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Martingaling - Looks so good until the inevitable

  • #321
  • Sep 5, 2014 10:27am Sep 5, 2014 10:27am
Quoting tacticat
{quote} Yes, you're right. Simple math... for a simple martingale that I don't think anybody uses. Martingala lovers (mostly using EAs) use currently very different martingala techniques, all sharing the increase-risk-when-losing but adding trailings, partial closures, smart entries, increasing opening gaps, multipair hedging,... a whole world out there. t.
Tacticat had some interesting thoughts and approaches.
  • #322
  • Sep 5, 2014 10:35am Sep 5, 2014 10:35am
Quoting freundr
So, back to the Martingale concept. I haven't utilized it but find it very fascinating. It seems that everyone agrees that it will eventually enter into a death trade using the traditional methodology but has anyone had success using variations ? 1.5 or 1.6 multiplier vs the 2x ? Hedging with negatively correlated positions ? Using multiple accounts and different instruments in each one ?
I use a smaller multiplier than 2 regularly. I guess what I do for entries would be considered "pyramid" entries maybe..if we're sticking to pure martingale, well, x2 is it....

More important than entry technique is how you'll go about discovering the extended levels of the pair IMO. (The business before entry..that's where martingale in purest form or it's "derivatives" are won..) There comes a point with any pair where it's riskier to go with the flow than go contrarian...a point where the probability of reversal is much higher than the probability of price continuing in the direction it's going. It's possible to see these ranges and make a trade plan based on them.

For example sake (posted in another thread recently on the subject..):

https://www.evernote.com/shard/s22/s...y-TrackVia.png
"Holy Grail" exists - accepting where is the first step.
  • #323
  • Sep 5, 2014 11:14am Sep 5, 2014 11:14am
Quoting VaBikePacker
{quote} I use a smaller multiplier than 2 regularly. I guess what I do for entries would be considered "pyramid" entries maybe..if we're sticking to pure martingale, well, x2 is it.... More important than entry technique is how you'll go about discovering the extended levels of the pair IMO. (The business before entry..that's where martingale in purest form or it's "derivatives" are won..) There comes a point with any pair where it's riskier to go with the flow than go contrarian...a point where the probability of reversal is much higher than the...
I also average up and average down into trades and find that it gives much more flexibility on entries and gives a much better overall return than single entries/exits. But I always use the same size each entry of .1 lots and build a position to .6 to .8 lots.
I forget which forum talked about using multiple sub accounts but the theory was: if you had $10,000 then open 10 separate accounts with $1000 in each and trade different pairs. With the target of doubling each account and the expectation of 1,2,3 accounts margining out.
  • #324
  • Sep 5, 2014 11:21am Sep 5, 2014 11:21am
Quoting freundr
{quote} I also average up and average down into trades and find that it gives much more flexibility on entries and gives a much better overall return than single entries/exits. But I always use the same size each entry of .1 lots and build a position to .6 to .8 lots. I forget which forum talked about using multiple sub accounts but the theory was: if you had $10,000 then open 10 separate accounts with $1000 in each and trade different pairs. With the target of doubling each account and the expectation of 1,2,3 accounts margining out.
why not just have two $5K accounts you trade the same pairs in but in different directions? If you do this, you could balance out your swaps probably...

Let's suppose you trade 4 pairs.

split them between two accounts:

One account: Pair1SwapPaid/Pair2SwapPaide Pair3PaySwap/Pair4/Payswap

Account two: Pair1PaySwap/Pair2Payswap Pair3SwapPaid/Pair4SwapPaid

..it's hedging..without...you know..hedging...

