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  • #21
  • Jul 2, 2010 7:54am Jul 2, 2010 7:54am
Quoting dbfusion
I respect your view but this martingale doesn't have string of losses.

it will be always one trade that is in loss .

Based on your strategy, yes there will be that one floating loss. But the martingale component only happens after a closed loss. That is to say, you don't increase your lot size until you've had a loss.

Hanover and I have years of experience at least experimenting with these markets. I can't speak directly of Hanover's experience, but I'm almost certain he has tried this sort of method as I have, and failed. Based on my experience, martingale works best in a market where no black swans exist. Find a market where that happens, and yes, Martingale becomes safe.

Either way, you seem quite set on this method, and I doubt I can change your mind. I wish you the very best with your endeavors, and if you should reach your financial freedom, feel free to shout at me: "I told you so."
  • #22
  • Jul 2, 2010 8:23am Jul 2, 2010 8:23am
Quoting Ronald Raygun
Based on your strategy, yes there will be that one floating loss. But the martingale component only happens after a closed loss. That is to say, you don't increase your lot size until you've had a loss.

Hanover and I have years of experience at least experimenting with these markets. I can't speak directly of Hanover's experience, but I'm almost certain he has tried this sort of method as I have, and failed. Based on my experience, martingale works best in a market where no black swans exist. Find a market where that happens, and yes, Martingale...
I respect your opinion very much and I do understand your points .
and I am really thankful for this response .

and I am very skeptical about martingale systems my self.

I know that I might (or will ) find some draw dawn that will kill a trade at some time .
but I still think that by some twist the impact can be avoided based on percentage of successful trades or entry formula or any other twist.

its just for the purpose of checking where the problem might be.

for example the system which is made earlier (i have link to it in first post ) failed only in 4 days during last 2 years. and guess what . its vacation days!.

so I can't really say its failing I can say simply don't trade vacations , either way who would trade a day with 40 pips range !! . and also another twist can be added . if his entries were based on RSI for example it wouldn't fail those days even !.

I know how dangerous it is to use martingale systems.and I have no idea if you have tried this system in particular ( you stated you did ) if by any chance you managed to find EA in one of your history folders that trades same way , I would be more than thankful if you posted it .

the EA which is in the link in first post can be changed by professional programmer in just 10 minutes or 30 minutes max to do this .

It helps to see the days where it fails and , that's why EA is good to have , to know what might be the problem .
I want to know what could be the problem in this method.

because with my eye on charts I can't find any big problem like the other one, and an EA would be very helpful in identifying it .


with my bare eye scanning charts I didn't find more than 7 levels , that's even entering randomly and trying to pick a center of a side way to force a losing trade ,including winning ones but I assumed it didn't and continued the multiplication.

I am ready to see it fail , it won't make me feel bad to see it fail .

but it will make me feel bad if I didn't try it and never knew if its failing or not , and is it avoidable or not.

I am by no mean questioning your experience in the market or your skills in trading and knowledge of such systems.

some one already has volunteered to do the EA so lets see the result and we can cooperate together to achieve something that might be successful .
I SEE YOU !!
  • #23
  • Jul 2, 2010 10:11am Jul 2, 2010 10:11am
hey db..... kinda reluctant to post anything here however had 3 questions on your system....

first, your trade example in the word doc assumes the first trade went against you..... there is no mention of what to do if the first trade goes for you..... do you sell again or buy....

second, what determined the first trade to be a sell....

third, once the trade or trades close at what point do you start again.... instantly or at the next opening of some bar.....

