Martingaling for a Living | Forex Factory

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Martingaling for a Living

  • #1
  • First Post: Edited Jun 28, 2013 7:29am May 23, 2013 4:26am | Edited Jun 28, 2013 7:29am
This is the journal of my martingale experiment. I know that Martingale is a word that scares, and you, the reader, should know that Martingales don't work normally, so first things first: Please, understand that I'm not giving any advice to you or anyone else to use it.

I'm also not selling anything, this is just my experiment journal that you are free to read and comment but please, don't stop by to convince me about the dangers of martingaling. Don't waste your time I know the dangers already.

Well, that said, this martingale is traded by an EA which cost me months to write and test. Normally a martingale is simple you would say, you double when you lose until you win. These are the basics but there is more here and something maybe different as it doesn't trade blindly (coin toss) but according to specific signal and tries to follow latest trend. That's what maybe makes it a bit different and (I hope) gives it more chances of surviving for the long term, this is what I think.

I have allowed 10K to a live account for this system. This is to say that I'm playing no game here and to remove any doubt you could have about my faith in my work.

My goal is to forward test it live for 60 months, yes, you read well... 5 plain years ! I know that if you are skeptic, you are thinking "man, i give you no more than a year..." which is already a lot but in the same time, you don't want to be wrong...

Like you, I think that it could crash but above all, I think it can succeed or maybe it could land somewhere in between. Only Time will tell, and if you are interested, being it positively, skeptically or even scientifically, before anything else, I can give you a first thing, the chance to follow it LIVE.

So, let's begin.

[28.06.2013 Edit] EA running now is version 1.18
Simplicity is the Ultimate Sophistication.
  • #2
  • May 23, 2013 7:45am May 23, 2013 7:45am
Quoting broketrader
What if it's not a "pure" or "casino-like martingale"
You need to define exactly what you mean by "Martingale", I think, if you're using the word with a different meaning from everyone else.

In general, anything that involves increasing the stakes after a losing trade, or during a losing run, is (a) unsound, (b) ill-conceived and (c) unnecessary.

Either a system/method has a net positive expectation ("edge") against the market, or it doesn't.

If it does, then there's no need to take additional risks by increasing the losses during the inevitable "bad patch".

If it doesn't, then changing the staking for the next trade according to the result of the previous trade(s) isn't somehow, magically, going to create an "edge" where none exists.

It's about as simple as that.
  • #3
  • May 23, 2013 8:12am May 23, 2013 8:12am
Quoting Xela
{quote} You need to define exactly what you mean by "Martingale", I think, if you're using the word with a different meaning from everyone else. In general, anything that involves increasing the stakes after a losing trade, or during a losing run, is (a) unsound, (b) ill-conceived and (c) unnecessary. Either a system/method has a net positive expectation ("edge") against the market, or it doesn't. If it does, then there's no need to take additional risks by increasing the losses during the inevitable "bad patch". If it doesn't, then changing...
Yeah, well written theory, but at the end we will see...
Simplicity is the Ultimate Sophistication.
  • #4
  • May 23, 2013 3:44pm May 23, 2013 3:44pm
Even though yr name is not the best i am interested!!

Seriously please keep me updated how it goes
  • #5
  • May 23, 2013 3:59pm May 23, 2013 3:59pm
Quoting midnight
Even though yr name is not the best i am interested!! Seriously please keep me updated how it goes
Thank you for your good humor, and don't worry, I'm not really broke

You have just to subscribe to the thread and you will be updated.

For now, the EA has lived for 46 days, made 32 trades and earn a total of 2% with a maximum drawdown of 46 % which is inline with my backtests.

So far so good, stay tuned.
Simplicity is the Ultimate Sophistication.
  • #6
  • May 24, 2013 5:36am May 24, 2013 5:36am
Quoting broketrader
{quote} Yeah, well written theory, but at the end we will see...
My concern is that if you increase the stakes during a losing run, you might not see. The problem with doing that is that you might have a very good system that does have a genuine "edge" over the market, but if you escalate the stakes during a bad run, you won't get the chance to prove that, not to yourself and not to anyone else, because you may wipe out the account unnecessarily.

Perhaps I have more conifdence in your system than you do, yourself? I'd like to see it getting a fair trial, which can determine whether it genuinely has a positive expectation - and at the moment it isn't getting that.

I wish you very well with it, but I have every expectation that this will actually turn out to be more than just "well-written theory", and that - unfortunately - testing your system by increasing the stakes when losing will prevent you from learning what you need to learn in order to find out whether the system actually has an "edge" at all.

One thing's an inescapable mathematical reality: if it doesn't have an "edge", increasing the stakes when losing isn't magically going to give it one - either it's profitable at level stakes or it isn't profitable at all.

