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Does the martingale system really work?

  • #221
  • Nov 16, 2013 7:57am Nov 16, 2013 7:57am
I wish this thread would just die. The answer is no, it doesn't work. Stop being a lazy, greedy person and either accept that there are no shortcuts to making money consistently here or quit before you blow your life savings on doubling down like a drunken gambler.
  • #222
  • Nov 16, 2013 10:15am Nov 16, 2013 10:15am
Quoting Proximus
{quote} Do you think that if i could do this in practice i didnt done it for now? The truth is that there exists NO system with 1:1 RR and 50%+ win rate, that is why i told in my first post that it is only theory.On paper it works out like magic,but on live trading it doesnt because there is no system that can handle that.Even if you pick trades randomly, the best you get is around 45% win rate, because of the spread + swap + slippage combo.This system is not designed for real life trading unfortunately, i just explained it for educational purpose,...

How the heck can you say there isn't a system that has a 51% win rate? You will be better off saying you don't know of any then saying it doesn't exist. I know traders that trade for a living and they aren't using martingale and their system is way over 51%… Stop the madness people.. Anything could work if you know how to make it work .. just because you don't how to use martingale doesn't mean it don't work.. SMH
  • #223
  • Nov 18, 2013 11:03am Nov 18, 2013 11:03am
Prox is apparently a child playing fire. But I agree you on this one!

in market there are all kinds of setups that cannot fail for consecutive 10 times (say).

the issue is that most ppl cannot find these setups.

let's say, Sunday gap of gbpjpy, show me 7 consecutive gaps that are not filled??? just an example.

Quoting akukaya
{quote} Hi Proximus, how about I show you system with high winrate..did your offer 95% of profit still valid? my opinion still smart martingale works in forex...not normal martingale...I did practice them my live trades too... martingale works charms if you know how to determine trend direction...that the main key... if you can find that, very very low chance for long string of losses...that's it.. think like this...101100010001100100100011110101100100100100110010100100101101101001011011010010110111 1 is win 0 is loss if your string of 0's can...
  • #224
  • Edited 2:11pm Nov 19, 2013 10:50am | Edited 2:11pm
Quoting charvo
Prox is apparently a child playing fire. But I agree you on this one! in market there are all kinds of setups that cannot fail for consecutive 10 times (say). the issue is that most ppl cannot find these setups. let's say, Sunday gap of gbpjpy, show me 7 consecutive gaps that are not filled??? just an example. {quote}
I agree that there are setups that provide solid directional bias, but "cannot fail" is effectively meaningless, because everything depends on how you place your SL, and then manage the exit (R:R). Or put simply, in the case of the weekend gap, the question becomes: what is the biggest number of pips that price can possibly move against you before the gap is filled? Underestimate that, and you'll have a loss, despite the gap eventually being filled. And then your RR depends on how you take profit, which affects your win rate, and so on........

If you have a setup that provides a solid edge, it ultimately comes down to which you prefer:a) Use 'conventional' MM: a (say) 75% probability of a win, with loss capped at (say) 2% of total capital — hence risk of ruin is negligible, and there's plenty of time to pause and re-evaluate, if drawdown reaches a certain level; OR
b) Use martingale: a 99.9999% probability of a winning sequence, but with unlimited loss, if you do happen to encounter just one occasion when it suddenly and unexpectedly goes wrong.

The numbers may vary, but the principle underlying the personal choice that's involved, is always the same.

(And before somebody else points it out, of course there are a potentially infinite number of MM options apart from (a) and (b)).
  • #225
  • Nov 20, 2013 3:51am Nov 20, 2013 3:51am
Quoting akukaya
{quote} Hi PipMeUp, It's half true! To me it works because of combination of the real edge(smart system) + martingale. example: if the string of system trades results sequence like 1011000100011001001000111101 01100100100100110010100100101101101 if you use same lotsize for each trade, you are not in profit!! if you combine it with the martingale lotsizing, you will gain.. That's the reason I think it works not only because of the edge system..
There is no such thing as a *half true* mathematical proof. Either it is correct or there is a mistake in the demonstration.

How do you know there won't be a 8th loser => I think it works
What if you DO hit the 8th loser? => You take this big loss and start again with the starting lot size.
How do you avoid losing all the accumulated money? => You withdraw from the account when you are at an equity high.

This is called a "stopped martingale". It has also been proven wrong. The proof is the Doob's Optional Sampling Theorem.
No greed. No fear. Just maths.
  • #226
  • Nov 20, 2013 1:24pm Nov 20, 2013 1:24pm
Right, David, i didn't think this deep, thanks for reminder.

i think that this explains (at least partially) why in real world i didn't bother to trade gaps, lol.

nowadays, i gradually realised that it really takes a lunatic to use martingale on a 75% hit RR1:1 system. the risk is simply beyond me.

i think across FF, many guys (including me) are in fact looking for a way to safely use martingale on their pathetic (slow) 55% hit system, lol.