so the idea would be that you have two trades open on each account at a time while looking start building positions on the other account in the contrarian direction..
"Holy Grail" exists - accepting where is the first step.
  • #325
  • Sep 5, 2014 12:29pm Sep 5, 2014 12:29pm
Quoting VaBikePacker
{quote} why not just have two $5K accounts you trade the same pairs in but in different directions? If you do this, you could balance out your swaps probably... Let's suppose you trade 4 pairs. split them between two accounts: One account: Pair1SwapPaid/Pair2SwapPaide Pair3PaySwap/Pair4/Payswap Account two: Pair1PaySwap/Pair2Payswap Pair3SwapPaid/Pair4SwapPaid ..it's hedging..without...you know..hedging... so the idea would be that you have two trades open on each account at a time while looking start building positions on the other account in the...
I like your thinking and in fact I utilize "hedging" in about 80% of my trades using EURJPY one direction and CHFJPY in the other direction. They were 98.6% correlated on the weekly timeframe until this recent EU move, now 97% or so. Just out of curiousity what pairs would you trade in the above suggestion or was that only for illustration purposes ? Personally I trade and focus only on a few pairs and build up larger positions in each.
Apologies to the OP if we wander too far of the original topic.
  • #326
  • Sep 5, 2014 12:37pm Sep 5, 2014 12:37pm
Quoting freundr
{quote} I like your thinking and in fact I utilize "hedging" in about 80% of my trades using EURJPY one direction and CHFJPY in the other direction. They were 98.6% correlated on the weekly timeframe until this recent EU move, now 97% or so. Just out of curiousity what pairs would you trade in the above suggestion or was that only for illustration purposes ? Personally I trade and focus only on a few pairs and build up larger positions in each. Apologies to the OP if we wander too far of the original topic.
Illustration purposes...

primarily aud/usd and picking up gbp/aud...learn a pair well and there's plenty of ROI there...
"Holy Grail" exists - accepting where is the first step.
  • #327
  • Sep 5, 2014 12:48pm Sep 5, 2014 12:48pm
Quoting VaBikePacker
{quote} Illustration purposes... primarily aud/usd and picking up gbp/aud...learn a pair well and there's plenty of ROI there...
  • #328
  • Sep 5, 2014 1:31pm Sep 5, 2014 1:31pm
Martingale or respectively lot increment can work.

If you know what you're doing even with a lower DD.

And NEVER trade against the trend!

Example for my week!


pic1 - fixed lotsize

Attached Image


pic2 - lot increment

Attached Image
  • #329
  • Sep 5, 2014 2:15pm Sep 5, 2014 2:15pm
Quoting VaBikePacker
{quote} why not just have two $5K accounts you trade the same pairs in but in different directions? If you do this, you could balance out your swaps probably... Let's suppose you trade 4 pairs. split them between two accounts: One account: Pair1SwapPaid/Pair2SwapPaide Pair3PaySwap/Pair4/Payswap Account two: Pair1PaySwap/Pair2Payswap Pair3SwapPaid/Pair4SwapPaid ..it's hedging..without...you know..hedging... so the idea would be that you have two trades open on each account at a time while looking start building positions on the other account...
Isn't that called transfer balance? and it's not permitted by the broker, isn't it?
  • #330
  • Sep 5, 2014 2:47pm Sep 5, 2014 2:47pm
Quoting irfan.zee01
{quote} Isn't that called transfer balance? and it's not permitted by the broker, isn't it?
you can create sub accountsin Oanda, not sure about other brokers.
  • #331
  • Sep 5, 2014 5:21pm Sep 5, 2014 5:21pm
Quoting irfan.zee01
{quote} Isn't that called transfer balance? and it's not permitted by the broker, isn't it?
or setup with two different brokers...more headache to manage but you'll get used to it...
"Holy Grail" exists - accepting where is the first step.
  • #332
  • Sep 7, 2014 12:59pm Sep 7, 2014 12:59pm
Quoting freundr
So, back to the Martingale concept. I haven't utilized it but find it very fascinating. It seems that everyone agrees that it will eventually enter into a death trade using the traditional methodology but has anyone had success using variations ? 1.5 or 1.6 multiplier vs the 2x ? Hedging with negatively correlated positions ? Using multiple accounts and different instruments in each one ?
A multiplier of 2 is used because that is what it takes to make the last trade cover all losses and then some, provided the same amount of pips are gained. Using a lower multiplier simply translates to a means of reducing the net loss as you will still be in a loss when you win at the end.
Example:
0-1-1-1-1+1 = -3
0-1-1.5-2.25-3.375+5.0625 = -3.0625
0-1-2-4-8+16 = 1
where 1 is the original amount invested


This however, does not change the fact that whatever multiplier be it 10 or 1.0001, all will end up losing everything in the end due to the exponential nature of this method.
  • #333
  • Dec 27, 2014 7:15pm Dec 27, 2014 7:15pm
Then:
http://www.forexfactory.com/attachme...0&d=1408067872

