone who comes from a gambling background the Martingale system is always frowned upon as likely to lead to big losses in the end. I assumed this would be the same in Forex, and had even heard a rumour that this was what got Societie Generale into so much trouble earlier in the year.

I seem to see it a lot dotted around here, particularly in ea's and people don't seen to question its use. Is there any situation where the martingale system can work???

thanks

Max
It's like heroin. It feels great the first time and a few times later. You feel like you can do anything. Then eventually you O.D. and you're DEAD!

They don't call that last trade the death trade for nothing.
  • #4
  • Edited 6:49pm Apr 5, 2008 6:30pm | Edited 6:49pm
Martingale is a form of money management and no amount of money management can change the expectancy of the game. If you have a positive expectancy, you do not need Martingale. If you have a negative expectancy, Martingale will not save you.
  • #5
  • Apr 5, 2008 6:58pm Apr 5, 2008 6:58pm
Thanks SMj
Thats what I figured. I was just surprised how much it was used and by quite experienced members. I guess if you had some chuck away money and a reasnobly reliable system you could give it a go but you would be relying purely on luck and not skill.

I'll stay well away

max
Gravity goes both ways in forex...
  • #6
  • Apr 5, 2008 7:14pm Apr 5, 2008 7:14pm
Quoting max pips
Thanks SMj
Thats what I figured. I was just surprised how much it was used and by quite experienced members. I guess if you had some chuck away money and a reasnobly reliable system you could give it a go but you would be relying purely on luck and not skill.

I'll stay well away

max
Mathematicaly speaking the best odds of winning a negative expectancy game is to take one's entire bank roll and bet it all or nothing, the first time. It is the only time the odds will be as good as it gets for you. If you win walk away and never play again. With a negative odds game, each time you play, you compound the negative outcome and the law of very large numbers grabs you and it is only a matter of time. All negative progression money management just speed up the process.
  • #7
  • Apr 5, 2008 7:49pm Apr 5, 2008 7:49pm
Well, you certainly can't get hurt by any system if you don't trade it. So, if that is your inclination, then don't read further....

But "Martingale" is not the only approach. I have traded progressive lot systems for a couple years now. Not Martingale, mind you, and to say that ANY progressive lot system will blow your account "just like" martingale is just simply not true. But several axioms SM mentions MUST be adhered to.

1. You HAVE to have a good system. And you have to change your whole thinking regarding "a trade". With PL, one trade is no longer "a trade". Rather, a sequence of trades becomes your "trade". With progressive lot (PL) systems, your gains multiply, but so do your losses.

2. You HAVE to have a managable loss plan. If you run your sequence to the end, can you survive to trade again... AND gain back your loss. But this is nothing new. If you trade any system, you have to address the same issue. What do you do after 20 losses in a row in a standard system?? With PL, you can recover faster, BUT, you have to have #1 above, AND you have to have enough of an account left to build from....

3. It is true, if you have a good, positive expectency system, you don't "need" PL. Say you have a good system, making 60% anually... great! With a modest PL system, conservative, you can double that. Very little increase in net risk, a bit more drawdown, but certainly managable with #1 & 2 above. So, 120% compared to 60% from money management only?? hmmmm......

There is indeed a benefit to a properly designed and managed PL system.

However, PL will not suit some people's trading psyche, and that is fine. Martingale applied to a negative E system is as SM says, a disaster waiting (and certain) to happen. Nothing can "fix" a negative E system, but that is not the application to which I am speaking....

To simply state all PL systems will blow your account "sooner or later" is simply not true. Strict Martingale, yes. Properly designed and applied PL systems, no. Simply, no.

You have to have the right psyche to trade PL, as you do to trade news, or to grid trade, or to correlation trade, or to trade indicators, or candle patterns... you get the idea... The system AND money mgmt has to fit YOU!

That, I believe is the biggest challenge in being a successful trader, not the system.

Just another view.....

Good trading and good success to you.... Find the system and MM that fits you....
  • #8
  • Apr 6, 2008 2:58am Apr 6, 2008 2:58am
Could you explain how your PL works?

max
Gravity goes both ways in forex...
  • #9
  • Apr 6, 2008 10:22am Apr 6, 2008 10:22am
Hi Max, I can get you started.....

But frankly, I am a bit hesitant to start down this road... as I have on a few occasions, and have simply managed to arouse the passions of fervant anti-Martingale folks.. (again, I don't trade Martingale, I trade PL....), not wanting to discuss, but simply to proclaim my impending demise!! Not what one needs .... It is a very unique, and advanced approach.. If a winning system stokes the fires of greed... PL can be thought of as greed on steroids!! (As SM alluded to....). So, it takes a VERY cool head and measured reason to apply PL properly... my opinion anyway... I am certainly no master, having my ups and downs as well, but am learning, and overall, successful, at least by my standards, which are the only ones that count!!

You can go here : http://forexfactory.com/showthread.php?t=75394

This is a specific method that uses PL. It is successful, and you could learn from it, but I am sending you here for the spreadsheet primarily... (the EA is not bad either, as it manages the trade sequence of that system once you manually start it...)

But the value of the spreadsheet is that you can adjust each trade sequence increment, and immediately see your profit, drawdown, and ultimate loss if your sequence runs out, up to a total of 24 trades. (you can set for less as well....) You can play with this sequence to your heart's content!

You can use this spreadsheet to manually manage your trading sequence if you want, for whatever system you are using. Keep in mind that the system HAS to be only one trade at a time, no multiple trades open. (You have to adjust the next trade size depending on the outcome of the previous trade, so multi-trade systems won't work.....)

Hope that helps! Good success to you in your trading endeavors...
  • #10
  • Last Post: Apr 6, 2008 8:46pm Apr 6, 2008 8:46pm
Quoting mrkam
Hi Max, I can get you started.....

But frankly, I am a bit hesitant to start down this road... as I have on a few occasions, and have simply managed to arouse the passions of fervant anti-Martingale folks.. (again, I don't trade Martingale, I trade PL....), not wanting to discuss, but simply to proclaim my impending demise!! Not what one needs .... It is a very unique, and advanced approach.. If a winning system stokes the fires of greed... PL can be thought of as greed on steroids!! (As SM alluded to....). So, it takes a VERY cool head and measured reason to apply PL properly... my opinion anyway... I am certainly no master, having my ups and downs as well, but am learning, and overall, successful, at least by my standards, which are the only ones that count!!

You can go here : http://forexfactory.com/showthread.php?t=75394

This is a specific method that uses PL. It is successful, and you could learn from it, but I am sending you here for the spreadsheet primarily... (the EA is not bad either, as it manages the trade sequence of that system once you manually start it...)

But the value of the spreadsheet is that you can adjust each trade sequence increment, and immediately see your profit, drawdown, and ultimate loss if your sequence runs out, up to a total of 24 trades. (you can set for less as well....) You can play with this sequence to your heart's content!

You can use this spreadsheet to manually manage your trading sequence if you want, for whatever system you are using. Keep in mind that the system HAS to be only one trade at a time, no multiple trades open. (You have to adjust the next trade size depending on the outcome of the previous trade, so multi-trade systems won't work.....)

Hope that helps! Good success to you in your trading endeavors...
thanks mate, I'll have a look. I am an 'ANTI' myself but still curious

Max
Gravity goes both ways in forex...
0 traders viewing now