A simple martingale system? | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Martingale, Anti-martingale, and Compounding 40 replies

Martingale, Reverse Martingale, Modified Martingale, Maths 1 reply

Martingale Calculation EA (also reverse martingale) 3 replies

How to change this Martingale to Reverse Martingale ? 3 replies

Martingale vs. Non Martingale (Simplified RoR vs Profit) 1 reply

A simple martingale system?

  • #1
  • First Post: Sep 1, 2010 11:43am Sep 1, 2010 11:43am
This is a system if it works for the folks that work all day
This system applies the coin flip

Use Daily chart

100 TP 100 SL...why? 50/50 chance either way. And 100 eliminates noise

In my opinion....
100TP 50SL is no good cause you will hit 50 more often...ie shoot a basketball from
10ft away or 20ft away. You shoot and hit more baskets at 10ft

50TP 100SL will work but then couple bad days and you have too much ground to make up

Rules....1% for a win...so whatever that works out ie .01 or .1 lots value of your account

All trades MUST complete on their own. ie if it goes 99 up then down for a loss oh well...

Buy or sell?.....whatever the DAILY says at 6-7pm ET(end of day)
Down day then you Sell
Up day then you Buy
Daily chart only
Simple eh?

Place the trade at this time as all markets are closed and will be start of new day
(Asia open)

You win then repeat....

Loss? then you place a 2% trade to make up
Loss again 4% 8% 16% 32%etc

Theory behide system

I'm betting on the power of the coin flip how many times can I (not) pick tails(loss)
WHILE!!! going in the direction of the DAILY trend.
Remember the price can only go in 2 directions up or down. You have 50/50 chance
on hitting either.

Go ahead and play(demo) you have nothing to lose(demo)....once you have set your trades and limits shut it down and go to work or live your life ONLY check
once a day! the limits are with broker so no need to leave on screen all day....

Been doing well(demo) but reason for this post is if there is anyone that sees something really wrong with this system and start a discussion.
I am not here to brag results on demo that is why I'm not sharing any results.
What I want is for others to think about system to see if it will or will not work.

Have a great trading day

B-cat
  • #2
  • Sep 1, 2010 12:32pm Sep 1, 2010 12:32pm
If you want to apply some kind of gambling system I'd recommend a La Bouchere Typ of Betting System instead of Martingale. I did a test that randomly entered trades over a testing period also with fixed TP and SL (both 50). With martingale progression I ended up with 50 USD Gain while having 2600 USD DD. On the other hand the La Bouchere System made 550 USD with "only" 600 USD DD starting with the same positionsize as the martingale one.

Martingal:
http://img844.imageshack.us/img844/3...usd5050001.gif

La Bouchere:

http://img839.imageshack.us/img839/4...eurusd5050.gif

I'd still wouldn't trade any of these I was just curious if there are better and worse betting strategies. Any Strategies that increses the Risk after a loss will end up in enourmous DrawDowns sooner or later.
  • #3
  • Edited 4:21pm Sep 1, 2010 12:45pm | Edited 4:21pm
The eternal debate, I will set you a challenge go find a mathematical paper or thesis that proves Martingale works and I will show you a 100 that it doesn't.

Martingale is about 200 years old and for 200 years it has been mathematically proven beyond any doubt that it does not work, now if you can convince the world mathematically that every mathematician that has lived for the last 200 and looked at this was wrong, I will personally recommend you for the Fields medal and the Chair at Oxford.

Martingale was invented by the French gamblinghouses to keep the gamblers coming back with a guaranteed solution to recoup their losses.

Just use simple mathematics, it would take 1,024 times the initial trade size to overcome 10 consecutive losses and you would need 1 trillion dollars to overcome 30-odd losses if you traded 0.1 lot, and to overcome 50-odd losses you would need the entire moneysupply of the world just to break even.

Let's be honest if you had 1 trillion dollars you wouldn't really be interested in FX trading, or Martingale now would you?

But come on, give us some mathematical proof that this works, people have been trying for ages to get us some, you may well be the first.

Martingale was resurrected by retail brokers so they can get their fingers on your money that much quicker....

Another way of looking at Martingale is the following, a $10,000 dollar account will be wiped out in 11 trades starting with 0.1 lotsize using this ridiculous strategy, and using a MM of 0.01 per $1,000.00, 10 losses would take 250 consecutive winners to make up for it. So you either need a 25:1 r/r ratio or a w/l ratio of 96% just to breakeven over time.
  • #4
  • Sep 1, 2010 2:19pm Sep 1, 2010 2:19pm
Quoting cloggie

Just use simple mathematics, it would take 1,024 times the initial trade size to overcome 10 consecutive losses and you would need 1 trillion dollars to overcome 30-odd losses if you traded 0.1 lot, and to overcome 50-odd losses you would need the entire moneysupply of the world just to break even.
Not that I use a martingale strategy, but are those numbers real calculations? If they're real, that's staggering!
  • #5
  • Edited 2:50pm Sep 1, 2010 2:28pm | Edited 2:50pm
Quoting pipmutt
Not that I use a martingale strategy, but are those numbers real calculations? If they're real, that's staggering!

