Did Martingale work for someone?

I tried Martingale several times using different helping tools. Always had pitiful result. I am sure that some people trade Martingale and heard that some people are happy. But I believe until certain point. Maybe it would work if to close certain losses. But in general I am pessimistic.

Martingale has one major problem that cannot be solved. What ever you set it at it will have a limited range it can cover. For example if you have 7 levels your account can handle and the reentry is 100 pips, if the market moves over 800 against you and stays that way then you are screwed. No matter where you set your range sooner or later the market will exceed it. So no matter how you set a martingale system up it will have a limited range and sooner or later the market will beat that range. That is why they fail. The only way you can make one work is to use it on a limited basis. In other words you limit the loss at some point and hope in the long term your many winners will out gain the occasional losers. I have found that if you limit your loss at around 4-500 pips and only use 3 levels you can be profitable both short term and long term with the less volatile currencies. But the bottom line is dont martingale, the perfect storm will come at some point. You have to have a limit (a place where you take losses) for it to work. You also need to know that super news stories will kill it so you stay away from those markets. Euro default is one. There is no such thing as never losing in Forex and that is the false promise of Martingale.

Hope someone may still be alive to answer this question.

Looks like everybody who tried Martingale tries to avoid even mention about it.

I did try Martingale (on Scalping system). Initially it was like profit for 9 trades and one loss would take almost the 80% (sometimes more) of profit. So I looked hard and seperated the signals into two categories (did statistical running and backtesting to segregage the trades) high chances of profit and lower chances, and didn't use Martingale in the later.
Now ocassionaly I do get striked out but overall Profit Factor is good.

Hope this helps.

I used it with 17 wins in a row, ordered the Ferrari then ofcourse had a losing trade where the direction didn't change direction before my loss was huge and pretty much blew the account.

It's got 2 major issues to over come :-


1. You've got to let your profits run, which is not easy after seeing moderate losses and being heavily in, if you don't the next loss with lose you 10x's your profit.

2. You need a sensible line in the sand to exit on where your loss is manageable think 3x's your average profit not entire account, and the probability is the market won't reverse 5pips later.

I'm working on a new system which will have averaging down so here we go again!!

Martingale has to do with doubling the bet size after each loss, not creating a grid. The two are mutually exclusive.

From what I've read on this forum over the years, I've reached the conclusion that very few people understand Martingale. It is a staking system that doubles your bet/position size very time you lose, and reverts back to the original bet when you win.

With martingale, the doubling creates a 'recovery' mechanism that will always bring the account back to breakeven + 1 unit. In other words, this MM overrides any technical strategy that is being used. Hence all martingale systems are effectively created equal, and all will always win.

However, there is one fatal flaw in martingale. It occurs when a sequence of trades causes the doubling to spiral out of control, to the point there are insufficient funds in the account to make another double. At this point, even if a margin call hasn't occurred, the amount of drawdown is irretrievable. I've heard this sequence referred to as the "death trade".

In other words, all martingale systems are guaranteed to win, until they suddenly and unexpectedly cause total ruin.

It's futile to backtest martingale-based strategies, because the statistical error in trying to calculate how soon an extremely unlikely event (the "death trade") is likely to occur is massively great, invalidating any performance results. Some martingales might show a 5 year, or even 10 year, history without a death trade, but this is statistically meaningless.


There have been many ideas to mitigate the effects of martingale:

1. Instead of doubling, use a less severe staking progression (e.g. 1,1,2,3,5,8, .... instead of 1,2,4,8,16,32, ....). However, this means that it will now take more than 1 win to return the account to breakeven, hence it cripples the recovery rate.

2. Put a limit on the number of doubles, i.e. revert back to 1 unit after only a few losses. Example: after 5 losses, we have lost 1+2+4+8+16 = 31x the original stake. So now, if we revert to 1 unit bets/positions, it will take 31 consecutive wins to atone for the 5 losses. Whereas, with 1 more double, it will take only one win. In other words, an even worse way of crippling the recovery rate.

3. Start with a tiny bet/position size and a huge account. Sure, this allows more doubles before ruin occurs, but it doesn't completely eliminate the risk of ruin, and it reduces any return in like proportion. To explain with an extreme example, there's not much point in making a few cents a day on a multi-million dollar account.

