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Magix, Martingales, and Market Myths

  • #41
  • Aug 26, 2014 6:36pm Aug 26, 2014 6:36pm
Quoting euclid
{quote} Aside from the additional costs, averaging 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.
Traditionally martingale is the process of doubling up. Used in a wide variety of gaming applications. I figure you know that but my point was the doubling effect based on hope of a heads (if the current run was tails) or red (if there was a current run on blacks) etc.
Luck is where preparation meets opportunity.......
  • #42
  • Aug 26, 2014 6:49pm Aug 26, 2014 6:49pm
Quoting euclid
{quote} Aside from the additional costs, averaging 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.
It is.

It just isn't in the "Traditional as applied to gambling", standpoint.

The words, you can't or you shouldn't when applied to anything are going to demand a test.

Knowledge is only solidified by empirical testing and application. This is what we demand out of science, why wouldn't we take the same approaches in our own methodology?

Your application of the term, Martingale...could be completely unique to you...might be successful by your own standpoint and even by markers in market.

So if you see the words, you can't or you shouldn't...does it really apply to what your idea is...or is it willing ignorance that is applied to a simple term?

Asking a question leads to an understanding.

Keep on, keeping on!

Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #43
  • Aug 26, 2014 6:51pm Aug 26, 2014 6:51pm
Quoting Ozzie Taz
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...
Ya kinda flew to the defensive there pretty fast, taz.

Not your style is it?

I am not trying to start an argument, nor trying to defend anything...but I am a little taken by your lack of effort to actually read a single fucking thing that has been posted here, but yet feel the need to chime in, for only the sake of chiming in...

Dude...

Really?

I think we both know you're better than that.
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #44
  • Aug 26, 2014 7:01pm Aug 26, 2014 7:01pm
Quoting Magix
{quote} Ya kinda flew to the defensive there pretty fast, taz. Not your style is it? I am not trying to start an argument, nor trying to defend anything...but I am a little taken by your lack of effort to actually read a single fucking thing that has been posted here, but yet feel the need to chime in, for only the sake of chiming in... Dude... Really? I think we both know you're better than that.
Yeah i guess i did. Sorry about that, its a character flaw that has improved over the years but not perfect. I did read mate.... i promise...... but feel the need to amalgamate definitions incorrect.

If your martingaling then your martingaling.
If your averaging then your averaging.

Just because your adding to a position in any format doesn't make it the same.

Outlaying money to buy an investment property in the hope it will increase over time is not the same as outlaying money at a casino or trading forex in the hope it will increase over time.

apples V apples
not
apples V oranges.
Luck is where preparation meets opportunity.......
  • #45
  • Aug 26, 2014 7:11pm Aug 26, 2014 7:11pm
Quoting Ozzie Taz
{quote} Yeah i guess i did. Sorry about that, its a character flaw that has improved over the years but not perfect. I did read mate.... i promise...... but feel the need to amalgamate definitions incorrect. If your martingaling then your martingaling. If your averaging then your averaging. Just because your adding to a position in any format doesn't make it the same. Outlaying money to buy an investment property in the hope it will increase over time is not the same as outlaying money at a casino or trading forex in the hope it will increase over...

Point taken.

Apples v Apples....

We are in a market place, where most people wouldn't actually know an apple if it did hop up and bite them in the ass...and past that, which brand of apple actually bit them in the ass....

Absolutes, IMO, don't have a place in any global based forum. The idea that there are no shades of grey, (not the housewife porn), is a part of willing ignorance.

If you want to keep to strict definitions, you've got my support as you would with any application that you choose for yourself in your life. It just ain't my style.

Learning the ideas and adapting the knowledge to be of benefit...I'd go with that.

For those who want to learn about an idea and it's possible applications, having a rudementary foundation is important. Stopping there will never keep the rain off of the top of your head though.

Because of the difference in language and even on semantics in the English Language, I think that an open forum of thought will play to the masses.

No need to apologize, dude...

If anybody gets the idea of being passionate behind their words, it's me!

Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #46
  • Aug 26, 2014 8:24pm Aug 26, 2014 8:24pm
Quoting Ozzie Taz
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...
I think I've taken this thread off into the weeds, I'll move on! Good trading people!
  • #47
  • Aug 26, 2014 8:29pm Aug 26, 2014 8:29pm
Quoting GEfx
{quote} I think I've taken this thread off into the weeds, I'll move on! Good trading people!
Funny...

I don't think that at all...

It would seem to me that your idea of a Martigale fits more closely with a pyramid than does with a cost averaging ideal...

Another application of a standard concept....

You BASTARD!

Where do you get off winning with this approach?

lol

Dude...

You've been around the factory for a while now...you've been witness to the blatant ignorance that gets posted regularily...why not be a part of a different aspect?

If you choose to leave, I can appreciate that.

If you choose to stay, others will gain a greater appreciation of your application.

Either way, brother...

I don't actually believe we'll ever sit opposite sides of the table long enough to have to throw down a gauntlet.
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #48
  • Aug 26, 2014 8:36pm Aug 26, 2014 8:36pm
Quoting GEfx
{quote} I think I've taken this thread off into the weeds, I'll move on! Good trading people!
Nah...happy to hear what you have to say/contribute to the idea here...who knows - we all just might learn something from each other...
"Holy Grail" exists - accepting where is the first step.
  • #49
  • Aug 26, 2014 9:01pm Aug 26, 2014 9:01pm
Ok, but if I become a pain, just toss me out the door.
  • #50
  • Aug 26, 2014 9:16pm Aug 26, 2014 9:16pm
Quoting GEfx
{quote} I think I've taken this thread off into the weeds, I'll move on! Good trading people!
Please don't. I have always enjoyed your input and guess i was getting caught up in terminology therefore rendering the for/against arguments here invalid due to the arguments being based on different concepts.

I like the 'absolutes' comment Magix made on post 45. The reason being is that i view it completely differently and different ideas based on the same concept is what im about. All in all, thats how we expand our knowledge base. Taking other ideas, researching, summarising, confirming, contributing and so on.

Personally i like to think that drilling into specific avenues of gray topics can result in a black/white or a one-sided dominant result. If a solution to a gray area is another gray area, then drill down further.

I think now im the one off topic, so will stop.

Please continue everyone.
Luck is where preparation meets opportunity.......
  • #51
  • Aug 26, 2014 9:19pm Aug 26, 2014 9:19pm
Quoting GEfx
Ok, but if I become a pain, just toss me out the door.
Buddy,

You know me better than that!

Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #52
  • Aug 26, 2014 9:32pm Aug 26, 2014 9:32pm
Quoting Ozzie Taz
apples V apples
not
apples V oranges.
Just for fun taz, and really, this ain't me lashing out at you nor the use of terminology...

I have thrown a little something together, kind of a spin off of another idea but applied it as it has been dictated...

The idea behind this EA(trade explorer attached to thread)...is to play a limited range based on a single trigger and cost average in for the same amount of the stop.

Better Explained...

It is starting with a .01 lot size. The goal, is to make $1.
If, price exceeds the same profit of 10 pips against, it will double the position and still keep the same $1 target.

Now...the EA is a piece of shit...is definitely one that will blow up the account and is only posted for the purposes of demonstration and the risks of using a martingale or martingalesque strategy...

Let's see, by comments from others, why this is or isn't a martingale strategy.

About the only thing that we can and will all agree on, is that a martingale applied to this tight of range, is an account buster.

But, since we have the tools, why not lend a visual to our words?



The first thing, I want you to state why this is or isn't a Martingale.

From here, I will play devil's advocate.

All for the purposes of information, not an absolute throw down...

Deal?
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #53
  • Aug 26, 2014 10:20pm Aug 26, 2014 10:20pm
Quoting Magix
{quote} Just for fun taz, and really, this ain't me lashing out at you nor the use of terminology... I have thrown a little something together, kind of a spin off of another idea but applied it as it has been dictated... The idea behind this EA(trade explorer attached to thread)...is to play a limited range based on a single trigger and cost average in for the same amount of the stop. Better Explained... It is starting with a .01 lot size. The goal, is to make $1. If, price exceeds the same profit of 10 pips against, it will double the position...