Yeah, those are real, the one I always use is that 50 losses started at 0.1 lot would need more money just to break even then the entire world has in circulation right now.

I never could figure out why the retailers are so bend on Martingale when there is no mathematical proof to back it up, quite the contrary.

A good area if you want to research this is mathematical modeling in gambling strategies, a fun area of mathematics. There are literally hundreds of papers and thesis available discussing this at length.

This is an old paper, but it proves the point quite eloquently.

http://www.bjmath.com/bjmath/thorp/tog4.pdf

Here is a website dedicated to gambling odds:

http://wizardofodds.com/


There are literally 1,000's of papers disproving Martingale and not a single one proving it, at least mathematically.

This is a typical folk story, no matter how much proof there is to the contrary, there are still loads of people believing in it in face of overwhelming evidence to the contrary.

Then again some still believe in Santa and the Easter bunny too.
  • #6
  • Sep 1, 2010 2:50pm Sep 1, 2010 2:50pm
Quoting cloggie
Yeah, those are real. I never could figure out why the retailers are so bend on Martingale when there is no mathematical proof to back it up, quite the contrary.

A good area if you want to research this is mathematical modeling in gambling strategies, a fun area of mathematics. There are literally hundreds of papers and thesis available discussing this at length.

This is an old paper, but it proves the point quite eloquently.

http://www.bjmath.com/bjmath/thorp/tog4.pdf

Here is a website dedicated to gambling odds:

http://wizardofodds.com/...
Thanks for the links, I've just downloaded the pdf.

It seems to me the attraction of martingale strategies is the hope that a win comes up before going bust.

Quoting cloggie

Then again some still believe in Santa and the Easter bunny too.
What, you mean........

lol
  • #7
  • Sep 1, 2010 2:54pm Sep 1, 2010 2:54pm
Quoting pipmutt

It seems to me the attraction of martingale strategies is the hope that a win comes up before going bust.

That's it, just like most misconceptions in retail trading. But 1,000's of people still discuss it, contemplate it and even use it even though there is no mathematical proof supporting it.

The whole point about developing a solid strategy is to skew the odds in your favour and using Martingale would make that neigh on impossible.

Just some basic knowledge of math and some Excel skills would quickly see the futility in Martingale. Maybe the retailers don't want to see it proven wrong clinging on to the folkore instead and hoping that they are the one that it would work for miraculously.
  • #8
  • Sep 1, 2010 3:16pm Sep 1, 2010 3:16pm
Sorry Cloggie

There is another element to the system.....while I agree with you and your stats I am using a little bit of forex common sence....can you lose 10 in a row? techically yes. but going in the direction of the trend after a loss reduces you chances of 10 losses in a row. I mean you have to apply a little bit forex fundamentals. This is what we are here for.
  • #9
  • Sep 1, 2010 3:19pm Sep 1, 2010 3:19pm
Hi bc,

How long have you traded this strategy? What is the hit rate (winning %)?

Regards,
BC2
  • #10
  • Sep 1, 2010 3:22pm Sep 1, 2010 3:22pm
you can lose 10 in a row very easily, the more you trade the more chances you have to go bust.
  • #11
  • Sep 1, 2010 3:24pm Sep 1, 2010 3:24pm
Quoting bordercat
Sorry Cloggie

There is another element to the system.....while I agree with you and your stats I am using a little bit of forex common sence....can you lose 10 in a row? techically yes. but going in the direction of the trend after a loss reduces you chances of 10 losses in a row. I mean you have to apply a little bit forex fundamentals. This is what we are here for.

Nothing to be sorry about, some of the best mathematicians using the fastest computers can't make this work, so unless you are a mathematical genius, have a Cray parked in your basement and visit forums like this in your spare time, your efforts would be best directed in finding a strategy that works and can sustain a few more losses then 10.

Like I say to most here, it is your money, you can throw it away as fast as you want to. We need liquidity providers, the more the merrier.
  • #12
  • Sep 1, 2010 3:26pm Sep 1, 2010 3:26pm
Quoting bordercat
can you lose 10 in a row? techically yes.
I've had 14 losses in a row on a system with a 65% win rate earlier this year, those kinds of numbers are hardly unexpected.
  • #13
  • Edited 3:39pm Sep 1, 2010 3:28pm | Edited 3:39pm
Quoting Razzle
I've had 14 losses in a row on a system with a 65% win rate earlier this year, those kinds of numbers are hardly unexpected.

Using Martingale, and a few million dollars to make up for the 14 losses you would have needed over 4,000 consecutive winners to make up for it.

And can we call it Levien, because it was Paul Levy who first introduced it, Martingale just nicked it.

But then Levy nicked it from a cloggie, Huygens who really was the father of probability theories, he was an interesting fellow who came up with this 400 years ago, google "De ratiociniis in ludo aleae" the first published work on money mangement and probability theories.

http://books.google.co.uk/books?id=G...0aleae&f=false

Mathematicians still use his basic theory today in trading.

