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

  • #61
  • Oct 20, 2012 4:41pm Oct 20, 2012 4:41pm
Quoting Dredding82
oh im serious.....its very easy to have an EA make up to 4 trades per day and make at least one of them profitable....
Martingale shifts your risk profile greatly so it becomes more about how much you lose when it fails, not how you can have a winning day.

1% per day, 10%... doesn't matter if you give it all back the day it fails to work.
FXGears.com
  • #62
  • Oct 20, 2012 4:45pm Oct 20, 2012 4:45pm
Quoting Jack_Larkin
Martingale shifts your risk profile greatly so it becomes more about how much you lose when it fails, not how you can have a winning day.

1% per day, 10%... doesn't matter if you give it all back the day it fails to work.

Look finding a few select setups for entry into positions is very easy....

I can not say this but once more....with the use of INDICATORS....and knowing the PERIOD....we can calculate how many possible trades we could enter per period(1 Day) using the period of the indicators and the period of the time frame....

So if we know for a FACT we will have between 1-5 possible setups(my system i use)...and for a FACT 1 of those trades WILL reach the TP of 1:1.....we then can do the SIMPLE MATH...and limit the risk.....make a steady profit....and not shit our pants....
  • #63
  • Oct 20, 2012 4:46pm Oct 20, 2012 4:46pm
Quoting shanewatson
I don't think it is smart martingale system. I don't like martingale system as it increase the risk of forex trading. I don't think it is a money management system and I think it is money damage system .
Why should I risk 16% of my total capital . Is it a good idea? If I have such a big amount I would risk maximum 1% for your mentioned system.

No one is forcing you to risk 16% of your account......I personally agree with you, I would risk a lot less .....each trader tailors the risk according to his/her appetite(if they can do the math)
As we speak I risk 0.20% , witch for some is crazy low....but if my trades give me the return I am satisfied with....then....
  • #64
  • Oct 20, 2012 5:03pm Oct 20, 2012 5:03pm
Quoting Dredding82
Look finding a few select setups for entry into positions is very easy....

I can not say this but once more....with the use of INDICATORS....and knowing the PERIOD....we can calculate how many possible trades we could enter per period(1 Day) using the period of the indicators and the period of the time frame....

So if we know for a FACT we will have between 1-5 possible setups(my system i use)...and 1 of those trades WILL reach the TP of 1:1.....we then can do the SIMPLE MATH...and limit the risk.....
In the case of martingale baskets, where you keep averaging in a single trade as it moves against you hoping for a reversal of enough to exit at a profit... or martingale bet sizes, where you double your bet each signal hoping for 1 winner that will recoup all previous losses and give you 1 unit of risk profit in return... both will, as a fact, run into a series of consecutive losses in a row that blow the account.

Here:

http://i.imgur.com/Oe3Nd.jpg

(Where this table says 0% it is just less than 1% rounded down. Even at 0.5% in this table (1 of every 500 bets) is still enough to blow an account. That might only happen once every year or two, but if it gives up all your profit from that year it still matters. Even if it doesn't give up all your profit, you're going to get a random distribution of this happening, so you may get two events happening near each other over 1000's of trades and still be within the probability of happening despite the events destroying your account twice over.)

But I encourage you to do your own probability simulation avec a Monte Carlo engine or random variable generator to test any theory you have. Please do so and report back.

Now, if you're going to tell me that your signal has a 90%+ hit rate for a 1:1 trade (see chart above), making your probability of a 5+ consecutive streak of losses less than 1%, which puts the risk slightly more in the acceptable zone (but still not very good,) then I'd have to ask why in the hell would you have to martingale such a signal the first place? (and I'd seriously question my ability to spot patterns since that would be the god of all signals and we could all retire billionaires.)

Lastly, please do not respond in all-caps saying things like "SIMPLE MATH" when you messed up your own compounding calculations and have a strikingly lax grasp of probability. I am all for having a conversation but not if you'll talk down to people like they are dim when your own posts don't paint you in a very bright light.
FXGears.com
  • #65
  • Oct 20, 2012 5:03pm Oct 20, 2012 5:03pm
this is a very interesting thread and i will comment on it another time. I am too pissed to comment accurately. But if you take away the M word (martingale) the idea has a totally new meaning. Take care until next time
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
  • #66
  • Edited 5:32pm Oct 20, 2012 5:21pm | Edited 5:32pm
In addition, as a side topic to the risk and probability speak but based more on my opinion: Martingale betting also is a negative toward the personal development of a trader. I strongly feel it only serves to build bad habits.

1) Traders need to learn how to cut losses and feel good about doing so, but martingale keeps them holding on to their perception of lost funds.

