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Doubling up method or playing casino

  • #1
  • First Post: Edited 1:54pm Jan 23, 2006 1:47pm | Edited 1:54pm
Hi everyone,

I was thinking about one strategy which I called doubling up method but I want to share it and you to review and make comments.

OK let's explain what I am talking about.

When we play simple Rulet we can use doubling up method but I think it is prohibited by casinos. For example let us asume that we have 100 000$. Let's place 1000$ on red, we lost!, place another 2000$ on red, we lost, place another 4000$ on red, we lost!, again doubled sum 8000$ on red, we lost and so on. as attempts rises the chance that this red will be done increases. So in this case, if we place 8000$ and we will win 8000$ which is more than lost sum of 1000+2000+4000 = 7000. If there is two attempts the chances are 50/50, but if there are 10 attempts on red chances will be 90/10 and as more attempts we have, possibility rises to win.

Let's now consider forex. First of all we must take most rangebound pairs (EURGBP, EURCHF), we have huge moves on daily charts for example skyrocket move in EURGBP by 150-200 pips in two days. We sell 1K and place 30 pips stop and 40pips take profit order. We lost! We go short with 2K again and place 25 pips stop versus 45pips take profit. We lost! we go short with 4K and place 20 pips stop and 50 take profit.
kill me if price will not reverse

So trend continuation chances are very small as we increase numbers of attempts. Pay attention that I am decreasing pips of stop loss order and increasing pips of take profit order, because as price goes up trend becomes more and more mature and there is less chance price to go up than in case of first attempt (placing 30 pips stop).

Now try to decline my idea, I will be grateful for criticizing comments
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kiss the trend
  • #2
  • Jan 23, 2006 2:02pm Jan 23, 2006 2:02pm
Casinos have table limits, which stop you carrying out this strategy.

The odds of Red are not 50/50. Remember there is also a zero and in some countries also a Double Zero.

The fact that Black comes up 6 times in a row, does not change the odds that Red will come up the next time. The Roullette wheel has no memory.

In the casino or with trading there is a reasonable statistical chance over a sample that you might get 7 or 8 losers in a row, so you might need a very big wallet to keep you in.
  • #3
  • Jan 23, 2006 2:03pm Jan 23, 2006 2:03pm
example
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kiss the trend
  • #4
  • Jan 23, 2006 2:06pm Jan 23, 2006 2:06pm
Quoting hagadol
Casinos have table limits, which stop you carrying out this strategy.

The odds of Red are not 50/50. Remember there is also a zero and in some countries also a Double Zero.

The fact that Black comes up 6 times in a row, does not change the odds that Red will come up the next time. The Roullette wheel has no memory.

In the casino or with trading there is a reasonable statistical chance over a sample that you might get 7 or 8 losers in a row, so you might need a very big wallet to keep you in.
OK but with 100K account and starting trading with 10K lots make it quite possible. Ok let's drop casinos, I stated it for an example. I analyzed EURGBP pair and it is quite good to play this strategy. You may have 2-3 trades in a month but with huge gains.
kiss the trend
  • #5
  • Jan 23, 2006 3:17pm Jan 23, 2006 3:17pm
Quoting hagadol
Casinos have table limits, which stop you carrying out this strategy.

The odds of Red are not 50/50. Remember there is also a zero and in some countries also a Double Zero.

The fact that Black comes up 6 times in a row, does not change the odds that Red will come up the next time. The Roullette wheel has no memory.

In the casino or with trading there is a reasonable statistical chance over a sample that you might get 7 or 8 losers in a row, so you might need a very big wallet to keep you in.
The longest *recorded* single color run is 27! There are table managers that claim even longer runs, but 27 is the longest recorded run!

FYI, 2^27 = 134'217'728. So even if you started with a single dollar, you'd have needed USD 268'435'455 to break that run! *No* casino will allow you to bet that on a table! <G>
  • #6
  • Edited 4:41pm Jan 23, 2006 4:34pm | Edited 4:41pm
Of course they will, if they don't, then they know nothing about statistics, probability and geometric sequences...Every time you are betting on red, the odds are still 50/50 (Neglecting of the green probability)...It doesn't mean that you got a 5 blacks in a row that your 6th time has a higher probability for red solely, the probability is still 50/50....The combined probability is the one that increases....It's like throwing a dice 5 times, the probability of getting 2 for 5 consecutive times is very low, but for every single throw, the probability of getting 2 is still the same, 1/6....

Doubling up is really dangerous, beware of it, it's a way to lose fortunes...

Let me give you a simple example....I will give you $1,000 everyday for 30 days, and in return you will give me $1 at the first day with the doubling technique for the same 30 days...Guess which one of us gets rich and which one gets broke at the end of the month????