Ah well, enough history lessons and offering mathematical proof that Martingale will never work. You guys are on your own.

Good Luck.
  • #14
  • Sep 1, 2010 3:47pm Sep 1, 2010 3:47pm
Quoting cloggie
Using Margingale, and a few million dollars to make up for the 14 losses you would have needed over 4,000 consecutive winners to make up for it.
I thought the basic principle of martingale was that the 15th winning trade would make up for previous losses and leave me 1 unit ahead ?
I suppose the argument your using is that I'd need 4000 winners to recover from the losses if I was forced into using my original position size, and not doubling (its too late in the day to do the maths !)


I was reading a thread at forex TSD, they have a sort of service that allows automated systems to broadcast signals to subscribers, many of these are based on martingale style progressions. One of the more sensible members was complaining that it was irresponsible to promote these types of things, on the basis that they always fail. More specifically, TSD where actively promoting these due to the method they'd employed to rank performance.

To his credit, the administrator openly admitted that was exactly the case. His research had indicated that his members where demanding betting style systems where they take a punt, and potentially make money quickly, or go bust. As there was no interest in long term low drawdown style returns the ranking was designed to penalise them.

Comments from other members seamed to back up his conclusion, they just wanted to take a punt and hope they get lucky, and forex provided a vehicle for them to do that. I supose its just a pity that this liquidity rarely hits the real market
  • #15
  • Edited 4:20pm Sep 1, 2010 4:05pm | Edited 4:20pm
Quoting Razzle
I thought the basic principle of martingale was that the 15th winning trade would make up for previous losses and leave me 1 unit ahead ?
I suppose the argument your using is that I'd need 4000 winners to recover from the losses if I was forced into using my original position size, and not doubling (its too late in the day to do the maths !)


I was reading a thread at forex TSD, they have a sort of service that allows automated systems to broadcast signals to subscribers, many of these are based on martingale style progressions. One of the more...

All these commercial EA's and signal providers use Levy/Martingale, that is the only way to make up for the lossmaking methods, just add a bit of luck and hopefully it will make money. That's why they all eventually fail, they have to, call it mathematical inevitability.

Come on do you really think you can buy a profitable system for a few hundred bucks? They are worth millions in the City. Look at the big quants, they spend hundreds of millions on modelling markets. Don't you think if these retail system worked they would not safe all that money and spend $99.00 instead?

We are digressing though, back to the subject.

Bordercat, if you can make Martingale work as the first person in the world, drop me an email, I will buy your system for 500k. But I do want to see 1,000 trades over 3 years, with a DD of less then 10% peak to valley and a return of double the SnP with a Sharpe comparable to similar strategies as taken from Barclays Index. So you only need to make about 30-50% a year profit and only have to show about one trade a day.

Oh and Goldman, if you are reading this, don't go offering the guy 10Mill, I found him first....
  • #16
  • Sep 1, 2010 4:29pm Sep 1, 2010 4:29pm
Quoting cloggie
Come on do you really think you can buy a profitable system for a few hundred bucks?
Noone with two functioning brain cells to rub together could possibly think that.

However having said that, there's no shortage of morons who do
  • #17
  • Sep 1, 2010 4:32pm Sep 1, 2010 4:32pm
Quoting Razzle
Noone with two functioning brain cells to rub together could possibly think that.

However having said that, there's no shortage of morons who do

That's why only 5% make it in this business, they understand that it takes hard work and dedication and there are no shortcuts.
  • #18
  • Sep 1, 2010 6:03pm Sep 1, 2010 6:03pm
Quoting cloggie

Oh and Goldman, if you are reading this, don't go offering the guy 10Mill, I found him first....
lol, great post!

Just been reading that pdf, it's riveting stuff, I can't put it down!
  • #19
  • Sep 1, 2010 6:24pm Sep 1, 2010 6:24pm
Don't think you are likely to take 10 losses in a row? Take a look at this post I made a while back:

http://www.forexfactory.com/showpost...11&postcount=7

34 losses consecutively!

10 losses in a row happens to me all the time. It happens so often in fact that I now view it as perfectly normal.......frustrating, but perfectly normal. And yes, I trade in the direction of the trend, but I can assure you that makes no difference to the certainty that you will still take 10 or more losses back to back at some point.

Good luck!
  • #20
  • Sep 2, 2010 8:44am Sep 2, 2010 8:44am
Hey Thanks for the discussion everyone....

I my own humble opinion with 100TP and 100SL if I cant pick 1 out of 10 right then I need to pick a different way to make money. Or as they say print off the chart and give it to a 5yr old child to chose the direction.

Flotsom what were you doing? dont mind me asking...cuz you had a great
system going....34 losses in a row? that could be 34 wins too if you did the opposite.....
Having tight stops and profits I could see having a bad run but over 100pip stops dont see how....but hey I been wrong before just ask my wife

b-cat
0 traders viewing now