Quoting hanover
{quote} because everything depends on how you place your SL, and then manage the exit (R:R). Or put simply, in the case of the weekend gap, the question becomes: what is the biggest number of pips that price can possibly move against you before the gap is filled? Underestimate that, and you'll have a loss, despite the gap eventually being filled.
  • #227
  • Nov 22, 2013 4:30am Nov 22, 2013 4:30am
Martingale is useless. Only one way it can go.
  • #228
  • Nov 23, 2013 8:45am Nov 23, 2013 8:45am
I keep wondering why did Martingale become so famous if his method sucks?
  • #229
  • Nov 23, 2013 12:05pm Nov 23, 2013 12:05pm
Quoting Vitez
I keep wondering why did Martingale become so famous if his method sucks?
A lot of people achieve recognition because they failed spectacularly. Nick Leeson is a well known example in the financial arena.

Anyway, what evidence do you have that martingale betting system was named after a person?

According to wikipedia: "The concept of martingale in probability theory was introduced by Paul Lévy in 1934, though he did not name them: the term "martingale" was introduced later by Ville (1939), who also extended the definition to continuous martingales. Much of the original development of the theory was done by Joseph Leo Doob among others. Part of the motivation for that work was to show the impossibility of successful betting strategies."

There are also some interesting facts about the origin of the word here.

Now you don't need to wonder any more.
  • #230
  • Nov 23, 2013 9:31pm Nov 23, 2013 9:31pm
Martingale has to work. Only because the market doesn't trade in one direction forever. You will eventually encounter a reversal, or an extension in which you can place a new wager. The trick with Martingale is the money management. I would say adding Martingale with High probability trades is almost full-proof (assuming the person has self control). As if you focus on the 1m chart per-say. You should have about 6-10 concrete entries. In which you should never have 4-5 losses in a row. Of course it is more then possible that you would encounter more then 5 consecutive losses, but it all boils down to the actual system.
  • #231
  • Nov 23, 2013 9:45pm Nov 23, 2013 9:45pm
Quoting Master_kiwa
Martingale has to work. Only because the market doesn't trade in one direction forever. You will eventually encounter a reversal, or an extension in which you can place a new wager. The trick with Martingale is the money management. I would say adding Martingale with High probability trades is almost full-proof (assuming the person has self control). As if you focus on the 1m chart per-say. You should have about 6-10 concrete entries. In which you should never have 4-5 losses in a row. Of course it is more then possible that you would encounter...
We shall all take under advisement the wise words of someone who can't spell "fool-proof".
Congratulations ScalaFX for coming out of the closet!
  • #232
  • Nov 23, 2013 10:26pm Nov 23, 2013 10:26pm
Quoting nubcake
{quote} We shall all take under advisement the wise words of someone who can't spell "fool-proof".
Not sure how misspelling a phrase has to do with one's trading ability using martingale. Yet, forums are full of people like nubcake who waste bandwidth with non-constructive replies.
  • #233
  • Nov 23, 2013 10:45pm Nov 23, 2013 10:45pm
Quoting Master_kiwa
{quote} Not sure how misspelling a phrase has to do with one's trading ability using martingale. Yet, forums are full of people like nubcake who waste bandwidth with non-constructive replies.
It's not my money being wasted if you are incapable of seeing a correlation between low intelligence and a lack of basic spelling ability. Furthermore, I guarantee you my reply was far more "constructive" than the dribble in your previous post.

And on top of all of this, "Not sure how misspelling a phrase has to do"... is not a sentence. You are just full of win, aren't you? This is 2 lessons I've given you for free now. Do better.
Congratulations ScalaFX for coming out of the closet!
  • #234
  • Nov 23, 2013 10:51pm Nov 23, 2013 10:51pm
Quoting Master_kiwa
Martingale has to work.
Has to? Why? Black magic? A divine edict? A constitutional amendment?
Quote
Only because the market doesn't trade in one direction forever. You will eventually encounter a reversal, or an extension in which you can place a new wager.
What does market direction have to do with a doubling-up strategy? Are you sure you understand what a Martingale is? I could enter an initial trade long, lose, enter a new trade short with double the volume (that's the important part), and lose again because the market reversed.
Quote
The trick with Martingale is the money management.
No, actually. The problem with Martingale is money management, because the exponential growth of your bet (when you encounter a large enough losing streak) will eventually bust your account. Another hint: the more trades you place, the better chance you have of eventually encountering that deadly losing streak. It's a mathematical fact.
Quote
I would say adding Martingale with High probability trades is almost full-proof (assuming the person has self control). As if you focus on the 1m chart per-say. You should have about 6-10 concrete entries. In which you should never have 4-5 losses in a row. Of course it is more then possible that you would encounter more then 5 consecutive losses, but it all boils down to the actual system.
Using Martingale is bad enough, but to use it on the hyper-active, noise-drowned 1-minute frame is even worse. No clear entries, fast-paced action, clutter from HF trading robots, super-tight stops, high spread cost and, I assume, a high volume of trades. A recipe for disaster.
  • #235
  • Nov 23, 2013 11:40pm Nov 23, 2013 11:40pm
It probably works in markets which have some "real" value behind them (commodities), but likely produces less income than well developed speculation strategies with tighter risk management.
  • #236
  • Nov 24, 2013 1:59am Nov 24, 2013 1:59am
somebody using martingale EA that open trades within range but that never works not difficult to exist from loss but actually martingale is perfect when you open trades manually without 6 continue losses same time very danger when loss trades reach more than 6 quantity