Yeah sure mate, why not.


Need to get the concept correct before commenting or i will expose myself as the fraud i really am....

Basically you are averaging in around a band of prices (above 'x' and below 'y') with the expectation that price will reach 'z' (z = $1 profit). If price goes -z minus 10 pips then you start averaging in again at a new band of prices (call these x1 and y1) but this time the difference is you have doubled your lot sizes BUT all trades have the same profit target ($1). This in essence will reduce the initial profit target price thanks to the doubled lot size.

If this is all correct, then the comparison i will make generalising this 'strategy ' is that if you average the price (between the 'x - y' and 'x1 - y1' price bands and average the total positions taken in each price band by lot sizes you will see a close resemblance to an overarching single trade averaging in position (ie: place 1 trade 'x' value, price went against you, place another trade '2x' value).

BUT

with dynamic profit range and dynamic lot sizes. I say dynamic lot sizes because you might take more positions in the first price band than in the second price band. Therefore you haven't doubled your overall position (then not martingaling). If your trades in the second price band exceed the number of trades in the first price band then you are martingaling (to an extent - traditionally martingaling is doubling, you could be doing more than double).

I use the word martingale because your net result (if successful) will be the same.

Have to go to uni - god i hope this makes some sense as i haven't proof read it.
Luck is where preparation meets opportunity.......
  • #54
  • Aug 27, 2014 12:29am Aug 27, 2014 12:29am
Okay this thread has begun to take some structure. So we need to develop some working definitions. Are we talking about any kind of averaging down and throwing that under the tent called Martin?

What progression are we testing? 1, 1, 1, 3?

1, 2, 4, 8?

1, 3, 5, 7?
Is the Martin capped? Do we add on signals? On grid? At fibs?

What is the definition of Martin for the sake of this discussion?
If you are good at something, never do it for free--Joker
  • #55
  • Aug 27, 2014 5:55am Aug 27, 2014 5:55am
Quoting jmn5611
Okay this thread has begun to take some structure. So we need to develop some working definitions. Are we talking about any kind of averaging down and throwing that under the tent called Martin? What progression are we testing? 1, 1, 1, 3? 1, 2, 4, 8? 1, 3, 5, 7? Is the Martin capped? Do we add on signals? On grid? At fibs? What is the definition of Martin for the sake of this discussion?
Primary is taken on a trigger...

IE, if you were sitting at the roulette table and waited for 4 reds to come up simultaneously and then decided to place your bet on black.

From there, a Grid of 10 pips.

Each subsequent trade is doubling the last lot taken, so the counts would in effect be, 1, 2, 4, 6, 16...up to a maximum of 10 levels.

The goal of the trade is to reach a net profit of a dollar.
(special note, as the broker selected uses both spread and commission, the net profit will be less than a dollar...so, for each win, I am effectively tipping the dealer, based on the number of positions taken).

This is set on an M5 chart and currently trading only a single pair, EURUSD.
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #56
  • Aug 27, 2014 6:01am Aug 27, 2014 6:01am
Quoting Ozzie Taz
I use the word martingale because your net result (if successful) will be the same.
This is only changed by swap fees and commissions.

2 things that aren't taken into effect from a gaming sense...

But let's attack a pure martingale as would be as closely tied to a gamble as possible. Pure Martingale.

The fact is, is that I actually don't believe that in the trading world, a 100% pure Martingale can actually exist, but has to be more closely tied to a loose interpretation.

IF we wanted Pure Martingales by the sense of the definition....
Account would need to be 1:1...
A trade would be for a single pip, as this is what would double an a wager.

Anybody see any issues with this, yet?

The accounts I work with, have either just a spread or a spread plus commissions. Meaning, that as soon as a trade would be taken, by the pure martingale sense and definitely depending on the pair, it would need be closed to loss of this single pip, if not greater, as this value is consumed by simply taking the bet...

So, in actuality...For the sake of a definition and pure based martingale system...there isn't one that actually exists in the world of Forex...