Now:
http://www.myfxbook.com/members/serg...i-bot-1/827407
  • #334
  • Dec 27, 2014 11:35pm Dec 27, 2014 11:35pm
Quoting MCRotter
Then: http://www.forexfactory.com/attachme...0&d=1408067872 Now: http://www.myfxbook.com/members/serg...i-bot-1/827407
Are these equity curves upside down or what? I see it going up and then all of a sudden it came down, why is that? Is there anything wrong with the person who managed this account? Martingale is the sure thing, you never lose on martingale trades if played correctly. If you get stopped out on one trade, enter another trade with double the amount. It is as simple as that. Only one winner will bring all your money back plus the profit you were looking for. There is no issue with martingale itself but the problem is with the way people use (or misuse) martingale. One is sure to lose everything on martingale trades if keeps on doubling the position sizes after every loss. What happens if there are 20, 30 or 50 consecutive losses? There is not enough money in this whole world for continuous martingale trades. But there is a simple way out from this. So simple that even a 5 year child can figure it out. Open any chart, on any time frame, relating to any pair and I show you how to martingale with 100% success. I am still having Christmas spirit and want to help.
The Thief of Wall Street
  • #335
  • Dec 27, 2014 11:51pm Dec 27, 2014 11:51pm
Quoting Chicky
{quote} Are these equity curves upside down or what? I see it going up and then all of a sudden it came down, why is that? Is there anything wrong with the person who managed this account? Martingale is the sure thing, you never lose on martingale trades if played correctly. If you get stopped out on one trade, enter another trade with double the amount. It is as simple as that. Only one winner will bring all your money back plus the profit you were looking for. There is no issue with martingale itself but the problem is with the way people use...
No body has posted a chart, that means you people are not interested.I am here only for one more hour. It will take half an hour to show on the posted chart how to achieve 100% success with martingale strategy, that means you only have half an hour. My spirit is running out.
The Thief of Wall Street
  • #336
  • Dec 28, 2014 12:34am Dec 28, 2014 12:34am
Quoting Chicky
{quote} No body has posted a chart, that means you people are not interested.I am here only for one more hour. It will take half an hour to show on the posted chart how to achieve 100% success with martingale strategy, that means you only have half an hour. My spirit is running out.
Merry christmas I think using martingale in spesific time frames with proper lot size and calculating avarage movement would be ok
  • #337
  • Dec 28, 2014 6:15am Dec 28, 2014 6:15am
Quoting Chicky
{quote} Are these equity curves upside down or what? I see it going up and then all of a sudden it came down, why is that? Is there anything wrong with the person who managed this account? Martingale is the sure thing, you never lose on martingale trades if played correctly. If you get stopped out on one trade, enter another trade with double the amount. It is as simple as that. Only one winner will bring all your money back plus the profit you were looking for. There is no issue with martingale itself but the problem is with the way people use...
Can't tell if that was a sarcastic post or not.

All strategies, run by the themselves will die given long enough time frame. Martingale is system that dies quicker, it's a time bomb as shown time and time again.
  • #338
  • Dec 28, 2014 12:51pm Dec 28, 2014 12:51pm
Quoting Chicky
{quote} No body has posted a chart, that means you people are not interested.I am here only for one more hour. It will take half an hour to show on the posted chart how to achieve 100% success with martingale strategy, that means you only have half an hour. My spirit is running out.
Dont know if you are still willing to teach us something :
Attached Image
Daily progress produces consistent growth
  • #339
  • Dec 28, 2014 10:04pm Dec 28, 2014 10:04pm
Quoting Daimari
{quote} Dont know if you are still willing to teach us something : {image}
Why not. I spared some spirit for today.

If you want martingale to work, find something in your charts that happens at least one out of every 4 times. I ,mean there should be 100% assurance that it happens. Remember, no chance, 100% assurance. Here is the calculation:

Investment: 1 +2+4+8= 15
Return 1:15 = 6.67%

If you cannot find something that happens once in at least 4 times, forget about the martingale.
The Thief of Wall Street
  • #340
  • Dec 28, 2014 10:14pm Dec 28, 2014 10:14pm
Quoting Chicky
{quote} Why not. I spared some spirit for today. If you want martingale to work, find something in your charts that happens at least one out of every 4 times. I ,mean there should be 100% assurance that it happens. Remember, no chance, 100% assurance. Here is the calculation: Investment: 1 +2+4+8= 15 Return 1:15 = 6.67% If you cannot find something that happens once in at least 4 times, forget about the martingale.
............... if 1 out of 4 is not there, find something that happens with 100% assurance 1 out of 10, or maybe 1 out of 10,000 or maybe 1 out of 1 Million times with 100% assurance. If there is no such thing, we should not be talking about martingale. This is the lesson.
The Thief of Wall Street
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