//----

when visually backtesting martingales the minute charts should be used........h
to trade and code, keep both simple... no call to impress....h
  • #24
  • Jul 2, 2010 10:30am Jul 2, 2010 10:30am
Quoting dbfusion
either way who would trade a day with 40 pips range !!

the EA which is in the link in first post can be changed by professional programmer in just 10 minutes or 30 minutes max to do this .
A) How do you know ahead of time that the days range will only be 40 pips? I have seen some monster moves when one market is closed (assuming that is what you mean when you say "vacation days")

B) If you want it reprogrammed go to scriptlance or elance and pay someone to do it since it appears there arent many takers here. And by the way, I always find it funny when a non-programmer says things like, "itll only take a professional 10-30 minutes to do this"... how do you know what is involved if you arent a programmer?
  • #25
  • Jul 2, 2010 10:45am Jul 2, 2010 10:45am
Quoting iulli
I have a question for you, don't you think if you using a way of martingale that has a very low risk of failure say once in 15 years it is same risk like any profesional trader is taking with no martingale? I mean money wise you end up with a lot more money just by using martingale, of course you withdraw your profits all the time.........
I believe I understand what you're saying. Here is what I see as being the fundamental difference(s).

If I risk 1% per trade consistently, and I lose 20 consecutive trades (the probability of 20 consecutive losses is supposedly very small), then my account loss is no more than 20%. I have plenty of time to shut off the EA, and re-think my options. However, with martingale, the 'death trade' is going to happen quickly, and unexpectedly, at any time. There is no time to escape, to re-think; the money is lost in an instant. And because of the double up effect, it is probably going to take a lot less than 20 consecutive losses. (Read the last few paragraphs of this post, where topherhk88 explains his strategy for coping with an unexpectedly high number of losses).

Martingale is a betting system. It does not alter trade expectancy. There's a XLS attached to this post. It illustrates that no matter what betting system we use, all it does is redistribute wins and losses, without altering the overall expectancy. Hence I see no advantage in using a betting system that uses progressive sizing; whether in a casino game like roulette, or an activity like forex trading, the concept is exactly the same.

Your method either has a real edge, by exploiting a statistically provable inefficiency in price movement, or it doesn't. Or, in the case of an expert discretionary trader, he knows the high probability setups (entries), and/or how to manage his trades (exits), to give him positive expectancy, and his track record confirms this. Betting systems do not alter expectancy; they can not turn a losing method into a winning one. If you have a positive expectancy system, there is no need to risk blowout by using bet/position sizing variations. You will gradually make money, and by keeping trade risk low (e.g. 1%-2%), you can survive lengthy losing periods, giving your edge the opportunity to eventually prevail. That is my understanding of 'prudent' risk management.

If your method doesn't have a real edge, then whatever you do is gambling, hence you might as well use Martingale, and hope to get lucky (i.e. avoid the 'death trade' during the course of your trading lifetime). If you want to play completely safe, the only alternative is to save your money, by not trading at all.

In response to the point made by Ronald, I don't have experience of failure using martingale systems. I see no need to test them, because IMO you can never test or measure success or failure with martingale. The staking system overrides everything else. If you are lucky enough to have 5 years, or 10 years, or 20 years, without the death trade, then your account is absolutely guaranteed to grow, and you'll likely be a trading millionaire. Why? Because that is how martingale works; every series of losses is always compensated for by the next (single) win. But then the death trade might suddenly occur, and you lose all of your millions overnight. Withdrawing money periodically does not help, because (1) martingale's ability to withstand losses depends on your account size (hence withdrawals are counter-productive), and (2) you have no way of knowing whether you'll make a withdrawal before the death trade. I explain the pros and cons of Martingale in more detail here.

Bottom line: martingale is gambling. And I agree with you, trading without a real edge is likewise gambling (but with some control over the rate of account bleed). If people want to gamble, then forex, with its leverage, scalability, vast market size, and lack of restrictions (e.g. no casino betting limits) is the perfect vehicle. It comes down to a personal decision: what risks an individual is willing to take. I'm happy to admit that I'm very conservative when it comes to my hard-earned savings. But each to their own.
  • #26
  • Jul 2, 2010 11:01am Jul 2, 2010 11:01am
Quoting traderjai_inhi
A) How do you know ahead of time that the days range will only be 40 pips? I have seen some monster moves when one market is closed (assuming that is what you mean when you say "vacation days")

B) If you want it reprogrammed go to scriptlance or elance and pay someone to do it since it appears there arent many takers here. And by the way, I always find it funny when a non-programmer says things like, "itll only take a professional 10-30 minutes to do this"... how do you know what is involved if you arent a programmer?
A) its vacation , I have seen many vacation days and no big moves when banks are closed !! so defenatly no one who has little understanding of forex risk to trade on vacation !.

