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MGH System (Martingale Grid & Hedging)

  • #61
  • Aug 2, 2014 11:23am Aug 2, 2014 11:23am
Quoting Kfx
{quote} Hi Ata-Turkoglu, welcome to the thread. Here is your answer. Hope this help you. {image}
That was very helpful Kfx, thanks..

I am happy to see that I am close to understand the system. To understand more I need to ask another question. Here it goes:


Now since you explained that we open a buy trade at Level-1:
When you say "set all TPs at level 1" should we even set the TP of this trade to Level-1?
If yes then it means the first long we opened brings us 0 profit? Right?

Many Thanks
Focus only on what truly matters!
  • #62
  • Aug 2, 2014 11:34am Aug 2, 2014 11:34am
Quoting Ata-Turkoglu
{quote} That was very helpful Kfx, thanks.. I am happy to see that I am close to understand the system. To understand more I need to ask another question. Here it goes: Now since you explained that we open a buy trade at Level-1: When you say "set all TPs at level 1" should we even set the TP of this trade to Level-1? If yes then it means the first long we opened brings us 0 profit? Right? Many Thanks
Your welcome.

Yes, al TPs of the 3 trades to Level-1.

That means, first long give us 0 pips, second long 10 pips and third long 20 pips, total = 30 pips.
  • #63
  • Aug 2, 2014 11:47am Aug 2, 2014 11:47am
Quoting Kfx
{quote} Your welcome. Yes, al TPs of the 3 trades to Level-1. That means, first long give us 0 pips, second long 10 pips and third long 20 pips, total = 30 pips.
I know all visitors will make use of your answers to questions so allow me to ask another crucial question:

How do you start your trading day? You open any chart.. no matter what pair.. what timeframe.. and look for the price to touch coming from above or below and proceed without hesitation? Or is there a trick to find out where the optimal Level-1 could be? What you called Level-2 could be Level-3 for another person. What you called Level-3 could be level-1 for some other and the whole story would change.. or???? I am thinking out loud.. how you decide, what are you looking for before you start with your first trade of the day with this system???? (Please keep your answer connected to example 1 only.. the other situations are still too complex to understand so I want to go step by step if you don't mind..)

Many Thanks
Focus only on what truly matters!
  • #64
  • Aug 2, 2014 12:13pm Aug 2, 2014 12:13pm
Kfx

Will you be addressing MM and lot sizing. Seems like the rational huge drawdown of martingale would be tempered by the many TP's along the way
  • #65
  • Aug 2, 2014 12:27pm Aug 2, 2014 12:27pm
Quoting Ata-Turkoglu
I know all visitors will make use of your answers to questions so allow me to ask another crucial question: How do you start your trading day? You open any chart.. no matter what pair.. what timeframe.. and look for the price to touch coming from above or below and proceed without hesitation? Or is there a trick to find out where the optimal Level-1 could be?
No problem.

Currently I'm not using this system. As I said earlier is a Work In Progress (WIP) project and I hope all interested members and myself can improve it.

To trade this system in the future, it would be necessary to crate an EA because it is a full time (24 hours) system. But I think it is better left this for later and focus on the details of the system first.

For backtesting I have used M5 EUR/USD, buy maybe it works better in other pairs.

Yes, no specific rules for entry. No secrets, Just wait to touch a level.

Quoting Ata-Turkoglu
What you called Level-2 could be Level-3 for another person. What you called Level-3 could be level-1 for some other and the whole story would change.. or???? I am thinking out loud.. how you decide, what are you looking for before you start with your first trade of the day with this system???? (Please keep your answer connected to example 1 only.. the other situations are still too complex to understand so I want to go step by step if you don't mind..) Many Thanks
What I talk about level 1,2 or 3, I mean grid levels. So level 1 is the main entry, level 2 the second trade and level 3 the las trade. Grids in this system (for now) have not more than 3 levels.

I'm just looking for price to touch some level from above os bellow to do the first trade ... that's it.
  • #66
  • Aug 2, 2014 12:37pm Aug 2, 2014 12:37pm
Quoting Kfx
{quote} No problem. Currently I'm not using this system. As I said earlier is a Work In Progress (WIP) project and I hope all interested members and myself can improve it. To trade this system in the future, it would be necessary to crate an EA because it is a full time (24 hours) system. But I think it is better left this for later and focus on the details of the system first. For backtesting I have used M5 EUR/USD, buy maybe it works better in other pairs. Yes, no specific rules for entry. No secrets, Just wait to touch a level. {quote} What I...
Thanks again, very well explained

Okay, no more questions for the first and simple example for now.. I will go and check this simple version on different pairs and different timeframes.
I will test it on GBP/JPY, the FDAX index and Gold... soon I will let you know about the results after testing this for a while..

