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Martingaling - Looks so good until the inevitable

  • #201
  • Aug 25, 2014 2:26am Aug 25, 2014 2:26am
Quoting XharpScalper
{quote} Hey magix whats your plan on floating losses , i can understand the power of martingale but it can also backfire.
Same plan as it has always been...

Dynamic
Trigger
Range.

When the system is ready to close the trades based on it's logic, I will accept the profit or losses as they come.

The idea that every trade needs to be a winner is where people get stuck...I don't have that issue...I prefer my understanding over blind guesses.
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #202
  • Aug 25, 2014 2:32am Aug 25, 2014 2:32am
Quoting Magix
{quote} Same plan as it has always been... Dynamic Trigger Range. When the system is ready to close the trades based on it's logic, I will accept the profit or losses as they come. The idea that every trade needs to be a winner is where people get stuck...I don't have that issue...I prefer my understanding over blind guesses.
you will take full loss full account blow of this market move , if market goes 200 or 300 more pips down you will loose all of your money.
and if it goes 100 150 pips in your favor then it might give you chance to BE. (which is actually against the trend for now)

Expecting BE or little profits against full account loss , well make your choice after good home work mate.
  • #203
  • Aug 25, 2014 2:35am Aug 25, 2014 2:35am
Quoting XharpScalper
{quote} you will take full loss full account blow of this market move , if market goes 200 or 300 more pips down you will loose all of your money. and if it goes 100 150 pips in your favor then it might give you chance to BE. (which is actually against the trend for now) Expecting BE or little profits against full account loss , well make your choice after good home work mate.
Yup.
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #204
  • Aug 25, 2014 2:39am Aug 25, 2014 2:39am
Quoting Magix
{quote} Yup.
well good luck
  • #205
  • Aug 25, 2014 2:39am Aug 25, 2014 2:39am
Requirement to win in forex without martingale:
Profit Margin > 1 (Profit Margin = Total net profit / Total net loss)

Requirement to win in forex with martingale:
Never loss x times in a row (Profit Margin > 1 is "not required anymore")

The problem is, is there any way to avoid x times loss in a row? No, no at all. Even with high PM, we still might loss lets say 15 times in a row.

If we have lower PM, our chance to have x times loss in a row is bigger than the chance if we have higher PM.
Example:
PM = 0.3, the chance to loss x times in a row is X%
PM = 0.7, the chance to loss x times in a row is Y%
PM = 1, the chance to loss x times in a row is Z%
which X > Y > Z.

So, if you want to survive with martingale system, you should increase your PM, the higher the better. PM>1 is even better.
But, wait a minute, if we have PM>1, we already become a winner in no martingale trading system. Why on earth we use martingale then?

So let's back to the requirement section..

Requirement to win in forex without martingale:
Profit Margin > 1 (Profit Margin = Total net profit / Total net loss)

Requirement to win in forex with martingale:
Never loss x times in a row (Profit Margin > 1 is "not required anymore" but necessary to increase probability to survive)

So basically, martingale only increase the requirements to win in forex trading.

If you think you can avoid to lose x times in a row with PM<1 then you are pushing your luck. Even with PM>1, you still have a chance to lose x times in a row.
  • #206
  • Aug 25, 2014 2:42am Aug 25, 2014 2:42am
Quoting Special One
Requirement to win in forex without martingale: Profit Margin > 1 (Profit Margin = Total net profit / Total net loss) Requirement to win in forex with martingale: Never loss x times in a row (Profit Margin > 1 is "not required anymore") The problem is, is there any way to avoid x times loss in a row? No, no at all. Even with high PM, we still might loss lets say 15 times in a row. If we have lower PM, our chance to have x times loss in a row is bigger than the chance if we have higher PM. Example: PM = 0.3, the chance to loss x times in a row is...
Completely Worthless.

Junk Math.