B) this is a forum , which means a community , which means its here for exchanging Ideas and have conversations and cooperation between people .
its by design meant to help each other by posting methodologies and giving away expertise for no money, and alot of good work of very good people who like to share things and like to help each other have been done .

with your attitude and understanding of what a community is for, you wouldn't have seen or learned or acquired any single information. not only in forex but in your entire life .

if you don't like the idea fine , at least have some decency for the people who share their ideas not necessarily mine . and start some giving instead of only taking.

and stop reading other people ideas then insult them if you don't like it !!!
I SEE YOU !!
  • #27
  • Jul 2, 2010 11:07am Jul 2, 2010 11:07am
Quoting hayseed
hey db..... kinda reluctant to post anything here however had 3 questions on your system....

first, your trade example in the word doc assumes the first trade went against you..... there is no mention of what to do if the first trade goes for you..... do you sell again or buy....

second, what determined the first trade to be a sell....

third, once the trade or trades close at what point do you start again.... instantly or at the next opening of some bar.....

//----

when visually backtesting martingales the minute charts should be used........h...
1- if it goes with you ,you do nothing enjoy the wining.
2- I try to buy or sell on the assumption of markets range 60%-70% of the time . so RSI is good enough to sell above 70 and buy below 30.
3- I start the trade based on any system you like whatever analysis you pick I my self in this particular system I use RSI , might use deferent things . the system is there for converting the losing trade into wining . so I start with very low lot size in case i got it wrong and had to revert to this system.
and don't use minute charts use at least 5m chart
15m better so you are at higher chance not initiating a trade in the center of a starting side way .
I SEE YOU !!
  • #28
  • Jul 2, 2010 11:28am Jul 2, 2010 11:28am
Quoting dbfusion
A) its vacation , I have seen many vacation days and no big moves when banks are closed !! so defenatly no one who has little understanding of forex risk to trade on vacation !.

B) this is a forum , which means a community , which means its here for exchanging Ideas and have conversations and cooperation between people .
its by design meant to help each other by posting methodologies and giving away expertise for no money, and alot of good work of very good people who like to share things and like to help each other have been done .
You still havent defined "vacation day". Whose vacation? What is a vacation day, when 1 market is closed? 2 markets? A Saturday perhaps? Something else?

I was trying to help by suggesting you go somewhere and pay to have your very profitable EA modified since it has been a few days and no one has publicly offered help. If the EA is really profitable and it would only take by your estimation 10-30 minutes to make such modifications, wouldnt be in your best interest to get it done in an expeditious manner?

One thing I have learned is that sometimes youve got to spend money to make money. Or you could always keep begging on a community forum that seems to have little interest. In case you havent noticed, most people here are advising against the use of your martingale strategy.

If you thinking anything in my first post was insulting, imagine how the programmer feels when they see you say it should only take them 10-30 min to modify it, as if their time means nothing to you...
  • #29
  • Jul 2, 2010 12:42pm Jul 2, 2010 12:42pm
Quoting dbfusion
with my bare eye scanning charts I didn't find more than 7 levels , that's even entering randomly and trying to pick a center of a side way to force a losing trade ,including winning ones but I assumed it didn't and continued the multiplication.
Martingale like techniques can be useful, but you have to know what you're doing. First, they should be employed only in relation with another statistical edge, like hanover says.

I have an experiment proposal for you. You said that you couldn't find more than 7 levels. There is a subtle trap here, the fact that that number, 7, occured at one particular point in the past. Before that point, the maximum number of levels was 6. And sometimes even before that, it was 5. And somewhere in the next years that number will grow to 8. If you really want to test this, start from your earliest data and write down the moment that level count increases. And if the maximum number you found was 7, I would trade the method as if it was 10, to give me some breathing space.

