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  • #21
  • Feb 27, 2010 4:31am Feb 27, 2010 4:31am
Quoting mr.marketz
Goose,

I don't keep those kinds of records, because as I stated earlier... I don't believe they offer any benefit (i.e. edge). The market is dynamic, so those stats are only good for a block of time here and there, anyway.

A "method" can (and will) most certainly hit a spot of 10, 20, or whatever losers in a row. However, if you as a trader lose 10 trades in a row... you need to pump your breaks and go back to paper trading. If you lose that many trades in a row, it can only mean one thing...you're trading a system, and not your edge. Last...
It seems you are having a different discussion from the topic I'm discussing, so we'll just end it here. No point in continuing a conversation if we are going to talk about 2 different subjects.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #22
  • Feb 27, 2010 4:37am Feb 27, 2010 4:37am
Quoting LasVahGoose
It seems you are having a different discussion from the topic I'm discussing, so we'll just end it here. No point in continuing a conversation if we are going to talk about 2 different subjects.
My apologies if I misunderstood the thread theme. Although, I rather enjoyed our discussion.

Till next time,
MM
  • #23
  • Feb 27, 2010 12:13pm Feb 27, 2010 12:13pm
Quoting LasVahGoose
It seems you are having a different discussion from the topic I'm discussing, so we'll just end it here. No point in continuing a conversation if we are going to talk about 2 different subjects.
Wise decision.

I really hope this thread is useful for people who thought about Martingale or Dumb Gambler, as a solution for recovering from losses.

Some days ago I was explaining this to a friend, and he said "Sure this happens in math, but do you have the statistics for REAL life?"
  • #24
  • Feb 27, 2010 12:41pm Feb 27, 2010 12:41pm
rofl!
  • #25
  • Feb 27, 2010 1:38pm Feb 27, 2010 1:38pm
Quoting Quantum4x
"Sure this happens in math, but do you have the statistics for REAL life?"
You should tell your friend about the statistician who drowned in a lake, whose average depth was only 6 inches !
  • #26
  • Feb 27, 2010 2:21pm Feb 27, 2010 2:21pm
The role of MM is to find a palatable balance between maximizing gains and preserving capital (obviously with special emphasis on the latter), not to recover recent losses by exponentially increasing the risk of wipeout.

Why should recent losses be any more significant than those in the more distant past? Both have exactly the same effect on eventual bottom line. Answer: the reasons for doubling up have an emotional, rather than a logical, basis.

Here's a link to a table that shows the probability of attaining X consecutive losses in any 50 trade sequence, for a given win rate.

Interesting that, with a 50% win rate, there's a ~4% chance of 10 consecutive losses within any 50 trade sequence. With Martingale, that means a 4% chance of losing 1+2+4+8+16+32+64+128+256+512 = 1,023 x the amount risked on the initial trade. Draw your own conclusions.

Martingale has been discussed many times before, e.g. here.
  • #27
  • Feb 27, 2010 11:14pm Feb 27, 2010 11:14pm
after all that is said and done about martingale i think it is perfect... for revealing the fools and then wiping them out as they so deserve!

martingale = fail! that is all!

can we never mention martingale on any forum ever again? PLEASE?!?!
Congratulations ScalaFX for coming out of the closet!
  • #28
  • Feb 28, 2010 8:35am Feb 28, 2010 8:35am
Hanover,

You bring up some good points, however, putting on trades and flipping quarters are not the same thing. Quick question for you (as it appears that you are a competent trader); when was the last time you lost 10 in a row?

p.s.

If you can actually recall the last time, my next question is what TF are your set-ups based on?


Quoting hanover
The role of MM is to find a palatable balance between maximizing gains and preserving capital (obviously with special emphasis on the latter), not to recover recent losses by exponentially increasing the risk of wipeout.

Why should recent losses be any more significant than those in the more distant past? Both have exactly the same effect on eventual bottom line. Answer: the reasons for doubling up have an emotional, rather than a logical, basis.

Here's a link...
  • #29
  • Feb 28, 2010 8:39am Feb 28, 2010 8:39am
Quoting Razzle
You should tell your friend about the statistician who drowned in a lake, whose average depth was only 6 inches !
That's funny
  • #30
  • Feb 28, 2010 9:41am Feb 28, 2010 9:41am
IMHO Mart. will fail because people see trades related, because I got heads last time, I have a higher probability of tails this time. This can often be exacerbated by peoples opinions. (I.e Cable is oversold IT SHOULD be going up,thus I am buying every dip)

This occurs when trading a "system" also. The system says this trade should work, even though the last trade on this signal just hit SL. So the trade is taken no matter.