Junk Logic.
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #207
  • Aug 25, 2014 2:47am Aug 25, 2014 2:47am
Quoting XharpScalper
{quote} Hey magix whats your plan on floating losses , i can understand the power of martingale but it can also backfire.
XharpScalper, Magix already add $300 fund to avoid margin call. So, theoretically it already hit margin call.
Adding more fund to avoid margin call is a bad habit, showing bad money management ability.
  • #208
  • Aug 25, 2014 2:49am Aug 25, 2014 2:49am
Quoting Special One
{quote} XharpScalper, Magix already add $300 fund to avoid margin call. So, theoretically it already hit margin call. Adding more fund to avoid margin call is a bad habit, showing bad money management ability.
I also have 3EAs running on an account I'd set up for 1...

So, I added funds...

Is there a rule that says that you cannot add or take funds as they are required??

Or that I am mandated to a certain set of logics per trade account/pair?

This account is an account that is funded and supplemented by other EA accounts.

I still want to see the play through to is fruition.

It's not about escaping at square or with a profit...it is about allowing the system to work it's way through.

Nothing more...nothing less...
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #209
  • Aug 25, 2014 2:55am Aug 25, 2014 2:55am
Quoting Special One
{quote} XharpScalper, Magix already add $300 fund to avoid margin call. So, theoretically it already hit margin call. Adding more fund to avoid margin call is a bad habit, showing bad money management ability.
In my humble opinion adding to the looser is the worst thing trader does with a hope that it will come back in profit zone.
  • #210
  • Aug 25, 2014 2:57am Aug 25, 2014 2:57am
Quoting XharpScalper
{quote} In my humble opinion adding to the looser is the worst thing trader does with a hope that it will come back in profit zone.

JACKPOT!

I 100% agree with you!!
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #211
  • Aug 25, 2014 3:06am Aug 25, 2014 3:06am
Quoting XharpScalper
{quote} In my humble opinion adding to the looser is the worst thing trader does with a hope that it will come back in profit zone.
I think that comment is a little too generalistic. Yes randomly entering trades to average down or up your position because you have no real reason to be in the trade except for 'it must turn here because it has come so far' is a sure fire way to burn out, however to have a zone or area where you anticipate the market turning may require multiple entries, most of which would be considered adding to losers.

Just food for thought
  • #212
  • Aug 25, 2014 3:14am Aug 25, 2014 3:14am
Quoting Razor_trader
{quote} I think that comment is a little too generalistic. Yes randomly entering trades to average down or up your position because you have no real reason to be in the trade except for 'it must turn here because it has come so far' is a sure fire way to burn out, however to have a zone or area where you anticipate the market turning may require multiple entries, most of which would be considered adding to losers. Just food for thought

As applied to random...correct.

As applied to systematic trading, very vague and general.

As applied to the system I am working with, it is spot on.

Dynamic trigger range means that I have chosen a select set of criteria based on an overall market analysis. Sometimes it wins, sometimes it loses...

But it still plays the range of the triggers from top to bottom.

Really, just a third interpretation of this same thing...

Cost Averaging in to minimize the overall loss...

Stop loss and Take profit points in my opinion, are just blind guesses. Trigger Ranged Dynamics allows for you to cost average in to a position, still accept a loss, but based on the Market Movement...not a STATIC number.
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #213
  • Aug 25, 2014 3:24am Aug 25, 2014 3:24am
Hey like remember when like the entire worlds economic system like collapsed n stuff

Themz were some shovels
H.D
  • #214
  • Aug 25, 2014 3:47am Aug 25, 2014 3:47am
The way a martingale system should be traded can bring 0 risk.
Deposit 5000 and run them. When profit = the deposit you should withdraw the deposit leaving you risk free.
Now there are 5000 in the account but not your money. When it will reach 20.000 you should take half away.
Now you have your money back and 10.k to top it up. Do this again and again untill the account will lose 20.000. By that time you'll have cashed over 50k in profits.
http://prntscr.com/4g8ju7

