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Martingale... How to make it WORK for YOU!

  • #21
  • Oct 20, 2012 8:10am Oct 20, 2012 8:10am
Quoting pmullin86
The point at which you stop is the point when you reach the max drawdown that you have set aside for this. Which the example I gave was 15% so once I lose 15% I stop and just try again the next day...
ok i get that,

but lets say you lose 15 % ,and stop,next day you also dont win,now the account is 30 % down,and so on,you reach account destruction very quickly,thats not to mention your slow % increase on account growth,

hey maybe im missing somthing !
  • #22
  • Oct 20, 2012 8:21am Oct 20, 2012 8:21am
Quoting diceman555
ok i get that,

but lets say you lose 15 % ,and stop,next day you also dont win,now the account is 30 % down,and so on,you reach account destruction very quickly,thats not to mention your slow % increase on account growth,

hey maybe im missing somthing !

That would mean that you've lost 8 trades in a row and probably should look into a different trading strategy or system or whatever the case...I know a lot of people who trade the freebie system and even my own strategy which has borrowed quite a bit from the freebie system does not incur such horrible drawdowns or lose streaks so winning 1/4 trades is quite feasible and would work for me. I mean think about it...your telling me that lets say you take one pair the eur usd and lets say the 1 hour time frame...your saying that someone can not simply take one profitable entry out of four different entries..I personally just find something wrong with that....but of course you wouldn't approach this without a system with a good win percentage or win ratio...you just have to make the numbers work for you...even just throwing a moving average and a stochastic on a chart lends you at least a 25% accuracy rate...
No man is free who is not a master of himself. -P.M.-
  • #23
  • Oct 20, 2012 8:26am Oct 20, 2012 8:26am
Quoting pmullin86
That would mean that you've lost 8 trades in a row and probably should look into a different trading strategy or system or whatever the case...I know a lot of people who trade the freebie system and even my own strategy which has borrowed quite a bit from the freebie system does not incur such horrible drawdowns or lose streaks so winning 1/4 trades is quite feasible and would work for me. I mean think about it...your telling me that lets say you take one pair the eur usd and lets say the 1 hour time frame...your saying that someone can not simply...
yes i agree with your points,

the fact you have a stopping point is relevent,

im just playing devels advocate,

but black swans do infact exist
  • #24
  • Oct 20, 2012 8:41am Oct 20, 2012 8:41am
Quoting diceman555
yes i agree with your points,

the fact you have a stopping point is relevent,

im just playing devels advocate,

but black swans do infact exist

Yes I do agree with the fact that black swans do exist and for that is why we are traders and as professional traders we know when its time to stop and adjust so if that rare occurrence does happen where you have two days with nothing but losses than we can assess the situation and say ok well this is my main account so I probably need to revert back to normal money management techniques to get this back to at least break even at least or to less of a significant percentage of loss before resuming the martingale or the second scenario you could have multiple accounts as I mentioned I would do in which your seperate account is strictly for martingale alone in which you are prepared to deal with such rare instances BUT because that may be a rare occurrence we have three different probabilities 1.) it never happens 2.) it happens when the account is already in great profit so the profits absorb the drawdown period or the drawdown percentage is not so bad or 3.) it takes us to a great drawdown percentage in which we must stop and trade back to normal more agreeable percentages.... so out of those 3 options 2 are not so bad and those 2 are more probable to occur than just the one negative impact on the account. Its the law of probabilities as the worst case scenarios has a 33 percent chance of happening over the two combined more favorable scenarios of 66% chance of occuring.
No man is free who is not a master of himself. -P.M.-
  • #25
  • Oct 20, 2012 8:43am Oct 20, 2012 8:43am
Quoting diceman555
yes its a bit heavy reading,but the bottom line is the only martingale that can work is sub martingale,but even then we are never sure of the point in which we stop,

