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Martingaling - Looks so good until the inevitable

  • #121
  • Aug 16, 2014 10:44pm Aug 16, 2014 10:44pm
Quoting jmn5611
{quote} I have officially become an EA addict. Thanks Magix, you suck. That said, and I am speaking to Proxy here, whom I happen to like. Proxy, if you code an EA to trade in the direction of the monthly trend, and tell it to add in accordance to whatever your trigger logic is, whether in drawdown or not, you might be surprised as to the equity curve you get. Of course, if you get caught in a full blown trend change on the monthly chart, you are toast. But, there are ways to mitigate that before you blow up completely. Just sayin, there are...
It depends on maximum margin % usage. Keep that under 6%, run some calcs and I think you'll be shocked at what your account can survive..Now, the practicality of putting your account through it is a whole other matter certainly...

Martingaling a $100 account at .10/pip, 50 lev...hmm...my initial reaction is it shouldn't take long to fry $100 if you're stacking trades closely and have a bit of a bad initial entry..Your free margin drops by $15-$20 on each entry depending on the mood of your broker at that moment it seems...

...sitting the challenge out because I don't trade with margin use that high and don't care to start now..

Cool concept of a challenge though...will be interesting to see how wrong I might be...
"Holy Grail" exists - accepting where is the first step.
  • #122
  • Aug 16, 2014 11:40pm Aug 16, 2014 11:40pm
Can someone please defined what is "Martingale"? I know what this fuckin' martingale is, but still like to have a definition. Adding to a losing position is not necessarily a martingale.
The Thief of Wall Street
  • #123
  • Aug 17, 2014 12:54am Aug 17, 2014 12:54am
Quoting Chicky
Can someone please defined what is "Martingale"? I know what this fuckin' martingale is, but still like to have a definition. Adding to a losing position is not necessarily a martingale.
Chicky,

IMO Wikipedia explains it well:

"A martingale is any of a class of betting strategies that originated from and were popular in 18th century France. The simplest of these strategies was designed for a game in which the gambler wins his stake if a coin comes up heads and loses it if the coin comes up tails. The strategy had the gambler double his bet after every loss, so that the first win would recover all previous losses plus win a profit equal to the original stake. The martingale strategy has been applied to roulette as well, as the probability of hitting either red or black is close to 50%.

Since a gambler with infinite wealth will, almost surely, eventually flip heads, the martingale betting strategy was seen as a sure thing by those who advocated it. Of course, none of the gamblers in fact possessed infinite wealth, and the exponential growth of the bets would eventually bankrupt "unlucky" gamblers who chose to use the martingale. It is therefore a good example of a Taleb distribution – the gambler usually wins a small net reward, thus appearing to have a sound strategy. However, the gambler's expected value does indeed remain zero (or less than zero) because the small probability that he will suffer a catastrophic loss exactly balances with his expected gain. (In a casino, the expected value is negative, due to the house's edge.) The likelihood of catastrophic loss may not even be very small. The bet size rises exponentially. This, combined with the fact that strings of consecutive losses actually occur more often than common intuition suggests, can bankrupt a gambler quickly.

Casino betting limits eliminate use of the martingale strategy."

My take is that the basic martingale, in a trading context, involves doubling your position size every time you lose (example: 0.1, 0.2, 0.4, 0.8, 1.6, ...... lots) , and reverting back to the original size (0.1 lot) as soon as you win. In a capped martingale, there is a limit to the doubling, i.e. you decide to stop doubling after a predetermined number of losses, and return to the original stake. In an uncapped martingale, you continue to double until you encounter either a winning trade, or a margin call, whichever happens first.

David
  • #124
  • Aug 17, 2014 1:21am Aug 17, 2014 1:21am
Quoting Chicky
Can someone please defined what is "Martingale"? I know what this fuckin' martingale is, but still like to have a definition. Adding to a losing position is not necessarily a martingale.
The key to a successful Martingale strategy…. is a solid trading strategy to begin with.

Something most people don’t have. Martingaling with no skill set will end badly.

Here is the concept. You are confident that the probability you of losing 3 in a row is extremely remote. If you lose 3 in a row you are done trading (or gambling) for the day. On your first trade you are willing to risk $100. If you win, your next trade goal is $100, if you lose you increase your risk to an amount to make up for your previous loss and still make your $100. If you lose again you increase it again, if you lose a third time, you are out.

A possible example:
1st trade risk = $100, if you lose you are now -$100 + commissions
2nd trade risk = $200 + double commissions, if you lose you are now -$300 + double commissions
3rd trade risk = $400 + triple commissions, if you lose you are now -$700 + triple commissions and are done for the day.

As soon as you win a trade, you return to your standard $100 risk size.
You continue to trade until you have achieved a profit of at least $700 +commissions for the day.