Also look at these two pages:

http://dl.dropbox.com/u/190212/ff/ge...martingale.jpg

http://dl.dropbox.com/u/190212/ff/gearing.jpg
  • #30
  • Jul 2, 2010 1:55pm Jul 2, 2010 1:55pm
hey adal.... my views on martingale, hedging, averaging up/down, fifo and other such taboo subjects quite often seem to differ from the 'status quo'......

those views were not formed by academic's, they were formed by learning from decades and decades of losses....

martingales do not frighten me, nor does loosing money.....

//----
//----

i rewrote paulo's ea to remove the hedging quite a while back..... the hedging, in this case, is a hinderance.... there are cases when hedging is the preferable method of handling a particular situation, but in paulo's ea it is not.....


if you run some stats on most martingale or progressive lot systems, you'll quickly see that the money is made in the 4th thru 7th steps.... the first three steps are again a hinderance....

you can recode the ea to only "mentally place" those first 3 steps, but not actually place any trades until the 4th and 5th steps.... doing so reduces the amount of movement required to become profitable....

the 4th and 5th trades must be placed where they would have been had all trades been placed.... and must have correct 4th and 5th lot size........

the 6th steps and higher should be a warning sign..... the market is doing something uncommon...... respond in an uncommon manner, by placing a trailing buystop or sellstop order.... the logic should be obvious......

the spacing should also be varied with each progression.....
//----
//----

of course doing the above will transform the ea into a martingale hybrid........h
to trade and code, keep both simple... no call to impress....h
  • #31
  • Jul 2, 2010 2:02pm Jul 2, 2010 2:02pm
Quoting hayseed
if you run some stats on most martingale or progressive lot systems, you'll quickly see that the money is made in the 4th thru 7th steps.... the first three steps are again a hinderance....
Looks like I'm not the only one who noticed that And there are multiple ways to profit from knowing that...
  • #32
  • Jul 2, 2010 2:48pm Jul 2, 2010 2:48pm
Quoting hayseed
hey adal.... my views on martingale, hedging, averaging up/down, fifo and other such taboo subjects quite often seem to differ from the 'status quo'......

those views were not formed by academic's, they were formed by learning from decades and decades of losses....
I believe in math. Math shows that FIFO and hedging are the same thing, except the extra spread you pay when hedging. I wrote all the formulas on paper and checked them myself. I also believed that you couldn't replicate a longer system holding a long with a shorter system holding a short without hedging, but I realized that you can, even with FIFO. I'm not trying to change your mind. Hey, whatever works for you.

Also, I would have gave up after decades of losses

Quote
if you run some stats on most martingale or progressive lot systems, you'll quickly see that the money is made in the 4th thru 7th steps.... the first three steps are again a hinderance....
That doesn't change the fact that it will blow in the 10th step You just bought yourself a few more doublings. You'll still blow. And since most of the money is made between 4-7, that means that if you enter at 4 you'll make very little money a lot of the time, and then you'll blow spectacularly.

http://www.edge.org/3rd_culture/tale...s/image002.png

http://www.edge.org/3rd_culture/tale...b08_index.html

Be smart.
  • #33
  • Jul 2, 2010 2:53pm Jul 2, 2010 2:53pm
Quoting Adal
I That doesn't change the fact that it will blow in the 10th step You just bought yourself a few more doublings. You'll still blow. And since most of the money is made between 4-7, that means that if you enter at 4 you'll make very little money a lot of the time, and then you'll blow spectacularly.

http://www.edge.org/3rd_culture/tale...s/image002.png

http://www.edge.org/3rd_culture/tale...b08_index.html

Be smart.
Thanks for your developed answer, you are of course right martingle always blow up. But there are ways to adapt it to make it far more viable. But that's changing the system so much that I'm not sure if it's still a martingale. Just a developed order management system. NOT a grid, they always blow up too.
  • #34
  • Jul 2, 2010 3:23pm Jul 2, 2010 3:23pm
Quoting Adal
Also, I would have gave up after decades of losses .
hey adal..... quite obviously i did not make myself clear..... my error....

giving up is not in my nature....... had it been, i would not be in my position today.......h
to trade and code, keep both simple... no call to impress....h
  • #35
  • Jul 2, 2010 4:54pm Jul 2, 2010 4:54pm
For those asking, the images I posted were from this book: http://www.amazon.com/New-Trading-Sy.../dp/047126847X
  • #36
  • Jul 2, 2010 6:00pm Jul 2, 2010 6:00pm
Quoting Adal
For those asking, the images I posted were from this book: http://www.amazon.com/New-Trading-Sy.../dp/047126847X
thinking to write book with title : Forex martingale ideas
with many variations of martingales and include with the my collection of my martingle EAs.

