Doubling up is martingale? | Forex Factory

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Doubling up is martingale?

  • #1
  • First Post: Jun 13, 2012 7:54am Jun 13, 2012 7:54am
I know that entering double the lot size after a loosing trade is martingale. (well I dont know the exact specifics)

What is it when you double up using the profits or partial profits of a win.

eg: winning trade =100$
so next trade I risk 50$ if win becomes eg 300$
so next trade I risk half of total profits = 200$
if next I loose I loose the house money.

whats that called?
  • #2
  • Jun 13, 2012 9:02am Jun 13, 2012 9:02am
Increasing position size after a loss = martingale

Increasing position size after a win = anti-martingale
  • #3
  • Jun 13, 2012 9:20am Jun 13, 2012 9:20am
ah
so I would think there would be more people coding ea's this way no? But I dont seem to see ones like this (just wondering, I dont trade with ea's)

After each win risk a little more of the house money and after a loss revert to a lower lot size and increase after each win.
  • #4
  • Jun 13, 2012 9:42am Jun 13, 2012 9:42am
Quoting moneydeep
I know that entering double the lot size after a loosing trade is martingale. (well I dont know the exact specifics)

What is it when you double up using the profits or partial profits of a win.

eg: winning trade =100$
so next trade I risk 50$ if win becomes eg 300$
so next trade I risk half of total profits = 200$
if next I loose I loose the house money.

whats that called?
If you referencing adding additional positions onto an already active trade that is currently positive then it would be noted as Pyramiding. Pyramiding is an art that uses the strength of a trend and its minor pullbacks to use the current profits to add new trades. How far a Pyramid can go depends on a variety of factors but it is possible to build multiple long tail trades that were executed without any risk to your current set balance.

If your referring too closing a trade and then using a portion of your winnings as added risk to your normal position I am not sure on what it is called.

ie 100 profit leads to balance of 5100
Normal trade risk of 2% would mean 100 plus a portion of the newly added 100.
  • #5
  • Jun 14, 2012 5:34am Jun 14, 2012 5:34am
"A cool, disciplined trader will take an average system and make money with it. A nervous, arbitrary trader will take a brilliant system and wreck it."

Razor_trader, love your signature, but was wondering, is it really such a thing as a "brilliant system"?
  • #6
  • Jun 17, 2012 8:28am Jun 17, 2012 8:28am
Quoting ladylyn
"A cool, disciplined trader will take an average system and make money with it. A nervous, arbitrary trader will take a brilliant system and wreck it."

Razor_trader, love your signature, but was wondering, is it really such a thing as a "brilliant system"?
Well if we talk in terms of mechanical entries defined by a set of rules that when the rules say trade a person trades and that 'system' over a long period of time returns a positive sum, that could be considered a brilliant system.

The term is coined from the workings of Peter Crown and Joel Rensink and I have had the signiture for so long I cannot remember just whose work I copied it from. Basically I break it down to a person who is not suited to trade, a person who cannot control their emotions or has no set mentality to trading in a manner that may create longvetity for their account, you could hand a system that is highly successful (or in past tense has been as past results are not indicative of future success) to them and chances are they will struggle. On the opposite spectrum a disciplined trader, not necessarily already successful, could take a normal system and be able to run with it.

More or less, there is personal significance in the signiture because I read it for the first time when I was working on a problem by where I was able to see plenty of potential in others works but could not make it work myself. It took me a while to discover that it was not the systems that were the problem but my own mentality to trading. It took me longer to work on the personal aspects of trading, coming to terms with the risk of money and moving away for a gambling mentality whilst understanding that you can only work off a probable outcome of each new situation and that regardless of the homework you do there will be many times when you are wrong, even in situations where the most likely and probable outcome is in the direction you act upon. The markets cannot be willed in your direction.

RT
  • #7
  • Jun 22, 2012 5:56am Jun 22, 2012 5:56am
Yep, completely agree with you.
When I posted about your signature my thoughts were exaclty these - "you could hand a system that is highly successful (or in past tense has been as past results are not indicative of future success)" and that's why I became curious

I think that one big mistake is getting stuck to a system that has been profitable in the past and don't realize that it's not anymore!