Happy Trades
Focus only on what truly matters!
  • #67
  • Aug 2, 2014 12:39pm Aug 2, 2014 12:39pm
Quoting spyderman
Kfx Will you be addressing MM and lot sizing. Seems like the rational huge drawdown of martingale would be tempered by the many TP's along the way
That's a very important thing for us to study.

Keep in mind that this system can easily give us 10.000 pips per month.

My idea is to have a Max. DD of -5.000 in a grids serie, including open and closed positions. At this point we will close all trades. This represents a 5%, 10%, 15%, 20% of your account ... Depending on how aggressive trader you are.

Another idea is close all trades in some hedging level, for example close all trades at x32.

Any suggestions would be greatly appreciated.
  • #68
  • Aug 2, 2014 12:43pm Aug 2, 2014 12:43pm
Quoting Ata-Turkoglu
{quote} Thanks again, very well explained Okay, no more questions for the first and simple example for now.. I will go and check this simple version on different pairs and different timeframes. I will test it on GBP/JPY, the FDAX index and Gold... soon I will let you know about the results after testing this for a while.. Happy Trades
Thanks to you and good luck with those pairs.

It would be interesting to create some kind of basket of several pairs, hahaha. More complications
  • #69
  • Aug 2, 2014 1:58pm Aug 2, 2014 1:58pm
Hi Kfx,

How do we determine the profit target for each hedge? I mean hedge x2 is 100pips, hedge x4 is 250pips, hedge x8 is 500pips, hedge x16 is 1000pips?

How about hedge x32? 1000pips x2 = 2000 pips?

I'm kinda curious to know what would happen when its hedge x32? will the drawdown wipe out the account like normal martingale strategy?

Anyway, thanks for this strategy, it seems very original to me (i have yet to encounter strategy like this). Subscribed!
  • #70
  • Aug 2, 2014 2:12pm Aug 2, 2014 2:12pm
Hope we're not asking too many questions...must mean there's interest

So let's say you have x1 sells open...price moves up to start x2 buys...price moves down and you start x4 inside sells...price moves back up and hits x2 buy TP, but you still haven't reached your 100 net pips...you have x1s and x4s open, all sells. Now what?
  • #71
  • Aug 2, 2014 2:15pm Aug 2, 2014 2:15pm
Quoting Kfx
{quote} Here is the "Hedge x16 Inside Grid" example. I think the picture speak by itself. 1000 pips or more target for this example, by the way. {image}
If i'm getting this right, let's say the price moves back up to hedge_x8_level 1, we will have closed 3 x8 buy trades. At this price level, we have 3 x4 sell trades and 3 x16 sell trade still opening.

Assuming the x16 trades have not collected gains yet.

The drawdown would be:
x4_level 1= 8 x 4 x 10 pips = 320
x4_level 2= 7 x 4 x 10 pips = 280
x4_level 3= 6 x 4 x 10 pips = 240
x16_level 1= 7 x 16 x 10 pips = 1120
x16_level 2= 6 x 16 x 10 pips = 960
x16_level 3= 5 x 16 x 10 pips = 800

Total drawdown for open trades = 3720 pips
  • #72
  • Aug 2, 2014 2:19pm Aug 2, 2014 2:19pm
Quoting wilsonch
Hi Kfx, How do we determine the profit target for each hedge? I mean hedge x2 is 100pips, hedge x4 is 250pips, hedge x8 is 500pips, hedge x16 is 1000pips? How about hedge x32? 1000pips x2 = 2000 pips? I'm kinda curious to know what would happen when its hedge x32? will the drawdown wipe out the account like normal martingale strategy? Anyway, thanks for this strategy, it seems very original to me (i have yet to encounter strategy like this). Subscribed!
Hi wilsonch, welcome to the thread.

I refer you to post #65, where I answered to spyderman.

As I said before, for now it would be fine a 5.000 pips of Max DD, that represents a 5%, 10%, 15%, 20% of your account ... Depending on how aggressive trader you are. For example if you start with 0.01 lot, your max DD would be 500$.

I have not gotten to see a x32 hedge level yet (I have not done too extensive backtest), but according to my computations, closing all positions at the x32 hedge level, it could reach a loss of around 3000 pips or so.
  • #73
  • Aug 2, 2014 2:29pm Aug 2, 2014 2:29pm
Quoting wilsonch
{quote} If i'm getting this right, let's say the price moves back up to hedge_x8_level 1, we will have closed 3 x8 buy trades. At this price level, we have 3 x4 sell trades and 3 x16 sell trade still opening. Assuming the x16 trades have not collected gains yet. The drawdown would be: x4_level 1= 8 x 4 x 10 pips = 320 x4_level 2= 7 x 4 x 10 pips = 280 x4_level 3= 6 x 4 x 10 pips = 240 x16_level 1= 7 x 16 x 10 pips = 1120 x16_level 2= 6 x 16 x 10 pips = 960 x16_level 3= 5 x 16 x 10 pips = 800 Total drawdown for open trades = 3720 pips

Wilson...did you net out against all the profits you took along the way?
  • #74
  • Aug 2, 2014 2:30pm Aug 2, 2014 2:30pm
Quoting spyderman
Hope we're not asking too many questions...must mean there's interest So let's say you have x1 sells open...price moves up to start x2 buys...price moves down and you start x4 inside sells...price moves back up and hits x2 buy TP, but you still haven't reached your 100 net pips...you have x1s and x4s open, all sells. Now what?
Easy.