here my manual martingale trading result there is no more than 6 losses

Maximal Drawdown :467.36 (4.63%)
Total Trades :49
Profit Trades (% of total) :23 (46.94%)
Loss trades (% of total) :26 (53.06%)
Total Net Profit :121.58

detailed statement attached
Attached File(s)
File Type: zip Martingale manual trading.zip   10 KB | 651 downloads
  • #237
  • Nov 24, 2013 6:39am Nov 24, 2013 6:39am
Quoting Jexter
{quote} Has to? Why? Black magic? A divine edict? A constitutional amendment? {quote} What does market direction have to do with a doubling-up strategy? Are you sure you understand what a Martingale is? I could enter an initial trade long, lose, enter a new trade short with double the volume (that's the important part), and lose again because the market reversed. {quote} No, actually. The problem with Martingale is money management, because the exponential growth of your bet (when you encounter a large enough losing streak) will eventually bust...
It all goes back to the system which one uses. By you simply calling 1m a fast - paced action, clutter from HF trading robots, super - tight stops, high spread, etc would lead me to believe that you have taken a pounding using the 1m. 1M creates everything you see (or think you see on the higher tf). Breakouts occur at the start of a fresh 1m candle, unlike the very same breakout which you HTF groupies see. The spread is the same on higher tf as it is on the lower tf not to mention to pay more commission from holding a position over night (swap) compared to if you scalped your transaction. Yet let us get back to martingale.
You mentioned the more trades you placed the better chance you have of eventually encountering that deadly streak. Well how you can mention that as a mathematical fact with using mmmmmmmm errrrrrrr MATH (statistics)! Once again it all boils down to the system which one uses. As the system will determine you probability of how long your losing streak will be, not martingale itself. Martingale is simple a method of wagering, not a method used on determining what direction the market will go.
So let us use stats. The picture below is of a trader who is much better then all of us. Especially those who claim that trading is only luck. Have a look at this traders risk of ruin. myfxbook calculates your risk to ruin on several factors. If this guy used martingale it would be clear to see that after every loss his possibility of having that winning trade is actually increased, not decreased as some of you pessimistic trolls contend. This trader may not use martingale but you can say he has a excellent system. As he uses very conservative money management rules, and has over 400% profit in 8 months of trading! No margin call!
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  • #238
  • Nov 24, 2013 6:49am Nov 24, 2013 6:49am
Quoting nubcake
{quote} It's not my money being wasted if you are incapable of seeing a correlation between low intelligence and a lack of basic spelling ability. Furthermore, I guarantee you my reply was far more "constructive" than the dribble in your previous post. And on top of all of this, "Not sure how misspelling a phrase has to do"... is not a sentence. You are just full of win, aren't you? This is 2 lessons I've given you for free now. Do better.
Thank you again for your constructive post. Glad to see you can actually provide proof of how poor spelling ability relates to forex.
  • #239
  • Nov 24, 2013 6:54am Nov 24, 2013 6:54am
Quoting charvo
Right, David, i didn't think this deep, thanks for reminder. i think that this explains (at least partially) why in real world i didn't bother to trade gaps, lol. nowadays, i gradually realised that it really takes a lunatic to use martingale on a 75% hit RR1:1 system. the risk is simply beyond me. i think across FF, many guys (including me) are in fact looking for a way to safely use martingale on their pathetic (slow) 55% hit system, lol. {quote}
Here is someone who has well over a 96% win %. Much better then many of the pessimistic bloggers on this website, who contend that grammar is an important part of winning in forex. :nerd:
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  • #240
  • Nov 24, 2013 12:39pm Nov 24, 2013 12:39pm
Quoting Master_kiwa
(1)The spread is the same on higher tf as it is on the lower tf...........
(2) Once again it all boils down to the system which one uses. As the system will determine you probability of how long your losing streak will be........
I respectfully disagree with both of the above statements.

(1) If spread is 2 pips, for example, then trading 10 pip moves represents a 20% edge that you must overcome; with 100 pip moves, it is only 2%. After you've traded for a while, you come to realize that the percentages are more important than the pips, at least in this instance.

(2) No matter how much testing you perform, it's not possible to determine in advance how long your worst losing streak will be. And with uncapped martingale, it takes only one unexpected losing sequence to cause immediate ruin. Given that if you trade for long enough, you'll eventually encounter every possible scenario that the market can possibly throw at you, that losing sequence will eventually occur; hence ruin is inevitable, no matter how solid your system is. That's why pro traders focus primarily on risk management.

Read the posts here and here, and note the number of consecutive losses. Both of these gents are professionals who have been trading for a living for many years, unlike the graphic you posted which shows only 301 trades.

@Jexter: exactly right.
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