2) Traders need to separate each trade's execution choice independent from the last, not letting past trades affect future trading choices. Martingale violates this as well.

3) Traders need to develop a mentality that keeps them out of "all or nothing" trades. Traders who make all or nothing bets eventually end up with the 'nothing' outcome. This is a key part of being able to survive a 10+ year long trading career without blowing up. Martingale betting pushes the trader closer to 'all or nothing' bets with each level it increases in size. (If you think a streak of 5 losers is near impossible, when you get to 5 you'd probably think 6 is even less likely to happen... and so on..)

Again, this is more opinion based, but it relates to trading psychology.. a huge key to what gets people consistent and reliable as traders. (It's also based on my experience at work, where I'm surrounded by traders with 10+ years of experience that have survived that long and I see common traits in them.)
FXGears.com
  • #67
  • Oct 20, 2012 5:33pm Oct 20, 2012 5:33pm
Quoting billytt
this is a very interesting thread and i will comment on it another time. I am too pissed to comment accurately. But if you take away the M word (martingale) the idea has a totally new meaning. Take care until next time
Well the Money Management is already part of my trading plan ......without the martingale of course......
  • #68
  • Oct 20, 2012 7:39pm Oct 20, 2012 7:39pm
Quoting Jack_Larkin

Lastly, please do not respond in all-caps saying things like "SIMPLE MATH" when you messed up your own compounding calculations and have a strikingly lax grasp of probability. I am all for having a conversation but not if you'll talk down to people like they are dim when your own posts don't paint you in a very bright light.

" You do not have to be the brightest star out of billions to shine, you just have to be brighter then one!"
  • #69
  • Oct 20, 2012 7:50pm Oct 20, 2012 7:50pm
Quoting Dredding82
So if we know for a FACT we will have between 1-5 possible setups(my system i use)...and for a FACT 1 of those trades WILL reach the TP of 1:1.....we then can do the SIMPLE MATH...and limit the risk.....make a steady profit....and not shit our pants....

I completely agree with Dredding82 that in such given situation Martingale makes sense and should be used.

Quoting Dredding82
1.) Account Funds = $10,000
2.) Max Draw Down = 16%
3.) Possible Entries = 4 trades on the H1

When finding your "Trading Capital" you need to take your total account balance and divide it by your Max RISK...
$10,000 / .16 = $1,600
So our Trading Capital per day will be $1,600.
The only thing I think which does not fit is Dredding82 saying: and limit the risk

This is a 100% winning system so no point to limit any risk ..because there are no real risk with the given facts...

The only adjustment should be
2.) Max Draw Down = 90%
So our Trading Capital per day will be $9000.

The given situation can never be a losing one so why not put nearly the whole cash to work and not only e.g 16%.

***
I guess the whole discussion stands or false with the given situation
1) for a FACT we will have between 1-5 possible setups
2) for a FACT 1 of those trades WILL reach the TP of 1:1

3) then we can do the SIMPLE MATH


ONLY: if we know that for a FACT we should put as much as possible of the available money to work.

Cheers
Ati

PS: personally I can not say for a FACT:
that I will have 1-5possible trades and one of those trades WILL reach TP of 1:1
- that's why I do not implement such Martingale System .... if I would know such for a FACT I would most probably implement something along Dredding82 suggestion only with much more of the capital as it would be a sure winning situation.
Money is important, Love is essential.
  • #70
  • Oct 20, 2012 7:57pm Oct 20, 2012 7:57pm
Quoting Ati Baia
I completely agree with Dredding82 that in such given situation Martingale makes sense and should be used.



The only thing I think which does not fit is Dredding82 saying :and limit the risk

This is a 100% winning system so no point to limit any risk ..because there are no real risk with the given facts...

The only adjustment should be
2.) Max Draw Down = 90%
So our Trading Capital per day will be $9000.

The given situation can never be a losing one so why not put nearly the...
You have to consider your leverage and margin...which is why and the simple answer.......also you forgot the "not shit your pants" lol

Also...16% was an EXAMPLE ......lol
  • #71
  • Oct 20, 2012 8:01pm Oct 20, 2012 8:01pm
Quoting Ati Baia
I completely agree with Dredding82 that in such given situation Martingale makes sense and should be used.



The only thing I think which does not fit is Dredding82 saying: and limit the risk

This is a 100% winning system so no point to limit any risk ..because there are no real risk with the given facts...

The only adjustment should be
2.) Max Draw Down = 90%
So our Trading Capital per day will be $9000.