Right?
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #57
  • Aug 27, 2014 1:28pm Aug 27, 2014 1:28pm
Quoting Magix
{quote} Primary is taken on a trigger... IE, if you were sitting at the roulette table and waited for 4 reds to come up simultaneously and then decided to place your bet on black. From there, a Grid of 10 pips. Each subsequent trade is doubling the last lot taken, so the counts would in effect be, 1, 2, 4, 6, 16...up to a maximum of 10 levels. The goal of the trade is to reach a net profit of a dollar. (special note, as the broker selected uses both spread and commission, the net profit will be less than a dollar...so, for each win, I am effectively...
I coded an EA like this once, it was an accident.

It used a BB trigger in the direction of the monthly trend only. It had a brilliant 45 degree equity curve, with just one spike of serious drawdown. It traded 0.01 lots right across the board and waited 20 pips or two hours between signals for a TP of 20 pips. It was on the EURJPY.
If you are good at something, never do it for free--Joker
  • #58
  • Aug 28, 2014 4:28am Aug 28, 2014 4:28am
Something I meant to ask on the other Martingale thread, but Razor_trader has, for some reason, prevented me from doing so...but no matter....Magix, I see about 25 UJ shorts on your trade list and I would think that they will come back to profit because there Yen cannot get too much weaker I wouldn't have thought. of course it might go to 110 vs the USD, no one knows for sure....certainly not Kuroda! Anyway, my question is that if the UJ floats around in a range between (say) 102 and 104, would you be taking the small profits to exit the trade with at least something, or would you go for your original target and risk going into DD once more?

This is one part of Martingale that I don't know......do you exit while you can after being in a big DD, or do you risk it again and go for the target?

My personal system works, and works well by using a SL, so it's probably never going to happen that I use Martingale, but I do see some logic to it, and it is an interesting concept.
Doing what you like is Freedom. Liking what you do is Happiness.
  • #59
  • Aug 28, 2014 6:45am Aug 28, 2014 6:45am
Quoting realjumper
Something I meant to ask on the other Martingale thread, but Razor_trader has, for some reason, prevented me from doing so...but no matter....Magix, I see about 25 UJ shorts on your trade list and I would think that they will come back to profit because there Yen cannot get too much weaker I wouldn't have thought. of course it might go to 110 vs the USD, no one knows for sure....certainly not Kuroda! Anyway, my question is that if the UJ floats around in a range between (say) 102 and 104, would you be taking the small profits to exit the trade with...

Part of any trading system, martingale or otherwise is having an idea of when to cut losses or if the value of the reward has the potential to be greater than the risk...

IMO, at current, the value of the reward is exactly that!

It is true that anything can happen and on these, if I see a crash through above resistance, I will be forced to cut losses...

The trades were taken by way of an EA, but there is always the opportunity for the user to exit manually...or shut down the EA and walk away.

When I see the USDJPY chart, to me it looks like a pretty classic retrace and that there might be a better place to find my egress.

During this time and if I do see the opportunity to scale out some of these in profit, I absolutely will...but if I am right in my analysis..I will still be keeping a grand lot of the them open.

It is a tiny account, so these trades can be balanced by others along the way...really, it's only a couple hun that is in play...

So, to answer...yeah, small profits and watch for the bigger rewards...a little bit of technical analysis added to an otherwise blind and random logic.

Anyways...on my charts, this is what I see for USDJPY...I am not going to try and steer anybody else into a position...
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Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #60
  • Aug 28, 2014 6:55am Aug 28, 2014 6:55am
Quoting Magix
{quote} Part of any trading system, martingale or otherwise is having an idea of when to cut losses or if the value of the reward has the potential to be greater than the risk... IMO, at current, the value of the reward is exactly that! It is true that anything can happen and on these, if I see a crash through above resistance, I will be forced to cut losses... The trades were taken by way of an EA, but there is always the opportunity for the user to exit manually...or shut down the EA and walk away. When I see the USDJPY chart, to me it looks like...

Ok thanks....that's pretty much what i thought,.....which goes to confirm what I was saying before, that those who use Martingale as a 'never lose' strategy, will do exactly that...lose....in the end. For those with experience, it can be a very useful tool
Doing what you like is Freedom. Liking what you do is Happiness.
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