I also know people who use this same technique to tier trading positions instead of taking a stop. Instead of stopping out they add a position equal to the ratios detailed above. You can also employ a 4 step martingale or a 5 step…etc…but with an ever increasing catastrophic event risk size.

It is easier at the lack jack table or with binary options, because your risk amount is fixed.

The key difference in spot FX is that factors vary because your trading levels vary. On one trade I might have a stop level of 15 pips then the next 35 pips. 1 trade may be counter trend and I stay 1-1 then the next is with the trend on the 3rd wave so I shoot for 1-3 RR. Some days there will not be enough volume in the market so my martingale style could extend to over a week. What about if I hold a position over the weekend and price gaps past my stop? You can use an algorithm to calculate your risk based on your pip goal, but I find the other factors involved somewhat problematic.

And this is all is executed with the key assumption …IS MY TRADING STRATEGY PROVEN? Is my strategy sound enough where 3 loses in a row are extremely rare?

If not, throw this model in the bin!

How do I know if I have a solid strategy? Keep a tally on your win loss ratio while trading LIVE (demo & micro lots don’t count)and also can you explain your trade progression to someone? How do you know when enter a trade? If you can’t explain your trade progression in detail, you are not ready for live trading, especially with a martingale strategy.

Cheers
  • #125
  • Aug 17, 2014 1:49am Aug 17, 2014 1:49am
It is funny that there are already 5 pages of this thread and people are still talking about ideas that were discussed previously.

More so here is another thread

http://www.forexfactory.com/showthre...28#post7458428

The same topic.And same uneducated noobies try to become millionaires with martin(gay)l

Ok here is the deal:

Suppose i have 1 million $, now of course with 1 million i can martingale more safely because i can survive easily up to the 2^19 power situation, that is 19 losses in a row, and lose the entire account on the 20th loss in a row.

Now 19 loss in a row is pretty unlikely, but even if it has a remote risk, will i be so stupid to risk 1 million $ on it? If i am a billionaire then maybe, if i only have that million $ and otherwise i`m broke, then surely not.

If i have 1 million $ then i can just put that into a saving account or buy some bonds or indices and never have to worry about >3% DD.

With martingale i constantly have to worry about 100% DD.And i also know that some time it will come, for certain, which may be 1 year or 1000 year, but it can be the first event aswell.

So the second i use martingale i just put my only million dollar at a full exposure risk, and i have no guarantees that i will see it again.

Who would be so stupid to do this?

Oh and if you only have 10.000$ account then you can only survive 2^13 (13 consecutive loss), which is even more likely to happen than 2^19.

Especially if you use a tight stoploss strategy....Yeah with martingale you are bound to have 1:1 RR otherwise it doest recuperates the losses, but what i mean is small TP & small SL aswell, which is very bad.If you do use big TP and equally big SL then your accuracy suddenly improves and you trade frequency decreases...

Also the martingale gains/week in this mode i bet they are smaller than the S&P weekly return, so why have a gambling strategy with 100% risk when you can have an S&P 500 long only strategy with 5-10% DD ?
"There's a sucker born every minute" - P.T. Barnum
  • #126
  • Aug 17, 2014 1:54am Aug 17, 2014 1:54am
Martingales are, IMHO, just one of the possibilities to trade. The nice thing is that they are usually easy to automatize with an EA.

About the success expectancy? If the markets were completely random it is easy to demonstrate that a simple martingale will fail. But it is easy also to demonstrate that all other types of trading will also fail, no matter the indicators, SR analysis, fundamentals....

If markets are not completely random and we assume for instance the hipothesys that 1) a pair will be more time ranging than trending or 2) that the probability for the price to keep on a trend decreases faster than we would expect on a random market THEN martingales are positive.

For me it makes sense to validate the two previous hipothesys. To do so I've been running hundreds of martingales since March. So far the results are good: martingales are more positive than negative ; positive enough to win the spread, commisions and technical costs?? That's not yet clear.

My experiment consists in running on a single account up to 300 martingales over 32 instruments (3K euro, 1:500 leverage). I've run that setup now more than 100 times on demo accounts and the result is promising: the equity doubles 6.5 times out of 10 in one month or less (and blows the account the rest of times).

t.
  • #127
  • Aug 17, 2014 3:45am Aug 17, 2014 3:45am
Quoting merquise
that after the price hits his sl, he opens another trade in opposite direction with double the position...he had more than 130 consecutive winning months..you can't argue there

B.U.L.L.S.H.I.T


i smelled bullshit there, but just for fun i modified my ea to exactly that:

  1. Change the trade direction when the previous closed trade was a loss
  2. And double the lot size, while reseting it after a winner

Starting off with 0.01 lot, a 500$ account just as many of you would,run through 2010-2014, through 5 pip to 100 pip STOPS (TP=SL) in 2.5 pip increments, and this is the result:



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Attached File(s)
File Type: rar bs martingale.rar   8 KB | 464 downloads


worst outcome graph death in 44 trades

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Also there was a jackpot which made a 400% gain,however it was 1 of 39 optimization results, whereas almost all other of them were in minus.
So about 90% of the optimization results ended in -30% drawdown or worse, troughout 5 years of trading

Pretty impressive profits what can i say.. Is that trader gambler homeless yet if he is using this strategy for so much time ?
"There's a sucker born every minute" - P.T. Barnum
  • #128
  • Aug 17, 2014 4:18am Aug 17, 2014 4:18am
Quoting Proximus
Is that trader gambler homeless yet if he is using this strategy for so much time ?
All trading is gambling, isn't it? Good traders only gamble when the game has a positive expectancy.
You have proved that that simple martingale has negative expectancy, (no need of proof, it was obvious).

My experience is that simple martingales are too slow getting profits to compensate the unavoidable final event.
Modifying the martingale to do better entries is not good, the better the entry signals the less operation frequency and the lower the unitary profit (because a good signal reaches normally TP without increasing the operation volumes).
Modifying the martingale to decrease risk with hedging, partial exits, limited stops... doesn't work (or at least I haven't found any commercial or any method programmed by me that improves relevantly the final outcome).

My only hope is these days to boost the profit speed, enough to be able to 'cycle' in a few weeks. I see the cycle as a single classical mid-term operation but the SL with a RR of 1:1 (either you blow the account or you double).

t.
  • #129
  • Aug 17, 2014 4:27am Aug 17, 2014 4:27am
Quoting Proximus
And as for gambling, well, i havent seen a roulette player getting billionaire, so probably you wont be either with your shitty martingale strategy...

lol

This is amusing...

You and your backtests can't understand profitability and success through a strategy, so it can't possibly exist.



I am not under the illusion that an account with $100 start will make me a billionaire...this is where you are missing the forest through the trees, Ace...You talk about these huge gains, but yet don't want to gamble...This is exactly what you are doing.

I've picked a controlled set of statistics based on forward test data that I'd be using and applying a single pair to...it may still be considered a gamble, but no more than any other person would have working with the same account start...only issue is, I'd pick performance over a coin toss.


This truly is what I mean about you talking about shit you have absolutely no relevant knowledge or experience with.

So, why not start getting smarter, or get a lot quieter.

At this point, all your words will do is continue to humiliate you.
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #130
  • Aug 17, 2014 4:33am Aug 17, 2014 4:33am
Quoting Rtm
{quote} 100 is not enough to trade martingale there big shot. 10k is the minimum given the 0.01 minimum trade size allowed from brokers. However I will accept your donation that I will not lose 10k on any account, real demo , 10k, 100k, 1mil with martingale strategy. But will see steady increase like typical martingale of +/- 1000/month.

Here is your problem and is in keeping with your facebook attitude for posting here...

You base your comments on your limited experience and fail to see any information otherwise posted.

Check my TE, champ...I am over a month in on a $500 account with .01 lot sized starts and add on increments...

I've had a set back with my vps, but besides that, it ain't a $10k account and it hasn't blown up.

Accept my donation...

Pshhhhhhhhhhhhhhhhhhhhhhhh

Get your head out of your ass...

From this last post of yours, it doesn't seem like you'd be willing to work with a live account, let alone the size of the account we are going to start with, nor believe it even possible to be profitable from this standpoint.
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #131
  • Aug 17, 2014 4:44am Aug 17, 2014 4:44am
Quoting tacticat
{quote} You have proved that that simple martingale has negative expectancy, (no need of proof, it was obvious).
Not to everyone...tell that to mr Magix and his crew, he just cannot comprehend with his tiny brain, the nature of gambling and the risks involved, and because so, he just simply ignores the risks, because he can .And its obvious that by ignoring the risks the risks will dissapear, because thats how logic works isnt is

Quoting Magix
{quote} lol This is amusing... I am not under the illusion that... At this point, all your words will do is continue to humiliate you.
Yes you are under illusion pal, you think that by ignoring the risks they will dissapear, how clever

I think your 1 braincell is very alone Magix
"There's a sucker born every minute" - P.T. Barnum
  • #132
  • Aug 17, 2014 4:49am Aug 17, 2014 4:49am
Quoting hanover
My take is that the basic martingale, in a trading context, involves doubling your position size every time you lose (example: 0.1, 0.2, 0.4, 0.8, 1.6, ...... lots) , and reverting back to the original size (0.1 lot) as soon as you win. In a capped martingale, there is a limit to the doubling, i.e. you decide to stop doubling after a predetermined number of losses, and return to the original stake. In an uncapped martingale, you continue to double until you encounter either a winning trade, or a margin call, whichever happens first. David
My take is that I can add incrementally based on a base indicator criteria and play a dynamic range, win or lose.