The given situation can never be a losing one so why not put nearly the...
If you know how your indicators work.....the period you use....the period you are trading on...then you can calculate how many possible setups for entry you will have for that day.......so yes you could....
  • #72
  • Oct 20, 2012 8:01pm Oct 20, 2012 8:01pm
Yes, that is right .. one would have to check leverage and margin.requirements ..for each used broker..

Much success
Ati

Quoting Dredding82
You have to consider your leverage and margin...which is why and the simple answer.......also you forgot the "not shit your pants" lol
Money is important, Love is essential.
  • #73
  • Oct 20, 2012 8:03pm Oct 20, 2012 8:03pm
Why is Jack larkin denied from posting here? I think he brings up good points and are valid for debate. Isn't that what forums are for?
Fuck Forex Factory.Wake up people.
  • #74
  • Oct 20, 2012 8:07pm Oct 20, 2012 8:07pm
The major problem for me is: know for a FACT: 1 in 4-5 trades reaches TP R:R 1:1

.... personally I don't think one can know that for a FACT ..
... the best I think one can do is to beliefe that it is very a high possibility that 1 in 4-5 trades reaches TP R:R 1:1


AND for me: a very high possibility that 1 in 4-5 trades reaches TP R:R 1:1 is not good enough to go into full Martingale


but that's me and I accept that others might have an other view...

Cheers
Ati



Quoting Dredding82
If you know how your indicators work.....the period you use....the period you are trading one...then you can calculate how many possible setups for entry you will have for that day.......so yes you could....
Money is important, Love is essential.
  • #75
  • Oct 20, 2012 8:07pm Oct 20, 2012 8:07pm
Quoting Dredding82
So if we know for a FACT we will have between 1-5 possible setups(my system i use)...and for a FACT 1 of those trades WILL reach the TP of 1:1.....we then can do the SIMPLE MATH...and limit the risk.....make a steady profit....and not shit our pants....
Still looking into your theory. And need to evaluate my trading with it. losing streaks are part of the game and they are way more than 5. (IMHO) For me at least… Your account does not get depleted, but still…

Still working on what your saying. So, Don’t mind me. Ain’t as quick as you are.
Fuck Forex Factory.Wake up people.
  • #76
  • Oct 20, 2012 8:08pm Oct 20, 2012 8:08pm
Quoting ramy3
Why is Jack larkin denied from posting here? I think he brings up good points and are valid for debate.
I have no personal problems with him but....

1.) This is not a debate......

2.) He keeps trying to throw out that i am trying to buy/sell with no SL .......and just keep adding positions..........that is not the case.......I KNOW FOR A FACT! I will ONLY HAVE 1-5 entries into that pair for that day...A stop loss IS USED.....so SIMPLE MATH! can be applied!

Since he keeps throwing gambling stats..... flipping a coin bull shit...i do not see the need for his comments...........And for a 10+ vouched member to not be able to make at least 1 profitable trade for a 1:1 risk to reward ratio per day...........Now that is just STR8 BULL SHIT! Not that he can not do it...but he has 10+ vouchers but cant make 1 trade out of 5 go in his favor!
  • #77
  • Oct 20, 2012 8:11pm Oct 20, 2012 8:11pm
Ok lets list 4 FACTS about the a pair........


1.) it will make a new high

2.) it will make a new low

3.) it will not make a new high or low

4.) it will make a new high and a new low.......


Focus on the facts of the market.........
  • #78
  • Oct 20, 2012 8:12pm Oct 20, 2012 8:12pm
There are FACTS.....that happen everyday that people either choose to not see or were TAUGHT! not to see..............
  • #79
  • Oct 20, 2012 8:13pm Oct 20, 2012 8:13pm
as i was saying, once the M word is mentioned you will get hords of people denouncing it and so they should.Straight away they put forex in the same basket as flipping a coin. Flipping a coin is random, forex is not random. If you have a good strike rate then it should be possible to double up on a loser hence M, banks and institutes do it but the secret is for the little guys not to know about it. or just keep it in the same league as coin flipping.
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
  • #80
  • Oct 20, 2012 8:14pm Oct 20, 2012 8:14pm
Quoting Ati Baia
The major problem for me is: know for a FACT: 1 in 4-5 trades reaches TP R:R 1:1

.... personally I don't think one can know that for a FACT ..
... the best I think one can do is to beliefe that it is very a high possibility that 1 in 4-5 trades reaches TP R:R 1:1


AND for me: a very high possibility that 1 in 4-5 trades reaches TP R:R 1:1 is not good enough to go into full Martingale


but that's me and I accept that others might have an other view...

Cheers
Ati

So you can not take your current indicators you use.......and find how many possible setups for entry into that pair you would have for the period you are trading..........

Please refer to post #1..........
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