Just another boring martingale system that is headed towards doom

ok, someone spot out the problem (not sarcasm)

trades eur/usd
trades any time of the day
trades any time frame

whenever you want to trade, either open a buy or sell position, direction doesn't really matter

set the TP for 10, and the SL for 10

If your trade is successful, then congrats. go make another trade, however, if it is not successful and the SL is triggered, immediately open a position in the opposite direction of the first trade, with a TP of 10, and a SL for 10. Also, you must double the second trade.

So if the first unsuccessful trade was .1 lot, the second trade must be .2 and if the second trade is still unsuccessful, then you must make the third trade .4 lots. Obviously this system will require a decent amount of margin. So if you are lacking in margin, you could always start out with a .01 lot.

Here is a little math that is probably flawed, but open for suggestions.

1st trade, statistically speaking, you have a 50/50 chance of winning the first trade

so shouldnt the chance of winning the second trade be 75%?

and the third trade 87.5%?


Also, I know spreads havent been acknowledged, but with a 3 pip spread, you can just count that you make 7 pips per 10 real pips made.



For those of you who are thinking, "this is a martingale system, it is bound to blow his account", here is a possible explanation.

Say I use .1 lot to start out with
.1 lot --- level 1
.2 lot --- level 2
.4 lot --- level 3
.8 lot --- level 4
1.6 lot -- level 5

In my risk account, I have enough margin to buy a few lots, so I could go up to level 5 on this strategy. Now, get a coin, and start flipping. Act like each flip with consecutive faces are levels. If you get 3 heads in a row, that is level 3, 4 tails in a row, that is level 4.

In my coin flipping experiment, I did experience one level 5, which would make me worry if that were real money, so I could always down the lot size.

And as far as the money management strategy, there isn't a whole lot of it. I reccomend you withdraw your profits frequently, because you never know when this thing is going to go for 15 straight reversals.

I know this is risky, but would this really work in the real world?

There are two problems as far as I'm concerned, the first is that your win probability reasoning suffers from the logical flaw known as 'gambler's fallacy' by where you assume a negative correlation between trading events.

The second problem is more by way of observation that this type of idea comes up about once a month on various forums and I have never seen anybody make it work (that is not to say that nobody has made it work), but a lot of people have tried and failed. When it comes down to it, you need an edge, then Martingale may be applied with success.

ea im running with basic idea. be very aware though that if left alone it will def blow account sooner or later

No the probability of winning does not increase since it's not symertrical.
This also means that you can't just reverse some loosing EAs.
If the probability of winning were 50:50 all the time you just could risk 10 Pips and shoot for 30 and it'd be impossible to lose on the long run.
Does this work? No. Now think about what that says about your martingale.

anyone with this ea? Worth trying.......

He is correct in that if you have a large enough sample size, your chances of a random entry hitting a SL vs TP of 10 pips would be approximately 50%. However, the spread (or the commission whatever the cost) would make the difference here. With one pip spread, you would be looking at a gain of 10 pips and loss of 11. This would immediately lower your gain/loss ratio (not your number of successful trades) below 50%. Without any martingale system, it would slowly suck all your money to your broker. Now add martingale: each consecutive trade still has the same <50% setup because the probabilities are independant. The market sometimes trends and sometimes ranges so flipping the direction won't help. The only difference is you are risking more each time, attempting to recover your losses. Many times it will work. There will be times when you have a large enough number of consecutive losses which will wipe out all your gains, and eventually result in losses and MC (6 consecutive losses will require 64x initial capital). Martingale even coupled with higher probablity trades is rather risky. Here you are suggesting something that is mathematically impossible.

It's not 50:50 only because you have 2 outcomes like in a bernoulli experiment. Consider this. Price is dropping like a stone you keep going long with a 10 TP and 10 SL. It will just keep hitting your stop loss.
You will never end up with about 50 winners and 50 losers after 100 trades.

Two threads on the exact same strategy:

http://www.forexfactory.com/showthread.php?t=43221

The second is "Martingale Strategy: Almost Can't Lose" by Jarcrocker. See from post 19 to the end.

Hi James,

Craig is right, the martingale idea keep coming here in FF with many version.

1)May be most successful so far is as per nanning bob modified version. But I consider it is quite conservative and not aggresive EA.

2)I have seen Xaron also had success experience with martingale with different version. Not sure he continue with success or not.

3)If just using tp10 and sl10 without good filter, definitely will hit margin call soon.I can make simple EA to prove that.

4)My own experience, had develop martingale EA and make USD50 to USD300 in a week. Withdraw the money and leave 50 && the other week, margin call hit. Then I stop using martingale for a while and still looking for a better filter or edge.

Still fan of martingale

p/s: JTmoore, your results attached is from your latest EA with GJ?
The EA is consider smart martingale but I still thinking it can hit MC soon.

"3)If just using tp10 and sl10 without good filter, definitely will hit margin call soon.I can make simple EA to prove that."

That is true. The probability is not determined by the TP/SL Ratio but by the trend itself. The Trend dominates everything. It's the only thing that's 100%
true in Forex Trading. You can have the best moneymanagment if the trend goes against you. You will get raped. You can try to outsmart the market with some fancy math bullshit. If the trend goes against you. You will get raped. You can only risk 0.1% at a time. If trend goes agaisnt you. You will get raped. Please don't tell me about "counter trend trading". That way you're trading a small correction which is -> a trend. No one has and will ever make and money in the markets when price goes against him.

thanks for bring in this FXtradepro thread into here. I found the idea is very interesting quite similar with what I am trying now. I just notice this and it will be good reference for me.

Thanks again.

yes it is but im using it on eu with very aggressive settings and with gj VERY conservative. on eu i set it to make $50 at a time but on GJ it is set to only $10. both are doing great but i watch them all the time. it isn't a set and leave the computer type of ea. it is more of a set and make sure it doesn't blow your account kind of thing. but it is doing good so far and yes i think you are right, matter of fact, i know you are right, if left unattended it will DEFINATELY BLOW ACCOUNT!!!

Having an edge would definitely help u tip the balance of this system into profitability.

Things like identifying areas of support and resistance so that price actions would go crazy around them. or identifying time periods where prices would trend. like opening of sessions etc. would help.