Happy trading
  • #8
  • Jun 22, 2012 6:03am Jun 22, 2012 6:03am
Quoting Razor_trader

If your referring too closing a trade and then using a portion of your winnings as added risk to your normal position I am not sure on what it is called.
It's simply a creative form of Money Management.
  • #9
  • Jun 22, 2012 6:12am Jun 22, 2012 6:12am
Here's something I wrote years ago and I was surprised I was able to find it. Take it for what it's worth, the main idea being that one is not limited to a one size fits all approach to MM. And yes, I do this.


Another method is to consider your capital and your profit separately.

Let’s say you have $10,000 starting capital. You consistently risk 2% per trade. You make 10%, or $1,000 profit. You then risk more of your profit than your capital.

Capital risk = 2% of 10k = $200
Profit risk = 4% of 1k = $40
Total risk = $240

If you were to use a straight 2% of capital it would be

Capital risk = 2% of 11k = $220

You could use thresholds on this system as well. As you make more and more, you risk more.

Once you hit a predefined point, pull your profit into capital. For example, let’s say your profit has now reached $5,000. You now consider the entire 15k as capital instead of capital and profit. So you now put your next trade on as

Capital = 15k x 2% = $300.

Once you make a profit, you now start over again risking more of the profit than capital.
The idea is to protect your profit at some point.

How you do something like this is totally open to you. If you have the appetite for it, then risk a lot of your profit. It’s how you can grow it quickly. They key is to not go nuts with your capital. You need this to stay in the game.


The drawback with a system like this is that when you hit a loser you’ll have a larger position on. But that’s ok. If you’re a trend follower for example, when you hit a trend that lasts for a while, you should hit a series of winning trades. The idea is to keep ramping up your risk while trading conditions are good for your system.

If you’re a range trader and you hit a persistent range, then you’ll also hit a series of winners and you’ll keep ramping your risk.

It doesn’t have to be anything dramatic, but it could be if you want it.

The main idea is that you don’t have to just use a consistent risk. We all get lucky at times and you want to capitalize on that luck when it happens.

The great trader Paul Tudor Jones did just this. He started his fund and took relatively large risks. When he started winning he kept pressing it. In his first 5 years he never made less than 150% return. After 5 years he dropped his risk, started making a consistent 20% return pa and he now manages over 12 billion dollars.

Money management is what you want it to be. Be creative, be daring, but don’t be stupid and reckless. Have a plan and stick to it.
  • #10
  • Jun 22, 2012 3:19pm Jun 22, 2012 3:19pm
Quoting Razor_trader

If your referring too closing a trade and then using a portion of your winnings as added risk to your normal position I am not sure on what it is called.
Aggressive compounding?

Some money managers used to do it (some probably still do). If they've had a very good month they'll use part of their gains for risk towards the end of the month, if they win they've had an exceptional month, if they lose it's still a good month to keep clients happy.

I think someone else mentioned it doesn't have to only be when a trade is closed, gains on open profitable trades can be compounded in a similar way.
  • #11
  • Jun 22, 2012 5:00pm Jun 22, 2012 5:00pm
I average down all the time, if the 2nd average positions over all are positive then who cares what it's called, it's making money and keep doing it.

Mine are most definately positive!

I ramp up my lot sizes while I'm in profit playing with other peoples money, but doing it at the end of the month and risking giving back most of the months profits for us that don't get a bonus is kinda silly ofcourse.

Don't hold long enough to increase lot size due to open profits, can't see it making much difference unless your holding onto really long term >1000pip profits.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #12
  • Jun 23, 2012 2:53am Jun 23, 2012 2:53am
Quoting Turveyd

I average down all the time
Which is probably why your account keeps going back to $100, you make a few bucks on a series of winning trades and then give it all back on one or two losers!


Quoting Turveyd

I ramp up my lot sizes while I'm in profit playing with other peoples money, but doing it at the end of the month and risking giving back most of the months profits for us that don't get a bonus is kinda silly ofcourse.
Who said anything about 'most', it's just a percentage of gains, an acceptable/respectable monthly return will still be there.


