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Magix, Martingales, and Market Myths

  • #21
  • Aug 26, 2014 8:31am Aug 26, 2014 8:31am
If people lose 95% of the time, then brokers win 95% of the time, why is this?
They don't even look at a chart, just take the trade. A traders should have the advantage,
they have the luxury to study the charts for trends, so where does it all go wrong.
It's all about low leverage, if your account can only stand in the trade for so long, then the
broker will always be there to collect your money.
  • #22
  • Aug 26, 2014 8:42am Aug 26, 2014 8:42am
Quoting GEfx
Hi Magix. Just my 2 cents. I sometimes use this technique within my trading strategy, although I have bent the rules to fit my needs. I never, ever use this technique on the first trade, but it is useful as I add trades when building a position. I do trade with stops and on trade 1, if things don't go according to plan, I am out. But as I build a position, I can use this technique to "fix" a mistime entry, or to take advantage of a deeper pullback than planned as a pair reloads during a sustained move. Think of it as exposing profits in a...

Bending the rules is the same thing I see as selective application.

And, I don't view anything to be wrong with this.

Be it, adding a position of the same size instead of doubling, or be it to just cost average in to minimize losses.

There is a base understanding of application of any tool required. Anything used improperly as applied to market will most likely not give the results desired and can have detrimental effects on an account.
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #23
  • Aug 26, 2014 8:52am Aug 26, 2014 8:52am
Quoting deltaone
martingale is neither a strategy, nor a technique, itīs just gambling. NO professional trader gambles.
Perhaps the first book you should consult is a dictionary and short of that, maybe just a wiki.

Strategy:
Strategy generally involves setting goals, determining actions to achieve the goals, and mobilizing resources to execute the actions.

Technique:
technical skill; ability to apply procedures or methods so as to effect a desired result.

By pure definition alone, Martingaling can be deemed both a strategy and a technique.
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #24
  • Aug 26, 2014 9:18am Aug 26, 2014 9:18am
Quoting GEfx
Not a strategy...true. Not a technique...well, since adding to a mis-timed trade is an approach to trading a developing opportunity, yes it is a technique. For those who don't understand how and when to use it, it is a tool that can badly damage your account. No professional trader gambles...this is true.
No professional trader gambles...this is true - Surely you must be kidding here. A professional trader will tell you being correct 50% of the time is really good in the industry. Which means 50% of the time they are completely wrong, which in turn says they don't know the outcome before placing the trade, which in turn says even a professional is a gambler. If you think trading is not a form of some calculated gambling, you my friend need a wake up call.

I hope this thread doesn't turn out to be another "this is why it won't work and this is why it will". I would rather see it as sharing of ideas and methods utilizing the martingale strategy and I would be happy to contribute. If you don't believe martingale works, just go away already and don't worry what I'm doing with my money...it doesn't concern you.
  • #25
  • Aug 26, 2014 9:34am Aug 26, 2014 9:34am
Quoting TheDirtySerb
I hope this thread doesn't turn out to be another "this is why it won't work and this is why it will".I would rather see it as sharing of ideas and methods utilizing the martingale strategy and I would be happy to contribute.
TDS,

I will do my damnedest to try and see that this thread is entirely about the sharing of ideas.

Reasonable people, provided with reasonable information, can come to their own, reasonable conclusions.

This isn't a thread to dictate that the only way to trade is through the use of martingaling and cost averaging...but is more to show the idea and its possible applications.

I look forward to seeing more of you in print.
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #26
  • Aug 26, 2014 10:01am Aug 26, 2014 10:01am
My opinion is that this market is more predictable than believed via price action.

I trade with a purely numbers based system for entry/exit and what has been REALLY interesting to me is how fundamentals respond to this regardless of the result of the fundamental announcement.

I consider myself to not martingale, but, reality is, like anything else, and as magix has pointed out, there are "derivatives" of it, so, in part, I martingale, but I don't consistently double positions as pairs go against my trading bias...hadn't pondered it the way you described previously (doubling down on USD, etc..), so, yeh, I do some martingaling already...