if sombody was able to work that out,then the game would be over,

everthing else is pure luck

What do you think these big hedge fund and investment firms are doing with their super algorithm trading computers which trade nothing but numbers and work around money management strategies similar to this and the game is not over for us. They have been doing it for years...
No man is free who is not a master of himself. -P.M.-
  • #26
  • Oct 20, 2012 8:46am Oct 20, 2012 8:46am
I joined the list of election, lol To use martingale and make it work for me and very important when and where to put the martingale salaam
  • #27
  • Oct 20, 2012 9:25am Oct 20, 2012 9:25am
[quote=pmullin86;6118069]What do you think these big hedge fund and investment firms are doing with their super algorithm trading computers which trade nothing but numbers and work around money management strategies similar to this and the game is not over for us. They have been doing it for years...

i have no idea how hedge funds operate,but id be very surprised if they are risking 15 % of there clients money on 4 trades,and doubling up every loss,

i cant see how you can compare doubling up at every loss to high frequency trading modules,

but as ive said im merely asking laymans questions
  • #28
  • Oct 20, 2012 9:35am Oct 20, 2012 9:35am
[quote=diceman555;6118108]
Quoting pmullin86
What do you think these big hedge fund and investment firms are doing with their super algorithm trading computers which trade nothing but numbers and work around money management strategies similar to this and the game is not over for us. They have been doing it for years...

i have no idea how hedge funds operate,but id be very surprised if they are risking 15 % of there clients money on 4 trades,and doubling up every loss,

i cant see how you can compare doubling up at every loss to high frequency trading modules,

but...

I didn't mean I think the hedge fund managers are doing it in such a literal sense but I just meant some form or deviation of the method but your right who knows...I just mentioned that from some pretty interesting articles I read a while back somewhere but who really knows...
No man is free who is not a master of himself. -P.M.-
  • #29
  • Oct 20, 2012 9:39am Oct 20, 2012 9:39am
Objection ! Dredding !

with 1% growing everyday, 1 year isn't 240%

with compounds effect it's = 1089.25537%

lol



Quoting Dredding82
I am going to keep it short simple and to the point.


"Trading is SIMPLE....OVER THINKING is HARD!"



To use martingale and make it work for you...there is only 3 factors you need to consider.........


1.) Account Funds!

2.) Maximum Draw Down you are willing to let your account go to.

3.) Possible entries into a trade that your will system give in a given period.


Using martingale is not crazy nor is it impossible to make a profit....
  • #30
  • Oct 20, 2012 9:40am Oct 20, 2012 9:40am
[quote=pmullin86;6118120]
Quoting diceman555


I didn't mean I think the hedge fund managers are doing it in such a literal sense but I just meant some form or deviation of the method but your right who knows...I just mentioned that from some pretty interesting articles I read a while back somewhere but who really knows...

thats true,i certainly dont,i wish i did,

  • #31
  • Edited 10:19am Oct 20, 2012 9:53am | Edited 10:19am
[quote=diceman555;6118129]
Quoting pmullin86


thats true,i certainly dont,i wish i did,


Here is something interesting that you can read in which it describes how a martingale signals a complete market and it defines it thoroughly in a sense that I'm sure that a lot of programmers and algorithms traders consider when creating there computers to trade for those big companies and such...kind of some incomplete thoughts in this post but this is a bit rushed at the moment but anyway attached is that file I mention...Its all math...with this you delve into arbitrage and all of those complicated strategies that I'm sure there is no arguing that investment firms and institutions do use without a doubt...
Attached File(s)
File Type: ppt IIa Martingale Math.ppt   174 KB | 1,183 downloads
No man is free who is not a master of himself. -P.M.-
  • #32
  • Oct 20, 2012 10:53am Oct 20, 2012 10:53am
Quoting Dredding82
You never trade off your ACCOUNT BALANCE.....

$10,000.00 account

16% MAX Draw Down

$1,600....this is your "Account Balance" you will use for your Money Management every day.