4. Withdraw money from the account after the balance has (for example) doubled, meaning that we're playing with winnings only. There are at least 3 flaws with this approach:
a) The death trade could easily occur before we have the opportunity to withdraw our funds.
b) Assuming our initial stake size is based on some fraction of the money held in the account, then we reduce future returns by withdrawing money.
c) Withdrawing money reduces the number of doubles the account can withstand, i.e. increases the future risk of ruin. (In other words, the opposite idea to that conveyed in point 3).


Martingale is gambling, not trading. If a trader has a genuine edge, he will make money without any need to use martingale, or indeed any MM system that artificially props up his account balance, but is ultimately unsustainable. All any kind of MM can ever do, in itself, is merely redistribute wins and losses (the attached XLS can be used to prove this assertion). The only exception to this rule is that increasing bet/position size in situations when probabilities are more favorable, will increase overall winnings. But this must likewise be weighed up against any increased risk of ruin.

One argument I've heard is that martingale is no more dangerous than flat (consistent) betting/sizing, because without an edge the trader will lose anyway. That's true, but if I risk (say) 1% per trade, I can always abandon ship, and re-assess the situation, if/when a certain drawdown is reached, with the majority of my capital intact. Whereas if one doubles without limit, ruin comes swiftly and without warning, allowing no such opportunity.

There is nothing wrong with using forex as a vehicle for gambling. But I believe that it's important that the 'trader' makes an informed decision, and is fully aware of the potential rewards, and the risks, that are involved.

David

Martingale, stops all of the small SL hits just before it turns which cost you.

Martingale or accepting SL hits, both seems to take out a account in the same average amount of time.


Martingale is in theory, great in slow choppy market conditions, if GU was going sideways for ever it would be the best but a 1000pip move with no let up ='s death!!


I only average down to a limited degree :-


Short GU 1.5000 SL 1.5060 0.1 Lots
Short GU 1.5020 SL 1.5060 0.2 Lots
Short GU 1.5040 SL 1.5060 0.3 Lots

All out at -60, total loss -200 MAX ( not allowing for a gap )

Average price increases to 1.5026


A move to 1.4950 then gets me :-

+50 ( only 1st order in )
+140 ( 2nd order in )
+410 ( all 3 orders in )

The risks on the 3 orders are -60, -80, -60 Less risk more bang potential.


That's the advantage of normal averaging down.


Who's actually got any account even micro big enough to fully Martingale on ??

Also tried this, not only doubling (100% increase in bet size) but with several other combinations 25% increase in bets to 200% increase. (Closing losing trade and opening a new one in different market conditions not necessarily in the same direction)............ , nothing works. Why? for these three reasons:

1. When market goes in one direction, it takes leaps with very little retraces in the opposite side and going in that particular direction may seem indefinite. Sometimes it moves thousands of pips without showinng a decent retrace.

2. Gambling Rule #2: There is a limit to how much one can lose, but no limit to how much one wants to earn.

3. There will always be spells of winning trades and losing trades, martingale cannot survive in a streak.

ps- A study in comparatively less popular Quant Trading may help knowing more about Martingale trading method.

Ahhhh the main issue with trading is, you'll happily put your trade -200 pips into the red in the hope it'll come back, but you'll never hold to +200, +10 and yes profit!!

1 of the lads I chatted to, had a reverse martingale system :-

He went long, 1.5000 $1 per pip, then at 1.5005 $2 then 1.5010 $3 keep going to you add $10 or more.

Theory being, your on trend you get a big move you make huge at $55 per pip fully in, any pull back after being fully in was ofcourse a killer, but as your already in profit by then it allowed him to run a BE SL ( EA moved it for him I think )

Before news, he'd put orders either side in short!!

Tried this as well during a study of martingale extending over 10 years. The issue with martingale studies is that they produce good results in short term, but when you apply this over a longer term its ugly face surfaces.

Once said that, one spike in the opposite direction not only takes away all accumulated porifts of reverse martingale, but also destroys one's operating capacity.