Reality: none of us can precisely pick a top or bottom all of the time, but, we can take advantage of averaging into positions to garner the best advantage possible for ourselves. Pure martingale tweaked a little does this well IMO..
"Holy Grail" exists - accepting where is the first step.
  • #27
  • Aug 26, 2014 10:29am Aug 26, 2014 10:29am
Example of my strategy and how I utilize martingale based on percentage level of weekly open and S&R. Not teaching or preaching, just sharing. What works for me may not work for you and vice versa. This may be confusing to some but I tried to make it as clear as possible. Chart one is H1 and is looking for initial entry as well as an example of previous winner. Chart two is H4 of first chart and shows backup entries.
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  • #28
  • Aug 26, 2014 10:31am Aug 26, 2014 10:31am
Quoting VaBikePacker
Reality: none of us can precisely pick a top or bottom all of the time, but, we can take advantage of averaging into positions to garner the best advantage possible for ourselves. Pure martingale tweaked a little does this well IMO..

Well said.
  • #29
  • Aug 26, 2014 10:35am Aug 26, 2014 10:35am
Quoting TheDirtySerb
Example of my strategy and how I utilize martingale based on percentage level of weekly open and S&R. Not teaching or preaching, just sharing. What works for me may not work for you and vice versa. This may be confusing to some but I tried to make it as clear as possible. Chart one is H1 and is looking for initial entry as well as an example of previous winner. Chart two is H4 of first chart and shows backup entries. {image} {image}
I can't say I completely understand what you've posted, but, interestingly, your analysis results look similar to mine and seem to have similar results: an area where shorting is the appropriate direction, and area where long is the appropriate position and the "no trade zone"...
"Holy Grail" exists - accepting where is the first step.
  • #30
  • Aug 26, 2014 10:42am Aug 26, 2014 10:42am
Quoting VaBikePacker
{quote} I can't say I completely understand what you've posted, but, interestingly, your analysis results look similar to mine and seem to have similar results: an area where shorting is the appropriate direction, and area where long is the appropriate position and the "no trade zone"...
Lol, yes that's the great thing about trading. I may not see what you see and you may not see what I see, but if we both see thing similarly in a different way and end up with the same result/conclusion, hopefully we both will profit. Best of luck to all, I'm out.
  • #31
  • Aug 26, 2014 10:47am Aug 26, 2014 10:47am
From the book I'm reading currently
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  • #32
  • Aug 26, 2014 10:55am Aug 26, 2014 10:55am
Quoting TheDirtySerb
{quote} No professional trader gambles...this is true - Surely you must be kidding here. A professional trader will tell you being correct 50% of the time is really good in the industry. Which means 50% of the time they are completely wrong, which in turn says they don't know the outcome before placing the trade, which in turn says even a professional is a gambler. If you think trading is not a form of some calculated gambling, you my friend need a wake up call.
No I am not kidding. And, I am a professional trader. You are correct when you say that I don't know the outcome before placing a trade, but my success rate is above 87%. For me, it's not gambling. I think the wake up call should be issued to those who seek to achieve 50/50. If you are a 50/50 trader, Martingale will lead to failure. Learn to trade before moving on to advanced techniques.
  • #33
  • Aug 26, 2014 11:05am Aug 26, 2014 11:05am
Quoting GEfx
{quote} No I am not kidding. And, I am a professional trader. You are correct when you say that I don't know the outcome before placing a trade, but my success rate is above 87%. For me, it's not gambling. I think the wake up call should be issued to those who seek to achieve 50/50. If you are a 50/50 trader, Martingale will lead to failure. Learn to trade before moving on to advanced techniques.
This is usually where threads like this go sideways:

GEfx - can you provide some detail on what you understand martingale to be? My purpose isn't insulting at all - keeping our individual understanding clear can contribute to the conversation vs. inciting fury...Just as the serb and I have just demonstrated, we arrive at a very similar result in very different ways that we each understand. I'm interested in your assessment of martingale, particularly being a pro trader.
"Holy Grail" exists - accepting where is the first step.
  • #34
  • Aug 26, 2014 11:15am Aug 26, 2014 11:15am
Quoting VaBikePacker
{quote} This is usually where threads like this go sideways: GEfx - can you provide some detail on what you understand martingale to be? My purpose isn't insulting at all - keeping our individual understanding clear can contribute to the conversation vs. inciting fury...Just as the serb and I have just demonstrated, we arrive at a very similar result in very different ways that we each understand. I'm interested in your assessment of martingale, particularly being a pro trader.
You can check my journal here on FF. Sorry to take this off track for you.
  • #35
  • Aug 26, 2014 11:41am Aug 26, 2014 11:41am
Quoting GEfx
{quote} You can check my journal here on FF. Sorry to take this off track for you.