At the end of the month, you will end up with $30,000, while you will have to hand me $32,768 on the 16th day alone. On the 30th day, you will find yourself owing me $536 Million Dollars just for that day, if you have any money left with you of course

The total amount which you will pay to me during the course of the 30 days is $1.073741799 Billion Dollars...

Re-think about it once again and use some math man...


Thanks,

Nader
  • #7
  • Jan 23, 2006 6:38pm Jan 23, 2006 6:38pm
If you have $100k and you plan on doing this strategy, please save yourself some time and just give the money to me - I will give you my bank account details and you can transfer it straight in.

This is pretty much guaranteed to lose all of your money. You need to look over more than just a couple of months worth of data to see what a currency really does. You need to watch out for the once a month events, the once every 3 month events, the once a year events and even the once in a 100 year events. As an example, take a look at the AUDJPY over the last 12 months. It generally traded up in a channel and then in late December it took a large dive. If this happened to you, it would completely wipe you out. I think the assumption that you make that it will range and won't give you 10 or 15 losses in a row is a very bad assumption.

Simon
  • #8
  • Jan 23, 2006 7:02pm Jan 23, 2006 7:02pm
It sounds like you are trying to apply the Martingale system to Forex. The Martingale system was made to work in the casinos favor. The odds are in favor of the house and they know this. Eventually they will win.

Not sure how this would work out in Forex. What if you trade a system with positive expectancy?
  • #9
  • Feb 3, 2006 9:43am Feb 3, 2006 9:43am
Guys you make fun and I booked huge profits this week trading doubling up method. I bought USDCAD at 1490 added at 1460 added at 1380, average rate was 1418, and 14 mini lots (10K), we will have weekly pin bar and daily is bearish too, so I will cover partial profits.
I sold audusd at 7550 added at 7580 (just added 1 lot I did not play doubling up here), I covered at 7485.
I sold GBPJPY at 207.2, added at 201.5, looking for big correction.
kiss the trend
  • #10
  • Feb 3, 2006 10:08am Feb 3, 2006 10:08am
Your fist mistake was to try to compare trading forex to a Casino Game. Not a good comparison.


I DOUBLE UP on trades.

I place a trade and it is up let's say a couple of hundred dollars and the move still looks strong. I will wait until the point where when I double up or ADD MORE LOTS ON - combined with where my stop is, if the trade backs up and stops me out I still have a little profit or break even.

That has been the key for me. Only adding on lots after I have the profit locked in to cover adding the lots. I move my STOP up to lock in those profits to cover the added lots.
- SAFE TRADING MONEY DUCK
  • #11
  • Feb 3, 2006 11:36am Feb 3, 2006 11:36am
I also was thinking about doubling or even tripling trade quantity. I will work for 100% in automated 24/h systems. You should also find a broker that will allow you start from 0.01 lot (or maybe you have a big wallet).
  • #12
  • Feb 3, 2006 2:34pm Feb 3, 2006 2:34pm
What you're explaining is what I've tried on an Online Casino. But I stopped this because I didn't know who is behind the Casino. Somebody may watch my performance and let the Roulette always be "black" or "zero" when I'm always on "red".

I see that many people are claiming that one is statistically and the other one is FOREX isn't. I disagree.

A normal Roulette is a complex chaotic system which is FOREX.

The problem I see with this "strategy" is, that you need already much money handy. Problem.
And of course you need to keep nerves up. You may lose 10 times in a row, are you still cool enough to bet another 11th time?

I doubt.
  • #13
  • Feb 3, 2006 3:11pm Feb 3, 2006 3:11pm
Quoting fx-trader777
Guys you make fun and I booked huge profits this week trading doubling up method. I bought USDCAD at 1490 added at 1460 added at 1380, average rate was 1418, and 14 mini lots (10K), we will have weekly pin bar and daily is bearish too, so I will cover partial profits.
You bought when price was moving down. That's a bad sign. I don't see any price action confirmation of your entries. The only reason I can think of is that you entered on the retrace of last Friday's daily pin bar, twice. Then for the third trade, entered near Tuesday's low. Sounds like you where using the
hope-n-pray method. Could you tell me how you entered?

I find Money Ducks method of "doubling up" is a safer option. What if the weekly pin is a false one. Trend on the weekly is still down. Monthly is bearish too.

Adding trades to a losing trade just builds up stress and panic.

Take Care
Habeeb
Keeping it Simple
  • #14
  • Feb 4, 2006 1:02pm Feb 4, 2006 1:02pm
Quoting qweet

The problem I see with this "strategy" is, that you need already much money handy. Problem.
I doubt.
You don't have to have a lot of money to double up.

It is a principle that can be applied with whatever size wallet you are working with.

