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Martingaling - Looks so good until the inevitable

  • #341
  • Dec 28, 2014 10:29pm Dec 28, 2014 10:29pm
Quoting Chicky
{quote} ............... 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.
What is the real failure of martingales, Chicks?

I will tell you, that it isn't based on the martingale...but more so waits in failure like every other system and trader who guns themselves out of market.

Sort this out and you are actually one step closer.

Happy Holiday Season, mango!
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #342
  • Dec 28, 2014 10:44pm Dec 28, 2014 10:44pm
Quoting Magix
{quote} What is the real failure of martingales, Chicks? I will tell you, that it isn't based on the martingale...but more so waits in failure like every other system and trader who guns themselves out of market. Sort this out and you are actually one step closer. Happy Holiday Season, mango!
I am aware that you employ some kind of martingale in your trading method. My experience (as a gambler, book-maker and trader) taught me few lessons and I formed some basic principles. Here is one that says any form of martingale is a no no.

Quoting Chicky
{quote} ............... Gambling Rule #2: There is a limit to how much one can lose, but no limit to how much one wants to earn. .
The Thief of Wall Street
  • #343
  • Dec 28, 2014 10:47pm Dec 28, 2014 10:47pm
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.
Have you been using martingale over the years and if yes how profitable was it for you ??
Daily progress produces consistent growth
  • #344
  • Dec 28, 2014 10:48pm Dec 28, 2014 10:48pm
Quoting Chicky
{quote} I am aware that you employ some kind of martingale in your trading method. My experience (as a gambler, book-maker and trader) taught me few lessons and I formed some basic principles. Here is one that says any form of martingale is a no no. {quote}

Jackpot, Chicks.

Next Question...how do you differentiate the size of gains and the size of losses, and when these should be taken?
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #345
  • Dec 28, 2014 11:02pm Dec 28, 2014 11:02pm
Quoting Daimari
{quote} Have you been using martingale over the years and if yes how profitable was it for you ??
I was quite profitable. Until 2008, I had 2 workable methods. Martingale was more successful until summer 2007. I used martingales only on gambles and trades the outcome of which was dependent on some sort of analysis (the wagering)but not on pure gambles like dice, roulette, etc. When conditions were right, I used to double my account in 30 or so days. Once I doubled it in less than 7 days. But there were some blown accounts as well. From 1995 to 2007, it gave me little over 20% annual return on an average. Then in summer 2007, I lost all of my gain plus some more.

After that I developed 3 more logical methods. I now have 5 methods (including Martingale that I don't use). The annual returns are somewhere between 10% to 15%, I am not very happy with this level of returns but this is the best I can do.
The Thief of Wall Street
  • #346
  • Dec 28, 2014 11:13pm Dec 28, 2014 11:13pm
Quoting Magix
{quote} Jackpot, Chicks. Next Question...how do you differentiate the size of gains and the size of losses, and when these should be taken?
For me, size of gains is equal to size of loss, most of the time. This has to be a % of account equity just before taking the trade. Stop Loss is determined first. If stop loss is 17 pips, the take profit should be 19 pips (2 pips for spread). Lot size is adjusted so that 17 pip loss is equal to the amount (% of equity) you want to lose.

For a variety of reasons, I do not calculate take profit based on chart reading (support/Resistances or any other technicals). My take profit are based on my stop losses that are purely technical. The best reason I can give you for doing it this way is that the recent past performance of pa gives you some indication where it does not want to go but I cannot figure out where it wants to go based on this recent past performance.
The Thief of Wall Street
  • #347
  • Dec 28, 2014 11:14pm Dec 28, 2014 11:14pm
Quoting Chicky
{quote} I was quite profitable. Until 2008, I had 2 workable methods. Martingale was more successful until summer 2007. I used martingales only on gambles and trades the outcome of which was dependent on some sort of analysis (the wagering)but not on pure gambles like dice, roulette, etc. When conditions were right, I used to double my account in 30 or so days. Once I doubled it in less than 7 days. But there were some blown accounts as well. From 1995 to 2007, it gave me little over 20% annual return on an average. Then in summer 2007, I lost all...
Interesting story, I didnt know you have been trading for that long.

With that being said, what type of technique would be better. You argued that martingale can work but is risky for some period of time, but what else would be better?? Do you agree that a trend following system is more likely to provide stable return over the year.

Also, in have little experience compare to you but I manage to realize that sometime the market in a trend season while other time its in a ranging season... making it impossible to trade one single strategy. Do you alternate strategy from time to time or you managed to find something that works all the time.
Daily progress produces consistent growth
  • #348
  • Dec 28, 2014 11:19pm Dec 28, 2014 11:19pm
Quoting Chicky
{quote} For me, size of gains is equal to size of loss, most of the time. This has to be a % of account equity just before taking the trade. Stop Loss is determined first. If stop loss is 17 pips, the take profit should be 19 pips (2 pips for spread). Lot size is adjusted so that 17 pip loss is equal to the amount (% of equity) you want to lose. For a variety of reasons, I do not calculate take profit based on chart reading (support/Resistances or any other technicals). My take profit are based on my stop losses that are purely technical. The best...
Sounds like a single trade system more than would be a martingale or cost averaged system.