Don't worry - I'll trouble you no further with the laws of science and math. Good luck!
  • #7
  • May 24, 2013 5:56am May 24, 2013 5:56am
Quoting broketrader
{quote} Thank you for your good humor, and don't worry, I'm not really broke You have just to subscribe to the thread and you will be updated. For now, the EA has lived for 46 days, made 32 trades and earn a total of 2% with a maximum drawdown of 46 % which is inline with my backtests. So far so good, stay tuned.
You obviously have faith in your system as can be seen by your $5K live account, but are you sure suffering a 46% drawdown for a 2% return is a good idea?
  • #8
  • May 24, 2013 6:26am May 24, 2013 6:26am
No worries and no problem to discuss.

What I understand is that this system has no edge and should fail sooner or later and if this is what you said, and given it's martingale nature, I know that you could be right. I assure you, you are not talking to a novice trader, I tried dozens of systems in the past, some for which I paid, some I made myself, and all had an hedge and finally they all failed.

My reasoning to come to this, was this single and simple statement : "Martingale works if you have infinite pockets."

But there is one problem in this statement which is the word "infinite".

So I replaced that word by "risk" and tried to limit that risk to an acceptable level to me. And acceptable to me was that given the results I obtained on a 5 years tests, it's was worth playing 5k$ or 10K$ on it. That's it... after, you win or you loose.

And, at the end, it doesn't matter if the system has no edge at all, as long as it makes money constantly and in the long run...
Simplicity is the Ultimate Sophistication.
  • #9
  • May 24, 2013 6:35am May 24, 2013 6:35am
Quoting TheMaxx
{quote}You obviously have faith in your system as can be seen by your $5K live account, but are you sure suffering a 46% drawdown for a 2% return is a good idea?
The system makes money step by step, this is why I only made 2% in a month.
This is why also I had a drawdown of 46% instead of 100% if I had wanted to make more.

It doesn't matter what the return is in one month, My goal is to having it running for a minimum of 5 years.
Simplicity is the Ultimate Sophistication.
  • #10
  • May 30, 2013 6:24am May 30, 2013 6:24am
First full month of forward testing this martingale with success.
Total closed rades: 34
All time return at the time of writting : 3.1 %
Tested Months : 1
Months left to finish the test : 59
Simplicity is the Ultimate Sophistication.
  • #11
  • May 30, 2013 7:44am May 30, 2013 7:44am
Quoting broketrader
First full month of forward testing this martingale with success.Total closed rades: 34All time return at the time of writting : 3.1 %Tested Months : 1Months left to finish the test : 59
good start. hope it continues to work
  • #12
  • May 30, 2013 7:57am May 30, 2013 7:57am
Quoting midnight
{quote}good start. hope it continues to work

Me too! Thanks.

Next milestone is end of June.
Simplicity is the Ultimate Sophistication.
  • #13
  • Jun 17, 2013 3:43pm Jun 17, 2013 3:43pm
Good Luck! If you think you have an edge, then don't listen to the naysayers and go for it.
  • #14
  • Jun 18, 2013 1:06am Jun 18, 2013 1:06am
Hi Smokey,

Thanks, off course that I will go for it.

I saw that you were also doing great recently, I hope it will continue that way.

Best of luck to you too.
Simplicity is the Ultimate Sophistication.
  • #15
  • Jun 18, 2013 8:45am Jun 18, 2013 8:45am
Thanks. We all the know the markets can humble you at any point. I'm doing ok now, but I have to keep it in long term perspective. Drawdowns will happen, but we have to keep grinding away.
  • #16
  • Jun 18, 2013 1:11pm Jun 18, 2013 1:11pm
thatīs the way!!! Iīm like you, with deep conscious that this is the way!
your chart of Non-Cume return trades, explain very well the method, and how you were able to jump off on BE or even profit, on a looser trade!!

We are together mate!
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  • #17
  • Jun 18, 2013 2:27pm Jun 18, 2013 2:27pm
Hi xandi !

Well, I don't understand your Non-cume return thing, but thanks anyway.

Broke

PS. Yes, a fresh beer, just what I need just now
Simplicity is the Ultimate Sophistication.
  • #18
  • Jun 18, 2013 2:50pm Jun 18, 2013 2:50pm
Good luck and all the best! Really hope you do well!
  • #19
  • Jun 18, 2013 2:58pm Jun 18, 2013 2:58pm
Quoting guess121
Good luck and all the best! Really hope you do well!
Thanks guess, time will tell...

Same thing to you.
Simplicity is the Ultimate Sophistication.
  • #20
  • Edited Jun 19, 2013 11:00am Jun 18, 2013 6:25pm | Edited Jun 19, 2013 11:00am
Quoting broketrader
Hi xandi ! Well, I don't understand your Non-cume return thing, but thanks anyway. Broke PS. Yes, a fresh beer, just what I need just now
brooo..your chart show us how you resolve a lost trade in a Beakeven trade...your reinforce(doubling) your position on level below, you did it again below, and after you close it on BE, with simple 50 pips retrace or less!! Perfect!
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