Anyone interested?
  • #37
  • Jul 2, 2010 10:05pm Jul 2, 2010 10:05pm
Quoting akukaya
thinking to write book with title : Forex martingale ideas
with many variations of martingales and include with the my collection of my martingle EAs.

Anyone interested?
I might be interested.
  • #38
  • Jul 3, 2010 3:12am Jul 3, 2010 3:12am
Quoting Adal
First, they should be employed only in relation with another statistical edge, like hanover says.

If you really want to test this, start from your earliest data and write down the moment that level count increases. And if the maximum number you found was 7, I would trade the method as if it was 10, to give me some breathing space.......
Looks like I have a major problem expressing myself. I pretty much meant the exact opposite of what you're saying that I agree with.

Let's try again. This is what I meant:

1. If you have an edge, there's no need for martingale. In fact you should avoid it, because all it does is add unnecessary risk. Small, consistent sizing = prudent MM.

2. If you don't have an edge, it makes no difference whether you use martingale or not, because you're gambling anyway.

3. Position sizing in itself can't provide any kind of edge (unless you can somehow calculate the probability of each setup in advance, and place larger bets on higher probability setups). Otherwise, all sizing variations do is redistribute wins and losses.

4. There is no such thing as successful or failed martingale systems. EVERY martingale system is successful until the death trade occurs.

5. It's impossible to test martingale properly, no matter how large your test sample is. A 'black swan' is by definition, a completely unpredictable and unexpected event.

Hopefully that's more understandable.
  • #39
  • Jul 3, 2010 3:44am Jul 3, 2010 3:44am
Quoting hanover
Looks like I have a major problem expressing myself. I pretty much meant the exact opposite of what you're saying that I agree with.

Let's try again. This is what I meant:

1. If you have an edge, there's no need for martingale. In fact you should avoid it, because all it does is add unnecessary risk. Small, consistent sizing = prudent MM.

2. If you don't have an edge, it makes no difference whether you use martingale or not, because you're gambling anyway.

3. Position sizing in itself can't provide any kind of edge (unless you can somehow...
Consider martingale only if:

1)Your system tested and the occurance of consecutive straight loss almost always <7, martingale is a better strategy compare to fix lot.
2)Death trades occurance very very rare(based on your tested system).
3)You can bank in profit very high percentage return >100% in quick period of time, basically before reach death trade...
4)limit your total loss during death trade == your initial deposit value.
meaning u must ready to loss your initial deposit.

so let after you had 130% return, after that occurance of death trade(if unvoidable). You still gain 30%.

compare it with fix lot. you will get up and down results, end of the same period, you may slightly increase/decrease your account or breakeven. Some will also meet margin call.
  • #40
  • Jul 3, 2010 5:30am Jul 3, 2010 5:30am
Quoting hanover
3. Position sizing in itself can't provide any kind of edge (unless you can somehow calculate the probability of each setup in advance, and place larger bets on higher probability setups). Otherwise, all sizing variations do is redistribute wins and losses.
Sorry for misunderstanding you.

Yes, it doesn't provide an edge. But it makes the difference between getting 1% or getting 10% annually from your edge.

You make it sound like people should not worry about finding an optimum MM at all. I hope this is not another misunderstanding from my part
Quote
5. It's impossible to test martingale properly, no matter how large your test sample is. A 'black swan' is by definition, a completely unpredictable and unexpected event.
A black swan will get you anyway, even with a very conservative MM. That's what Taleb argues.

I will never trade a martingale. I could use a MM system where I would double down 2 or 3 times, but I would cut my loses there, at a maximum 10% account drawdown. And this only for systems with a high expectancy.
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