Once the x2 TP reached, we will wait for the price moves one more level as usual to start with x8 buys.
  • #75
  • Aug 2, 2014 2:33pm Aug 2, 2014 2:33pm
Quoting spyderman
{quote} Wilson...did you net out against all the profits you took along the way?
Hi spyder, it is my intention not to nett them out, since we are at the stage of paper trade, I would prefer to put myself in a very downside position. It is quite normal in forex that when we open the 3 x16 trade, the price will immediately go against us. So, I think we need to prepare for the worst, from there we can think of a more rational MM.
  • #76
  • Aug 2, 2014 2:36pm Aug 2, 2014 2:36pm
Quoting wilsonch
{quote} If i'm getting this right, let's say the price moves back up to hedge_x8_level 1, we will have closed 3 x8 buy trades. At this price level, we have 3 x4 sell trades and 3 x16 sell trade still opening. Assuming the x16 trades have not collected gains yet. The drawdown would be: x4_level 1= 8 x 4 x 10 pips = 320 x4_level 2= 7 x 4 x 10 pips = 280 x4_level 3= 6 x 4 x 10 pips = 240 x16_level 1= 7 x 16 x 10 pips = 1120 x16_level 2= 6 x 16 x 10 pips = 960 x16_level 3= 5 x 16 x 10 pips = 800 Total drawdown for open trades = 3720 pips
As spyderman say, you have to add all profits gained in the way until the x16 or x32 hedge level was opened.

Depends on how many profits you have closed, but yes, you have about 3.000 pips max DD when you go from x16 to x32 if you have not earned too much profit before.
  • #77
  • Aug 2, 2014 2:40pm Aug 2, 2014 2:40pm
Quoting Kfx
{quote} As spyderman say, you have to add all profits gained in the way until the x16 or x32 hedge level was opened. Depends on how many profits you have closed, but yes, you have about 3.000 pips max DD when you go from x16 to x32 if you have not earnet too much profit before.
Hi Kfx and spyder, both of you are correct. I have explained myself in post 73 that i exclude them on intention. Hope you guys are cool for me being negative. I have seen enough 'impossibles' in casino. Imagine the roulette having 20-30 plus consecutive RED.

With a good MM, even if we reach x32 or x64, i believe the strategy is good at recovering, especially grinding profits through inside-grids.
  • #78
  • Aug 2, 2014 2:47pm Aug 2, 2014 2:47pm
Quoting wilsonch
{quote} Hi Kfx and spyder, both of you are correct. I have explained myself in post 73 that i exclude them on intention. Hope you guys are cool for me being negative. I have seen enough 'impossibles' in casino. Imagine the roulette having 20-30 plus consecutive RED. With a good MM, even if we reach x32 or x64, i believe the strategy is good at recovering, especially grinding profits through inside-grids.
No negative.

I know this system will fail, so I do not like trading grids/martingales until blow Account, thats because we have a equtity loss percent.

It would be great if you explain your MM to reach the x32 or x64 ... Maybe start with a smaller lot? ... please, let us know
  • #79
  • Aug 2, 2014 2:54pm Aug 2, 2014 2:54pm
So Kfx...let me recap some permutations in my mind so I have them straight.

If the reaching of a level (let's say from the top side coming down) closes out a series and starts a new one, than we would be placing a new 1x buy at that level.

For an x2 or any subsequent outside grid (like the x8 mentioned above) the entry comes after moving another level from the previous trade.

An inside grid is formed if there is at least 3 levels between the nearest levels of the two outside grids. Inside grid starts at 1/2 way between outside grids (or next level closer to first outside grid, if 1/2 way is between grids).
  • #80
  • Aug 2, 2014 2:58pm Aug 2, 2014 2:58pm
Quoting spyderman
So Kfx...let me recap some permutations in my mind so I have them straight. If the reaching of a level (let's say from the top side coming down) closes out a series and starts a new one, than we would be placing a new 1x buy at that level. For an x2 or any subsequent outside grid (like the x8 mentioned above) the entry comes after moving another level from the previous trade. An inside grid is formed if there is at least 3 levels between the nearest levels of the two outside grids. Inside grid starts at 1/2 way between outside grids (or next level...
Ufff ... That one is not so easy, maybe can you post some picture as example as I can explain you the right way?

Thanks.
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