1. You get into a trade and wait until you are into a PROFIT situation.
2. You move your STOP up to lock in those PROFITS.
3. Then you DOUBLE YOUR LOTS.
4. Making sure that the profits you have locked in with your STOP will cover ALL THE LOTS you now have in the trade, should the pair reverse an hit your STOP.
- SAFE TRADING MONEY DUCK
  • #15
  • Feb 4, 2006 3:54pm Feb 4, 2006 3:54pm
let's bring it down to an example:

1.) I go long at 1.2000 with 10 units
2.) price is moving to 1.2100
3.) I set a stop-loss at 1.2050

4.) I double my LOTS?
I'm sorry but I don't know what a LOT exactly is...

Is it maybe that I go long another time, now with 20 units?
  • #16
  • Feb 4, 2006 8:46pm Feb 4, 2006 8:46pm
Quoting qweet
let's bring it down to an example:

1.) I go long at 1.2000 with 10 units
2.) price is moving to 1.2100
3.) I set a stop-loss at 1.2050

4.) I double my LOTS?
I'm sorry but I don't know what a LOT exactly is...

Is it maybe that I go long another time, now with 20 units?
If you are going long with 10 units, that is 10 lots.

Whatever you want to call it units or lots, you would double up, only if you see it is going to continue to be a good move. And definitely move your stop up first, locking in the profits you have already achieved.
- SAFE TRADING MONEY DUCK
  • #17
  • Feb 5, 2006 3:13am Feb 5, 2006 3:13am
Quoting fx-trader777
Guys you make fun and I booked huge profits this week trading doubling up method. I bought USDCAD at 1490 added at 1460 added at 1380, average rate was 1418, and 14 mini lots (10K), we will have weekly pin bar and daily is bearish too, so I will cover partial profits.
I sold audusd at 7550 added at 7580 (just added 1 lot I did not play doubling up here), I covered at 7485.
I sold GBPJPY at 207.2, added at 201.5, looking for big correction.
This is not the same thing as doubling your next position AFTER your position has been closed out. What you are talking about is averaging down.

Simon
  • #18
  • Feb 6, 2006 10:25am Feb 6, 2006 10:25am
I do not know why but I liquidated my short pos in GBPJPY. As my partner say this is King Kong currency.

3 lots and 70 pips in profit.

I really used averaging mathod not doubling up.
kiss the trend
  • #19
  • Feb 6, 2006 7:19pm Feb 6, 2006 7:19pm
Hey, guys, you are all talking about doubling up in here...Just thought to pour some thoughts...

Many professionals say that you shouldn't DOUBLE UP...You should add to your position only with smaller increments, but not doubles...

Example:

You are long the EUR/USD at 1.2100 with 10 mini-lots....

You decide that you will add to your position more long lots when the pair goes to 1.2160, cool...

The pair goes to 1.2160...Now you don't double up and have a 20 mini-lots position, no...Instead you add smaller amounts every add up...Usually, they define it like that:

1- Main position (Open Position) = 100%
2- First Add up = 50%
3- Second Add up = 25%
4- Third Add up = 10% (Even this step is debated and many say that you should stop adding up at step 3)
5- No further add ups

End

So, your 100% is the 10 mini-lots...Your next add up at 1.2160 should be only 50% of your initial position, 5 mini-lots...

And your second add up should be 25% of your initial position, or 2.5 mini-lots, rounded down to 2 mini-lots...


So why is that?? For the following reason:

It's a risk based assumption, this lowers your risk...When you buy 10 mini-lots at 1.2100 and double up at 1.2160, adding another 10 mini-lots, your average cost is the exact middle, which is 1.2130, so to breakeven, you must place your stop loss at 1.2130, only 30 pips away from the current price...

On the other hand, when you use the 50% of the initial position add up, you have 10 mini-lots at 1.2100 and 5 mini-lots at 1.2160...Your breakeven point is lower than the mid-point at 1.2120...This means that your breakeven point is at 1.2120, which is 10 pips better than with the Double up method, and if you used the 1.2130 as your stop loss, you are profitable on the trade...

So, you always try to drag your average cost as near as possible to your initial price...


Another reason is to capture the majority of the move start with your initial position, capture the intermediate part of the move with a lower position size, and finally capture the final phase of the move with the smallest position size, since probably the move will be fading out as it moves in your favour, unless it's a strong trend...


Thanks,

Nader
  • #20
  • Feb 6, 2006 7:24pm Feb 6, 2006 7:24pm
Nader,

What you describe is pyramiding and not the same thing that was initially discussed. You comments on pyramiding are certainly very valid though.

Doubling up as described originally here is based on this idea:

bet 1 on black and lose
bet 2 on black and lose
bet 4 on black and lose
bet 8 on black and lose
bet 16 on black and lose
bet 32 on black and lose
bet 64 on black and win 64 but if cost you 63 to win it so overall you profit 1

start all over again.

It is guaranteed to work IF there is no house limit (which there is), you have an infinite amount of money (which you don't) and it is a 50/50 chance (which it isn't because of the zero).

Simon
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