If the TP and SL are the same distance from the starting point, at what point to you add in an additional or doubled down position?

(ps, you are moving away from the idea you were on)
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #349
  • Dec 28, 2014 11:23pm Dec 28, 2014 11:23pm
Quoting Daimari
{quote} Interesting story, I didnt know you have been trading for that long. With that being said, what type of technique would be better. You argued that martingale can work but is risky for some period of time, but what else would be better?? Do you agree that a trend following system is more likely to provide stable return over the year. Also, in have little experience compare to you but I manage to realize that sometime the market in a trend season while other time its in a ranging season... making it impossible to trade one single strategy....
The most reliable method I have developed is the most simple. If you check my profile, the last couple of sentences indicate this. It is so simple and logical that I couldn't believe it first. Will be back after a smoke to give you and other readers this method. You people try this method for a month and see for yourselves how good it works. There is no myth involved, no illogical thing, no shit loads of calculations, no complications, nothing. Pure simple and logical. I bet if anyone can challenge this method on any logical grounds.
The Thief of Wall Street
  • #350
  • Dec 28, 2014 11:47pm Dec 28, 2014 11:47pm
Quoting Chicky
{quote} The most reliable method I have developed is the most simple. If you check my profile, the last couple of sentences indicate this. It is so simple and logical that I couldn't believe it first. Will be back after a smoke to give you and other readers this method. You people try this method for a month and see for yourselves how good it works. There is no myth involved, no illogical thing, no shit loads of calculations, no complications, nothing. Pure simple and logical. I bet if anyone can challenge this method on any logical grounds.
Here is the method. I call it Bounce Playing.

There are certain historical levels. Pa has elephant memory, it never forgets a key level, maybe because many market makers place their orders at this level and many robots have these levels fed-in to execute the trades. At these historic levels, there is a lot of activity, mostly a bounce. It touches these levels and instantly reacts. No matter where it goes after this touch (that is, breaks or reverses), most of the time, it first bounces off from these levels. I wait for the pa to touch these levels "hoping" for a bounce. If it doesn't bounce but slices through this level, my stop loss gets hit. But again, many times, it comes back to this level after breaking and bounces off from there but now in opposite direction. For example if pa is moving down, I would place a long order at the next key level, if it bounces off, I book my profit. But if it doesn't and cuts right through this level hitting my stop loss, I will again place a pending order at this level, but this time it will be a short. The only thing you need to figure out is how big a bounce it could be. Since I choose these levels based on weekly charts, I expect anything from 30 to 40 pips. If you go less than 30 pips, there is a chance that your stop loss would get hit in normal market volatility, therefore try to select these levels from as big a time-frame as you can so that your sl and tp are comparatively wider.
The Thief of Wall Street
  • #351
  • Dec 28, 2014 11:51pm Dec 28, 2014 11:51pm
Quoting Chicky
{quote} Here is the method. I call it Bounce Playing. There are certain historical levels. Pa has elephant memory, it never forgets a key level, maybe because many market makers place their orders at this level and many robots have these levels fed-in to execute the trades. At these historic levels, there is a lot of activity, mostly a bounce. It touches these levels and instantly reacts. No matter where it goes after this touch (that is, breaks or reverses), most of the time, it first bounces off from these levels. I wait for the pa to touch these...
interesting ! How often you get a trade entry per month or per year ??
Daily progress produces consistent growth
  • #352
  • Dec 28, 2014 11:59pm Dec 28, 2014 11:59pm
inevitable? I use a basket cross system that is martingale that has produced 8% per month gains since 2008 and drawdown usually stays >30% will it continue to work in the future? I dont know! thats what optimization is for. The thing with martingale is yes you need more capital and once your account geets big and you get dd it is stressful because yes martingale is risky as there are events that can cause market to go completely out of control.
All posts are my personal opinion
  • #353
  • Dec 29, 2014 12:10am Dec 29, 2014 12:10am
Quoting Daimari
{quote} interesting ! How often you get a trade entry per month or per year ??
On Weekly Time-Frame, one or two per month. On Daily Time-Frame, several in a week. I should mention that my risk appetite varies from 0.25% per trade to 1.00% per trade based on these factors:

1. How strong is the historical level. There are four types of levels by their strength a) Based on Weekly Charts, b) Based on Daily Charts, c) Based whether on Weekly or Daily but near a round number, and d) If this level is also a Price-Pivot Zone (PPZ) or MoFu.
2. What time of the day they hit the level,
3) In which session they hit the level