When 5000 will be reached i will withdraw my own money and will continue with the 5000 made by the robot. Oh.. i have 3000 trades as i don't like gambling and putting money in small amounts daily is better than putting big amounts in one day.
  • #215
  • Aug 25, 2014 4:22am Aug 25, 2014 4:22am
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  • #216
  • Aug 26, 2014 3:37am Aug 26, 2014 3:37am
Quoting Matraguna
The way a martingale system should be traded can bring 0 risk. Deposit 5000 and run them. When profit = the deposit you should withdraw the deposit leaving you risk free. Now there are 5000 in the account but not your money. When it will reach 20.000 you should take half away. Now you have your money back and 10.k to top it up. Do this again and again untill the account will lose 20.000. By that time you'll have cashed over 50k in profits. http://prntscr.com/4g8ju7 When 5000 will be reached i will withdraw my own money and will continue...
Don't get me wrong, the theory sounds fine but then again there are plenty more theories that sound just as good but don't work in reality. The trouble is not knowing when you will have the streak of losers that will wipe you out. For all you know the very first trade you place could be the start of a market crumble against you, but that doesn't become fully apparent until after the event or you can, as in the instance of this thread, go 5000+ trades before the event happens.

The true essence of a martingale is to double up each losing position. In roulette is usually used with respect to odds and evens, reds and blacks and to some extremes the 1st 12, 2nd 12 and 3rd 12 options. In cards like blackjack it might be doubling up each losing hand ect. In trading its not so apparent as to how each person manages their risk and doubling down which can have varying outcomes in relation to how long you last and also how long it takes to get back to positive. The difference between the markets and the casino is that the markets have no limit controls except for the margin call when you reach your limit. Casinos at least have in place minimum and maximum bets and usually this allows a player to martingale to 7 possibly 8 times before the maximum is reach and your next win will not recover your losses. With trading you could be playing against a Black Swan without fully realising it until it is too late.

Therefore a martingale cannot be used 100% of the time as you claim (The way a martingale system should be traded can bring 0 risk) to ensure you also end up playing with the houses money. If it was then everyone would do it.
  • #217
  • Aug 26, 2014 3:52am Aug 26, 2014 3:52am
I do agree with you Razor.
This system can trick anyone no matter how long you have used it and profits made over months can be lost in few hours.
I am using it though with high surveillance, basically in front of the pc 10-12 hours a day watching the open trades, and if a trade goes out of my specific set rules for this system than i close manual . I do not trade during news releases, all positions are closed before news and before closing for the day.

So far this system has brought profits but as we all know, past performances do not reflect future performances.
If you, as trader, don't have a clear set of rules of how a trade must go and you don't cut a loss when the case occurs than this system will fail and close an account fast.
  • #218
  • Edited 4:16am Aug 26, 2014 4:06am | Edited 4:16am
Sure martingale can be justified and glorified. It can even be proved as "the most profitable type" of trading method... More often than not even

But it's the equivalent of Russian roulette.

You can take a guy lets call him "Merlin".,.. Who trades his account on martingale on a $1000 account , hits a rough patch after 4 weeks and deposits $1000 more... That hits a rough patch so he deposits another $500 just waiting for that inevitable reversal in the markets... Eventually BOOM... All these positions (100 or so) maybe its's just 3... Erase all losses and do something amazing.. They double the losses into amazing gains... Oh my

That's all well and good... But when you trade real accounts you look at %...

Percentage... Per.. Cent .. age


Why? Because if you have a hey day, you can say well.. "that was a nice hey day, so what if I add a ZERO to that?" Ok fine, do that... But the 75% draw down you suffered on a $1000 account (>$500) could you really suffer that on an account with an extra zero?

Would someone with say $1,000,000 say "hey there Draw down.... Can you risk >$500,000 of my money on the 75% chance I can double my $1,000,000? I heard you do that good!"