So if i want to make 1% per day....it would be 1% of the $1,600. Which is only $16 bucks....it does not sound like alot...but does your bank pay you $16 bucks per day?
I traded a lot with Martingale and because of your combination of your strategy and the low initial risk I am sure
you will never get a margin call but win 1 % daily almost every day ( maybe every day).

But in the first posting I think you are misleading people.
At least I thought you start with 1% of your account balance.

In reality you start with 0.16 % and each day you make 0.16 % , not 1% .

20 trading days x 0.16 = 3.2 % monthly.

No bank is paying us 3.2 % monthly, so your method is excellent in my books.
  • #33
  • Oct 20, 2012 11:18am Oct 20, 2012 11:18am
Quoting fxtr51
I traded a lot with Martingale and because of your combination of your strategy and the low initial risk I am sure
you will never get a margin call but win 1 % daily almost every day ( maybe every day).

But in the first posting I think you are misleading people.
At least I thought you start with 1% of your account balance.

In reality you start with 0.16 % and each day you make 0.16 % , not 1% .

20 trading days x 0.16 = 3.2 % monthly.

No bank is paying us 3.2 % monthly, so your method is excellent in my books.

You do start with 1% but from what he is saying in the first post is if you want to use a max drawdown of 16% than that amount of $160 is the most that you can totally risk for the day. But you are still risking the initial amount of 1% to begin with...but you are right indeed as no bank is still paying 3.2% a month and barely can get that in a year from a bank...lol...
No man is free who is not a master of himself. -P.M.-
  • #34
  • Oct 20, 2012 11:45am Oct 20, 2012 11:45am
Quoting pmullin86
I agree with what Dred is saying as it makes completely perfect sense...if your system doesnt have at least a 25% hit rate than something truly is wrong.....and thats all you really need for this thing to work. 1/4 trades to be profitable because think about it guys...you lose the first trade and you are down 1% so you double up the next trade and lets say you lose 2% so you double up the next trade than you lose 4% and double up the next trade which you are risking 8% and that trade hits 1:1 so than there is your 1% of profitability but it comes...

I still remember the day , when idea popped up in my about martingale and i was dreaming that i would be billionaire in couple of days.( Lol i tried it on roulette in Atlantic city )

What a days those where ....

Anyway my suggestion do one experiment before you go live with martingale.

Toss the coin 1000 times ...and note the results ...and see how many time you get heads or tails ( 7 times in a row).

Remember it has 50/50 probability , way better than your safety statement of 1/4 , you gave above.


Long story short ... NO matter what kind of money management strategy you use ..
be it a Martingale ,
Reverse Martingale,
Fibonacci ,
parlay ,
6 point divisor ...etc...

If your system or strategy has less than 50% chance of making 1:1 trade ,,than above money management strategies wont help you.


And if you have really got an edge of More than 50% chance of making 1:1 trade than you DONT need all this money management strategies...you are already profitable.

( I know some of you guys will curse me for trying to pop the bubble of wonderful imagination but if it saves you from blowing accounts i am fine with it.)
  • #35
  • Oct 20, 2012 2:10pm Oct 20, 2012 2:10pm
Quoting frontline141
Objection ! Dredding !

with 1% growing everyday, 1 year isn't 240%

with compounds effect it's = 1089.25537%

lol

Oh hush up....lmao

You know what i mean...if you only compounded yearly .....using different compounding rates will produce more profit....
  • #36
  • Oct 20, 2012 2:16pm Oct 20, 2012 2:16pm
Quoting fxtr51
I traded a lot with Martingale and because of your combination of your strategy and the low initial risk I am sure
you will never get a margin call but win 1 % daily almost every day ( maybe every day).

But in the first posting I think you are misleading people.
At least I thought you start with 1% of your account balance.

In reality you start with 0.16 % and each day you make 0.16 % , not 1% .

20 trading days x 0.16 = 3.2 % monthly.