The best way to use martingale is to set boundaries for both "Ultimate" sl and tps. Secondly, for reverse martingale, increase bet sizes early on and not uniformly i.e. after every break.

Putting any control max damage wise on a Martingale just means you get more losers, smaller but more frequent, and the small you make them the more frequent they happen.

You really can't win, unless you've got @4 Zillion Billion in your account to be able to surive the worst case ever imaginable and if so retire already.

Jesse Livermore.

He was an excellent trader of martingale trading. He did both Martingale and Reverse Martingale. Lost millions on martingale and made millions from Revese Martingale. But he had a unique way of applying reverse martingale. One great thing about this unique technique is the advantage of benefiting from reverse martingale without zillion billion dollars. The only requirement are 1. waiting until it breaks a solid support/resistance, and 2. balls of steel.

One can wait, no problem with that, but balls of steel come from calculating risk.

Since aggressive trading requires taking lot more risk for even more profits, nerves get shattered and one backs out. To solve this issue I use this formula:

20% risk for 200% profit. My account reaches margin call like this:

First failed attempt: From $100 to $80 (20% lost)
Second failed attempt: From $80 to $64 (20% lost)
Third failed attmept: From $64 to $51 (20% lost)
Fourth failed attempt: From $51 to $40 (20% lost)
Fifth failed attempt: From $40 to $32 (20% lost)
Sixth failed attempt: From $32 to $25 (20% lost)
Seventh failed attempt: From $25 to $20 (20% lost)

That means I get seven attmpts to double my account. What else can make us happy?

How you use your budget for every entry is yet another study. Jesse has method for that too.

Reverse does sound better, but if you wuss out at +3 pips cause it's damn scarey at $55 per pip then you've got to win 10 times just to cancel out the 1 loser your take.

Trading is the hardest thing I've ever tried to master ( Stocks are easy, beat them but Forex hmmmm ), thankfully I'm in it for the challenge!!

Although I am giving up on day trading and moving to swing!!

Turveyd, trading is the hardest, no doubt about it.

If you are going for swing, may like to read Reminiscences of a Stock Operator. I am still in the initial phase of swing trading, but demo showed excellent results. One great obstacle faced in swing trading is how to justify returns for the time funds remain locked and in the hands of others? The answer was found in "wait for the right time".

I used to swing stocks very well ( until I went to options and BANG went my account LOL ), so should be okay, when I traded stocks I sucked and avoided day trading, so went to daytrading forex for the challenge, so back to swinging and focus more on the money I guess rather than the challenge. Day trading 1 me 0

Only trade pairs which are trending then go with it with the theory the market won't change direction all the time!!

Yes but you are creating a grid. The grid is the limit of your account. So whenever that is met (the limit of your account) and price goes beyond that it has beaten your grid. If you really understand martingale trading that is exactly what you are doing. You are creating a grid where you double down at a 2nd, then a 3rd, then a 4th, point. Where ever you reenter your 2nd trade, etc. you have created a grid. Once you understand that then you understand where and when your martingale system will get beat. I know one guy who is trading 12 levels deep on a martingale system. He has never lost, so far, until he hits the move that beats his 12 levels. That is a grid and martingale is nothing more than a grid system.

Another point. If you use a martingale system that follows the trend it will always enter a trade at the very end of a run and when it reverses you are in big trouble if it is a strong reverse. If you use martingale on a counter trade system eventually a run will happen that doesnt quite make it the retracement you need. So either way you do it the market will beat you at some point because it is a grid.

with martingale one risks too much just for little gain..

The Martingale is a beast...

I've read so many threads & posts where traders experiment with so many systems where they think they can tame this lion into a pussy cat by putting it on a vegan diet... It works for a while but then 2 things happen: the death trade (the beast awakes despite the failsafe systems) or a slow death by a thousand cuts (taking too many small loses just to avoid the death trade).

The only way I've played with it (unconvincingly still) is to make the beast mad & hungry, using the martingale with aggressive settings where I know without any doubt that it is going to blow fairly quickly. If one can manage to milk the system regularly & profitably before it blows without giving in to the panic attacks then it can be an interesting route to explore...