It's simply not the same as risking $750 of a $1,000 account for a 2-$3,000 gain.. It's just not...

The question comes down to: What do you aspire to be as a trader? Do you want to be a guy who knows how to ride the odds and get lucky enough to look good.. Or ... Do you want to be the guy who can safely make consistence gains?

The thing is...

The guy with $10,000 to invest may give you a go..

The Guy with $1,000,000 to invest will spit on your grave.

The guy with 100,000,000 to invest may even have you killed!.. and why not.. you 75% deserve it
H.D
  • #219
  • Edited 6:00am Aug 26, 2014 5:36am | Edited 6:00am
Quoting Hilar
Sure martingale can be justified and glorified. It can even be proved as "the most profitable type" of trading method... More often than not even But it's the equivalent of Russian roulette. You can take a guy lets call him "Merlin".,.. Who trades his account on martingale on a $1000 account , hits a rough patch after 4 weeks and deposits $1000 more... That hits a rough patch so he deposits another $500 just waiting for that inevitable reversal in the markets... Eventually BOOM... All these positions (100 or so) maybe its's just 3... Erase all losses...
Said it like a pro.

I guess Demo Man can only ever trade sub 1k accounts because

1) He is talentless when it comes to a strategy with Sharpe > 1
2) He doenst know what it is to manage real money ie Big Money. He keeps funding 300-500 dollar accounts deluding himself it can work when all these years, he has just been losing on demo till his first real account, which we can perfectly see wht stupid odds you get when you martingle. To make 5% you need to take drawdowns of 30%.
3) If you give up on finding the real thing that makes FX tick towards positive equity curve ie fundamental, technical, bla bla (your edge) and blatantly decide to just use Money Management, then easy to say, your account will blow up just like the rest.
4) It takes a little bit more sophistication" than Martingle..to win at Forex.. . Brokers loves martingles man, the amount of trades, the carry they make off you, go for it.. What they dont want to tell you is stop and cut. They would lose the carry and the perpetual funding you provide. They rather sucker you 500 a month providing steady income for them. Than blow up your 1k and you dont come back

5) Ok statement 4 is bullshit but still just having a go at Demo Man
6) Best for new people to understand Forex that it is more than a Money Management thing. If money management can make money, everybody is a millionaire
  • #220
  • Edited 6:59pm Aug 26, 2014 4:45pm | Edited 6:59pm
Quoting Magix
{quote} w0w...death of another thread, thanks to the wonderful Hanover and his many posts of a lot of words, but never actually saying anything......
Magix,

Perhaps I am too wordy and theoretical. So I’ll start calling a spade a spade.

Anybody — even me — can trade a $500 account, take all the risks they want, and when they blow the account, they can easily forget their failure, re-fund the account and start over. Then, when the new account is in profit, they can jump onto FF and tell everybody that their money management is a winner.

So let’s forget theory then, and talk about the real world. I don’t want to pick on you, but your TE just happens to be a perfect example of what I’m talking about. It’s currently 36% down, and that drawdown is the result of adding to a stream of consecutive losses. Sure, the market might turn around, and all of those trades might eventually show profit, and I hope for your sake that it does. But for the serious trader with an account of (say) $1 million, putting $360,000 at risk in just a few days would be totally unacceptable. Let alone a professional who is trading other people’s money.

Even if you dig yourself out of this hole, martingale will eventually put you in the same situation again...... and again, and again......... until..........

So your MM is suitable for growing a small account, where loss doesn’t matter. But that’s all.

Whether or not I trade forex myself is irrelevant. Because all I’ve done (once again) is state what is patently obvious. But hopefully more simply and concisely this time.

Anyway, you still have a great chance to prove me wrong. If the account in your current TE recovers, and then survives the next THREE YEARS worth of changing markets, it would show that your style of martingale is capable of standing the test of time. At that point I’ll happily agree that hanover has had his head in his ass, and that Magix was right all along.

David
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