No bank is paying us 3.2 % monthly, so your method is excellent in my books.
It may be misleading to those without proper knowledge of true money management...

How do you think you get that APY from your bank...they pull accounts together to have a big account to use to trade. They then define the risk for that huge account(1%-20%) then they use that amount as there "trading capital"

Of course alot of people on here and across the trading world that are newbies do not fully understand money management. Everyone thinks they just take the total account balance and a % they feel comfortable losing...and trade off that...but they almost never factor in how many pairs...or how many possible setups they can have....so their MM is....well BULL SHIT...and its why alot of newbies blow accounts, even if it takes them a year to do it.
  • #37
  • Oct 20, 2012 2:22pm Oct 20, 2012 2:22pm
Quoting ronaleo10
I still remember the day , when idea popped up in my about martingale and i was dreaming that i would be billionaire in couple of days.( Lol i tried it on roulette in Atlantic city )

What a days those where ....

Anyway my suggestion do one experiment before you go live with martingale.

Toss the coin 1000 times ...and note the results ...and see how many time you get heads or tails ( 7 times in a row).

Remember it has 50/50 probability , way better than your safety statement of 1/4 , you gave above.


Long story short ... NO matter...
I understand what you are trying to say...but there is just one problem with that coin toss...you do not have a 50/50 chance....its pure randomness ...

You can not use a trend line, moving average...RSI...CCI....Stoch ....etc to judge trend or momentum.....

You can not know how many times you will flip tails before you flip just 1 heads.....

With trading we have indicators.....which gives us an average....we also what period we are looking to make a profit in.....with the use of just 1 indicator and knowing the period in which we wish to make a profit we can factor in the possible trades it will take to reach 1 winning trade to hit the 1:1 risk to reward.
  • #38
  • Oct 20, 2012 2:26pm Oct 20, 2012 2:26pm
Quoting fxtr51
I traded a lot with Martingale and because of your combination of your strategy and the low initial risk I am sure
you will never get a margin call but win 1 % daily almost every day ( maybe every day).

But in the first posting I think you are misleading people.
At least I thought you start with 1% of your account balance.

In reality you start with 0.16 % and each day you make 0.16 % , not 1% .

20 trading days x 0.16 = 3.2 % monthly.

No bank is paying us 3.2 % monthly, so your method is excellent in my books.

As for making 1%....you are making 1%....just not of your total account balance....which should never be used besides to find your trading capital and to see your YoY growth of the account.

Im sure you have read or seen a number of thread or books....none ever really go into Money Management but to say never risk more then 2%-5%....when they say that they mean of your total account balance and you must divide that by the number of pairs or stocks and the possible number of trades you plan to place in that period....

But since you think it is misleading...and to tell you the truth i was bored as fuck looking at reports and just about shit faced when i wrote the #1 post LMAO! I will edit the post to explain it a bit better.
  • #39
  • Oct 20, 2012 2:44pm Oct 20, 2012 2:44pm
Quoting ronaleo10
I still remember the day , when idea popped up in my about martingale and i was dreaming that i would be billionaire in couple of days.( Lol i tried it on roulette in Atlantic city )

What a days those where ....

Anyway my suggestion do one experiment before you go live with martingale.

Toss the coin 1000 times ...and note the results ...and see how many time you get heads or tails ( 7 times in a row).

Remember it has 50/50 probability , way better than your safety statement of 1/4 , you gave above.


Long story short ... NO matter...
And you dont even need a 50% chance of making a profit...even a 25% chance will work....You are still very new to FF and still seem green behind the ears...

Please trade a bit more and be profitable ....then comment on my threads....newbies input on a subject they have never used, tried or have a true understanding of....well that is like me asking you to trade one of my accounts....its just STUPID.......lol
  • #40
  • Oct 20, 2012 3:24pm Oct 20, 2012 3:24pm
Quoting Dredding82
As for making 1%....you are making 1%....just not of your total account balance....
?
Fuck Forex Factory.Wake up people.
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