How many people honestly have a system where they grade their chances of success before the trade is taken? (J16 excluded) Surely this is paramount. IMHO 2 trades are never the same! So how on one trade can we justify using double Lot size compared to previous without knowing the probability of success! We are not dealing with a fixed odds game, this isn't heads and tails, any estimation of the probability of a trade will be based on experience at best! At worst it will be based on false information!

Every trade IMHO should be an individual, it should have its own reasons for being entered. Its own reasons for the Lot size of it. Its own reasons for the exit point (TP) and its own point of failure(SL).
Why is any trade related to the previous trade?? (serious que!)

There are many fallacies in MM, and unfortunately they are much more widely preached than the truth of MM. I wish there was as much discussion on effective MM methods and models, as there is on all the abundance of indicator based systems.

LL
The winner of the rat race is still a rat.
  • #31
  • Feb 28, 2010 10:18am Feb 28, 2010 10:18am
Quoting Sim
what does this... mean?
It means using methods that rely simply on chance will likely bring strings of losses (or wins) that most people aren't prepared for. A lot of folks would consider ten losses in a row to be an anomaly, but given a large enough sample it is a high probability.

The same could be said for wins, but here is the caveat. A string of 10 wins could occur simply by chance, at the same time lending undeserved faith to a marginal or outright poor method.

Good post, Quantum.
  • #32
  • Feb 28, 2010 10:47am Feb 28, 2010 10:47am
But this is all under the assumption that every trade has the same probability of success which is a not true!

Even a random method of choosing buy/sell will not have a equal probability of success for each trade.

I flick a coin to decide whether to buy/sell this does not mean that the probability of success is equal depending on the result of the coin. The trade is unique.

Why does one trade have the same probability of success?

If we can assume that we can actual work out the probability of a trade
(Suggested method would be our historic win ratio. Again a fallacy. But this will be the assumption for this premise)
then for arguments sake we have a method that produces a 5% failure rate. That would be a 95% win rate.
The probability of getting 10 losing trades in a row is infact 5% not
0.05^10 (0.00000000000009765625 - better to bet on the national lottery than me losing 10 times in a row )

The odds of a head 1million times in a row is infact 50%, if the events are independant (i.e there is no bias in the throwing).
The probability of the trade is what matters and that truly is the Grail!

LL
The winner of the rat race is still a rat.
  • #33
  • Feb 28, 2010 11:27am Feb 28, 2010 11:27am
Quoting mr.marketz
Hanover,

........putting on trades and flipping quarters are not the same thing.........
I didn't mention flipping coins in my post. Anyway, I see MM as being universally applicable. Math is math. Let's just agree to disagree.

To answer your question, I take trades off certain patterns in any of the M15, M30, H1, H4 and D1 TFs.
  • #34
  • Feb 28, 2010 11:48am Feb 28, 2010 11:48am
Hanover,

What forms of MM do you use?
The winner of the rat race is still a rat.
  • #35
  • Feb 28, 2010 1:30pm Feb 28, 2010 1:30pm
Quoting LittleLuca
Hanover,

What forms of MM do you use?
I simply risk a fixed percent of my account (normally 1%) per trade. I've tried a number of different approaches (fixed ratio, optimal-f, etc) but I haven't yet found anything better.

There's a very good thread on MM here. Read the posts by mmeimandi.
  • #36
  • Feb 28, 2010 1:32pm Feb 28, 2010 1:32pm
Quoting billflet
It means using methods that rely simply on chance will likely bring strings of losses (or wins) that most people aren't prepared for. A lot of folks would consider ten losses in a row to be an anomaly, but given a large enough sample it is a high probability.

The same could be said for wins, but here is the caveat. A string of 10 wins could occur simply by chance, at the same time lending undeserved faith to a marginal or outright poor method.

Good post, Quantum.
thanks mate
  • #37
  • Feb 28, 2010 2:43pm Feb 28, 2010 2:43pm
Ok fellas,

Not much more to say here, since we've all got our minds made up anyway. Besides, the work week is starting in a few hours, so time to shut down the factory for the next 5 business days. Trading and forums don't mix.

Hanover, I appreciate the time you've spent putting your posts together - again, some really nice info there.

Trade well everyone,
MM
  • #38
  • Feb 28, 2010 5:12pm Feb 28, 2010 5:12pm
Quoting billflet
A string of 10 wins could occur simply by chance, at the same time lending undeserved faith to a marginal or outright poor method.
Take that thinking to the next level and you enter Nassim Taleb territory where a persons whole career as a trader could be just chance.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #39
  • Feb 28, 2010 6:00pm Feb 28, 2010 6:00pm
Black Swan just about explains every loosing trade i've had.

(Theres some irony in that.)
bull in a china shop
  • #40
  • Feb 28, 2010 11:58pm Feb 28, 2010 11:58pm
Hi! Do anyone use "regressive pyramid" in MM? What point of view?

Best regards, Noisee.
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