Semi Martingale Strategy

I'd like to discuss strategy that I've been testing on a demo account since the beginning of Des 2009.

DATE: 2 Feb 2010

Started with $ 1,000.00
Currently @ $ 8,592.50



UPDATE: 9 Feb

$ 10,000.00 reached



Here it goes:

I start on the Daily chart, determine the trend. If trend is down, I only go short. If trend is up, I only go long. I go to H4 & H1 to determine SR levels. Draw lines and Fibonaci's. Enter starting positions on the M15 chart. Wait for pullbacks and enter close to SR levels.

I set up a martingale using 20 PIPS. The sequence is 0.1, 0.1, 0.2, 0.4, 0.8, 1.6, 3.2, 6.4... I have never gone above 6.4 so far. I have even traded against the trend on the EURUSD the last few weeks and made a lot of PIPS. But I would not recommend it.

If the first lot goes -20 PIPS, the next position will be triggered. At this stage I set the first position to break even. When the second lot reaches +20 PIPS, the first position is closed and I'm up 20 PIPS ($20) on the second position.

If the third lot is triggered, I'm -60 PIPS (1st -$40 + 2nd -$20 = -$60) and the third position is triggered @ 0.2 lots. I move the second lot to break even and the first lot to TP -20 PIPS. If the third lot goes +20 PIPS, I'm up $40 - $20 of the first lot = $20. The second lot is closed at break even. At this stage I close half the third lot and close the first lot. That means I break even and so far have $0 profit.

The third position (0.2 lots) are now (0.1 lots) and becomes the first position.

You will find that you set yourself up against the pullback until the trend is back in action and then I am set for the longs runs (50-100 PIPS)

My aim was to get 100 pips a day, but I've made more every day.

Let me hear some comments. Thanks

ADDED LATER:

I should have added that I do take news releases in consideration, never enter just before or after news releases. And everyday I will look at some fundamentals just get a feeling of what is going on.

TIP: after a news release, if there is a spike against the main trend, I will wait for it to stall and then start with the first position going with the trend.

CHANGE ADDED 4 Feb

What happens if the third, fourth.... positions are triggered....?

3d position (0.2): If the 3d position is a winner ($40), I would be -$20 on the 1st position and the 2d position breaks even and is closed. TOTAL profit so far is $20. At this stage I would close the 1st position ($-20) and close half of the 3d position (0.1 lots). The TOTAL PROFIT WOULD BE $0.

The 3d position will become the 1st position and the grid has moved up.

4th position (0.4): If the 4th position is triggered and is a winner ($80), I would be -$40 on the 1st position and -$20 on the 2d position and the 3d position would break even. At his stage I would close the first three positions (-$60).

(Change) I always want to keep (0.1) open on the highest position. That means (0.3) of the 4th position will be closed with some profit, and the (0.1) will be set to 50 PIPS TP. The 4th position will become the 1st position of the grid and the whole grid moves up.

4th position ($80). Closed ($60) - 1st three positions (-$60). TOTAL PROFIT WOULD BE $0. But floating profit would be ($20). You will be in a better position if the pullback ends and the main trend is back in action.

I'll post an example of GBPUSD today.

Daily trend: Down

Drew R @ 1.5970 and S @ 1.5830

The R line has recently been pierced.

My first position is: 0.1 lots @ 1.5970. Currently @ 1.5957. Second position will be 1.5990 (0.1 lots). Lets wait and see.

I'll keep you posted on exactly what I do.

Cheers

Did you enter long or short?

Short.

I have to go now. Will be back in a few hours.

Cheers

Very interesting concept. I will follow your posts closely. I long thought that there should be a way to take advantage of the market randomness within a trend.

What % of equity is your first position?

JC

Hi Easy,

If the third lot is triggered you said you would be at -40 pips. Wouldn't you be at -60? You would be at -40 from the first position and -20 from the second. So...then price moves back in your favor 20 pips, now if the 1st position closes out at -20, and the 2nd position closes at 0, the third position is at +40...you are in 20 profit.

EasyTrader, thanks for sharing. very interesting, but here are a lot of questions:
1) the main tf u work on is M15?
2) regarding matringale technique, u basically keep opening increasing 20-pip positions toward the main daily trend, right? but looking at the H1 chart it's up for at least couple hours...

what happens when the position goes against you without retrace more than ur 6.4 (it will happen one day) whats ur plan then?

Wel, I'm back and lets see what happened.

GBPUSD are currently @ 1.5980

My second short position (0.1 lot) was triggered. I see it went down to the first position. So, I should have closed the first position manually and move the whole grid up, but I was not in front of the computer.

What I'm doing now is modify the first position to break even. If this happens, my second position will become my first position and the grid moves up.

I'll try to answer some of the questions later.

Lets use the position I hold currently with GBPUSD as an example.

1st position (0.1) = 1.5970

2nd position (0.1) = 1.5990

3d position (0.2) = 1.6010

If 1 turns against me and go up to 1.5990, I am -20 PIPS and 2nd is triggered.

If 2 turns against me and go up to 1.6010, I am -60 PIPS and the 3d position is triggered.

If 3 is a winner and goes down 20 PIPS, the first position will be -20 PIPS and the second position will be a break even. I am $40 -$20 = $ 20 in profit.

At this stage I will close half (0.1) of the third position ($20) and this will bring me to $0 profit.

Hope this makes sense.

I do this just to set myself up for the long run. Target is 50 PIPS.

1) I use the M15 for entering the trades on a swing.

2) I trade in the direction of the daily trend. Daily trend has been going down for a while and some pullback might come, but the reason for this trade was the Resistance line @ 1.5970 on the H1.

To be more save, one could wait for a pullback using fibonaci up to 30.2% (1.6454 - 1.5850) @ 1.6090 (would be a good time to go short).

Remember, I'm not counter trend trading. I'm actually trading against the pullback. So far, nothing happened and 20 PIPS will be fine to recover, BUT you are correct. It might just run against the main trend for 200 PIPS without retracing. I'm aware of that.

According to the account balance, I will take a loss up to $1000.00 and close all the positions.

At the end I'm still in good profit. It might happen more than once after each other, but is unlikely. I trade with the trend and the probabilities that it will go so far against me is still to happen. Lets see. It is just a demo.

hey, sorry for the stupid question but i never used fibo levels. i understanf the important psych percentage levels but what the up and down value do u use to calculate em?

I love the simplicity of it. Are you trading NY session typically (around news releases)? Have you tried any other pairs with any success?

Look for high and lows on the daily or H4 chart of the previous trend if a pullback is happening.

If the SR levels are close to the fibo levels, it is an indication that these levels are strong. Remember, that all of us can see those levels. And most traders look for them to enter trades. Either by breakthrough or bounce. The main trend is likely the direction it will go.

I wanted to test this on a demo and try to keep it as simple as possible. So far, so good.

I'm not gonna place all my trades here, only some to give you an example of how I do it.

The next trade entry I'm looking at is the EURUSD. I'm going to short it @ 1.3980. Reason. Main trend has been down. Pullback from 1.3852 and Resistance are coming @ the high of 29 Jan.

Happy trading.

UPDATE:

GBPUSD (SHORT)

1st position was closed @ 1.5970 with $0

2nd position @ 1.5990 has become my first position (0.1 lots) and the grid moves up.

Currently @ 1.5978

Hi, EasyTrader

First thanks for sharing and explaining.

... and when eventually a trade goes in the good direction... how do you manage it ? Trailing stop ? Target ? How, please !

Best regards

BBF

Its a common grid trading system. See Blessings3 ea on tsd. It has mm built in, auto profit calculations, moving tp etc.