Free flow of information and all, a quick summary of your selective application of Martingaling was all that was requested.
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #36
  • Aug 26, 2014 12:22pm Aug 26, 2014 12:22pm
OK, my journal, post #558, entries 3 (entry 1 was ok but entry 2 was stalled and going negative) and 5 (entries 1-3 are in good shape, entry 4 negative). My margin account was "protected" from the impact of trades 3 and 5, and from the placement of my stops. This is not the best example but it's the basic idea of risking profit, not margin, and driving for deepest profits possible. Results are noted in posts #561-563.
  • #37
  • Edited 6:46pm Aug 26, 2014 5:18pm | Edited 6:46pm
Traditionally, martingale is a double or nothing approach where the bet size doubles on every loss to eventually win and gain back all losses and then start from scratch. Will leave the math out of it but risk of ruin is certain due to the exponential growth of the bets placed and the fact that ...... "The market can stay irrational longer than you can stay solvent".

It appears Martingale has been morphed into averaging in/down approach which is what is being discussed here. Averaging is completely different than the traditional martingale. In fact im not even sure if 'Martingale' has been discussed here at all.... just averaging a position to expect a retrace.

Getting to the point, this thread (although i have only skimmed through) appears to be about averaging positions with the same/smaller lot sizes than the original position and not the traditional doubling.

If this is correct then everyone is arguing, both agreeing and disagreeing, about different approaches (hate to use the word strategy here cause in essence its purely a military term).
Luck is where preparation meets opportunity.......
  • #38
  • Aug 26, 2014 6:03pm Aug 26, 2014 6:03pm
Quoting Ozzie Taz
In fact im not even sure if 'Martingale' has been discussed here at all.... just averaging a position to expect a retrace. Getting to the point, this thread (although i have only skimmed through) appears to be about averaging positions with the same/smaller lot sizes than the original position and not the traditional doubling. If this is correct then everyone is arguing, both agreeing and disagreeing, about different approaches (hate to use the word strategy here cause in essence its purely a military term).
Actually...Traditional martingales have been discussed here...you may have missed in your skimming...we are all of 2 pages deep, I see how it could have easily been overlooked.

Purely Military isn't actually correct when discussing the word Strategy...If you are using or have worked with Meta4, and ever decided to get to know the features, a back test report is run in a feature of Meta4 known as the, "Strategy Tester".

Your idea of not being able to adapt the terminology by definition, (which you may have also missed in your skimming), is the same failure that others have when they see the word, Martingale.

The applications are limitless...on both...
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #39
  • Edited 7:22pm Aug 26, 2014 6:28pm | Edited 7:22pm
Quoting Ozzie Taz
Averaging is completely different than martingale
Aside from the additional costs, averaging down is mathematically the same as taking a loss and then opening a larger position. So I don't see how averaging is not a form of martingale.
  • #40
  • Edited 6:45pm Aug 26, 2014 6:33pm | Edited 6:45pm
Here you go: http://www.answers.com/topic/strategy (definitions - we know how much you love 'researching and maths', the staple of any real intelligence when dealing with financial matters)

But you know everything Magix. I skimmed through because i wanted a quick break from studying and thought to myself 'wow, another martingale thread - i have to skim through this one'. You say you 'call it what it is' but your just down right rude buddy. Oh, have you heard of simulation? Thats actually what your doing in the 'strategy tester' is simulating outcomes based on varying parameters but you probably would of have known that if you had any sort of engineering or mathematical background (thats not an attack, honestly).

On a positive, you do have a fantastic ability to defend yourself using sarcasm and you do structure your responses well, no matter has misguided they are.

Credit where credit is due. Good luck.... will see you here in another few years probably rehashing the same thing.

Anyways, not here to start an argument You guys are great at doing that.

Around and around in circles we go !!!! Let the personal attacks begin

YYYYeeeeeeeeHaaaaaaa
Luck is where preparation meets opportunity.......
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