The failure of a lot of these systems and my whole reason for not playing with stop losses is that they don't allow trigger ranged dynamics.

I am long until I am short.
I am short until I am long.

If the criteria of a trading system follows and adds in increments, it can take a loss, but this would be a trigger out, not a hard stop. From there, it will look to counter positions based on the inverse of the previous.

Trigger
Range
Dynamics!
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #133
  • Edited 6:10am Aug 17, 2014 4:52am | Edited 6:10am
Quoting Hilar
lol Magix is adorable Anytime his trades lose it's "an issue with his vps" (whatever the f that is). When ever he takes 500 trades and 1 month to make $15 it's his genius averaging down. Or "cost averaging" ......... wow He really thinks this is impressive.. lmao Adorable
Great...another moron chiming in for the sake of giving his kb a work out...
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Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #134
  • Aug 17, 2014 4:56am Aug 17, 2014 4:56am
Quoting Proximus
{quote} Not to everyone...tell that to mr Magix and his crew, he just cannot comprehend with his tiny brain, the nature of gambling and the risks involved, and because so, he just simply ignores the risks, because he can .And its obvious that by ignoring the risks the risks will dissapear, because thats how logic works isnt is {quote} Yes you are under illusion pal, you think that by ignoring the risks they will dissapear, how clever I think your 1 braincell is very alone Magix
Not that at all...

Amazing that you throw around insults but cannot actually back a single statement with anything that resembles solid data or logic...or spell checking for that matter...

I've stated this before and will again, prox...your backtests are bullshit!

I will pick my live data over your market ignorance and backtest reports, hands down!

And again, there is nothing that you've got, nor ever had that can come close to what we do...because you have no idea of what we do...you are left to sitting with your hands over your ears and your eyes closed, chiming in like an insolent 4 year old.
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #135
  • Aug 17, 2014 4:58am Aug 17, 2014 4:58am
Quoting Hilar
It's so adorable when he puffs his little chest out on his forum.
Showing proof of my issue with my vps is chest puffing??

Simon...

Are you drunk again?

Are you going to start getting all abusive and then delete a whole other string of posts??

Why not go be lonely in one of the several threads that you've opened, where nobody will visit...

OR

Why not create another internet friend so you have somebody to talk to.

That'd be fun...wouldn't it??
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #136
  • Aug 17, 2014 5:10am Aug 17, 2014 5:10am
I think having an incessant need to have the last word is likely the sign of someone who can't take a loss!

Probably someone trying to compensate for something.
H.D
  • #137
  • Aug 17, 2014 5:22am Aug 17, 2014 5:22am
Quoting Magix
{quote}I've stated this before and will again, prox...your backtests are bullshit! I will pick my live data over your market ignorance and backtest reports, hands down!
Did you forget that the historical data was once live data? What is wrong with you?

Quoting Magix
{quote}
And again, there is nothing that you've got, nor ever had that can come close to what we do...because you have no idea of what we do...you are left to sitting with your hands over your ears and your eyes closed, chiming in like an insolent 4 year old.
I dont care what you do, but what i know is that all martingale variants end in the same fashion, your martingale variant is just, as Gekko would say, a dog with different fleas.
"There's a sucker born every minute" - P.T. Barnum
  • #138
  • Aug 17, 2014 5:28am Aug 17, 2014 5:28am
Quoting Hilar
I think having an incessant need to have the last word is likely the sign of someone who can't take a loss! Probably someone trying to compensate for something.
lol

I nailed it...you are drunk!



After deleting the first post...you had to modify your new post, 2 times...

Not to mention, your continuation of trying to end a conversation like a child.

If somebody has a request for information, I reply...that's all...
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Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #139
  • Aug 17, 2014 5:30am Aug 17, 2014 5:30am
Quoting Proximus
your martingale variant is just, as Gekko would say, a dog with different fleas.
You do realize...that's a movie character, right??

But if we want to take off on movie quotes...

Let's take one from Brendan Fraser from Encino Man...

"Fresh Nugs, Wheezing the Juice, Auoooooooooga...BUDDY"
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #140
  • Aug 17, 2014 5:41am Aug 17, 2014 5:41am
Quoting Magix
{quote} You do realize...that's a movie character, right?? But if we want to take off on movie quotes... Let's take one from Brendan Fraser from Encino Man... "Fresh Nugs, Wheezing the Juice, Auoooooooooga...BUDDY"
I just want to prove my point, but i dont think you get it with your tiny brain...But then i just looked at your previous 50 or so posts and see that you are quite a troll man.

You are ForexFactory's chosen resident troll, i mean atleast 8000 of your 10k posts are just trollings.

Attached Image


Look in the mirror Magix and smile
"There's a sucker born every minute" - P.T. Barnum
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