Quoting Turveyd

Don't hold long enough to increase lot size due to open profits, can't see it making much difference unless your holding onto really long term >1000pip profits.
Is that why you've been trying desperately for the past 6 years to ride the trend instead of taking ~6 or 7 pips counter trend and averaging losers?

  • #13
  • Jun 23, 2012 3:54am Jun 23, 2012 3:54am
Quoting Dopey
Here's something I wrote years ago and I was surprised I was able to find it. Take it for what it's worth, the main idea being that one is not limited to a one size fits all approach to MM. And yes, I do this.


Another method is to consider your capital and your profit separately.

Let’s say you have $10,000 starting capital. You consistently risk 2% per trade. You make 10%, or $1,000 profit. You then risk more of your profit than your capital.

Capital risk = 2% of 10k = $200
Profit risk = 4% of 1k = $40
Total risk...
Aha this is what I was looking for. Great answer. It does make sense to risk a little of your profits including your capital when you've had a better month.
  • #14
  • Jun 23, 2012 4:01am Jun 23, 2012 4:01am
Quoting pipmutt
Which is probably why your account keeps going back to $100, you make a few bucks on a series of winning trades and then give it all back on one or two losers!




Who said anything about 'most', it's just a percentage of gains, an acceptable/respectable monthly return will still be there.




Is that why you've been trying desperately for the past 6 years to ride the trend instead of taking ~6 or 7 pips counter trend and averaging losers?

Since I started averaging down and ignoring the you can't do that, I haven't blown an account in years, so there.

Just below my $400 nemesis should have that nailed, Monday all being well!!

No resistance till $6000 which I failed to get over for months trading options, likely not helping by hitting 6K and spending 2K.

Damn Trolls!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #15
  • Jun 27, 2012 11:27pm Jun 27, 2012 11:27pm
Quoting jeanlouie
Increasing position size after a loss = martingale

Increasing position size after a win = anti-martingale
I wanted to post the same thing
  • #16
  • Jun 28, 2012 4:16am Jun 28, 2012 4:16am
Quoting leopard31
I wanted to post the same thing

But that's just illogical brain washing, it's not a loss until you close out for a loss.

If the Market is say over 1.2500, say 1.2515 at the time, and you think it'll go up and 1.2500 will hold, but don't want to miss it, why not take a position at 1.2515 rather than miss the boat, and if it goes lower and 1.2500 is holding, why not get a 2nd position say 1.2505, say SL for both is 1.2495.

You've increased your risk by 50% while increasing your profit potential by over 100%.

Martingaling, is an extreme example with no at loss exit plan.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #17
  • Jun 28, 2012 4:52am Jun 28, 2012 4:52am
Quoting Turveyd
it's not a loss until you close out for a loss.
Then what is it?
  • #18
  • Jun 28, 2012 5:03am Jun 28, 2012 5:03am
Quoting leopard31
Then what is it?

You open all trades at -2pips say for the spread, you could argue never to open a trade at a loss but you do.

It's an open trade, with a profit potential and a loss risk like all trades.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #19
  • Last Post: Jun 29, 2012 10:34pm Jun 29, 2012 10:34pm
If you vary your position sizes, then you'll win more if your bigger positions happen to coincide with winning trades, and lose more if they happen to coincide with losing trades. It's that simple.

Like Dopey says, it makes sense to increase risk if markets are currently trending strongly, or the probabilities are otherwise extraordinarily in your favor. But, as always, you must also weigh up trade risk against possible risk of ruin, or at least serious drawdown.

However, increasing position size merely to kick start a small account; or to recover from recent losses; or because you feel more comfortable risking recent profits rather than capital; none of this has any mathematical basis. You're simply playing a fortuitous game of hit or miss. Market probabilities and behavior aren't going to change because of your your recent P/L, or your personal and arbitrary view of your account situation. And the effect of recent P/L is no different to the effect of more historically distant P/L; ultimately all dollars won or lost are exactly the same. It's funny how our minds can play tricks on us.
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