If market is expected to be very volatile when pa is near these levels, for example, NFP or any other major news release, I would not place a pending order because any volatile movement would knock it down. I would wait for the break of this level and volatility to subside. If it breaks the level, I would place the order like mentioned earlier, but if it bounces off from the level during the volatile time, I would not take the trade.
The Thief of Wall Street
  • #354
  • Dec 29, 2014 12:15am Dec 29, 2014 12:15am
Quoting Chicky
{quote} On Weekly Time-Frame, one or two per month. On Daily Time-Frame, several in a week. I should mention that my risk appetite varies from 0.25% per trade to 1.00% per trade based on these factors: 1. How strong is the historical level. There are four types of levels by their strength a) Based on Weekly Charts, b) Based on Daily Charts, c) Based whether on Weekly or Daily but near a round number, and d) If this level is also a Price-Pivot Zone (PPZ) or MoFu. 2. What time of the day they hit the level, 3) In which session they hit the level If...
I will test this strategy in 2015 to see how it work. Thank you for sharing your knowledge with us Chicky
Daily progress produces consistent growth
  • #355
  • Dec 29, 2014 12:23am Dec 29, 2014 12:23am
Quoting Magix
{quote} Sounds like a single trade system more than would be a martingale or cost averaged system. If the TP and SL are the same distance from the starting point, at what point to you add in an additional or doubled down position? (ps, you are moving away from the idea you were on)
I do not favor double down or martingale, never did. Yes, sometimes (when I have a lot free time or if my targets are 100 or more pips away) try to average out my entries and exits, that is, enter and exit in parts. The most annoying thing while averaging out is if pa goes in your favor without giving you a chance to enter second, third or fourth part of the trade. I have a different method solving this issue, that will be altogether a different discussion.
The Thief of Wall Street
  • #356
  • Dec 29, 2014 12:33am Dec 29, 2014 12:33am
Quoting Daimari
{quote} .............. I manage to realize that sometime the market in a trend season while other time its in a ranging season... making it impossible to trade one single strategy. Do you alternate strategy from time to time or you managed to find something that works all the time.
It is important to know why it is ranging if it is ranging and why it is trending if it is trending.

If your strategy is based on a ranging market, stay with your girlfriend when it is trending. But if your strategy is based on trending market, stay with your wife when it is ranging. If you don't know if it is ranging or trending, watch Kama Sutra.
The Thief of Wall Street
  • #357
  • Dec 29, 2014 12:39am Dec 29, 2014 12:39am
Quoting Chicky
The most annoying thing while averaging out is if pa goes in your favor without giving you a chance to enter second, third or fourth part of the trade.
Which of course, being on thread topic, brings me back to the same question...

When to take profit and when to cut loss?

Keeping in mind that the market is not typically static in movements and especially pair to relevant trade session...if you were to work on a martingale strategy, does it need to be specific, or can it be dynamic to the week.

In your previous explanations, trading on the daily-weekly time frames with pivotal points, I would assume you to be higher in favor of an absolute dynamic 24 hour trade clock, but still doesn't explain how to deal with the range to trend, and effective means of determining the size of profit range and the extent of the reach of loss...

I guess you still have a little more work to do on these theories, huh?
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #358
  • Dec 29, 2014 1:00am Dec 29, 2014 1:00am
Quoting Magix
{quote} Which of course, being on thread topic, brings me back to the same question... When to take profit and when to cut loss? Keeping in mind that the market is not typically static in movements and especially pair to relevant trade session...if you were to work on a martingale strategy, does it need to be specific, or can it be dynamic to the week. In your previous explanations, trading on the daily-weekly time frames with pivotal points, I would assume you to be higher in favor of an absolute dynamic 24 hour trade clock, but still doesn't explain...
When to cut-loss 1: If you carefully check 1.2152 on a eur/usd daily or weekly chart. It is an important level. I place a pending long there with few pips stop loss let's say 10 pips.
When to take profit 1: My Take Profit in this case would be 12 pips, that is, at 1.2164


When to cut-loss 2: If you carefully check 1.2152 on a eur/usd daily or weekly chart. It is an important level. I place a Market Long Order now at the price of 1.2190 my sl would be few pips below 1,2152, let's say 1.2142. That will be a 48 pip stop loss.
When to take profit 2: My Take Profit in this case would be 50 pips, that is, at 1.2240

For bounce playing, it doesn't matter if the market is trending or ranging. A bounce is a bounce, neither a trend move nor a range move. In fact, a bounce is not a move at all, just a quick reaction. Like I mentioned earlier, one has to estimate (or guesstimate) the size of the bounce. For stronger levels 30 to 40, for less stronger maybe 20 or 25 or one may like to use whatever basis think appropriate like atr, etc. I just guess the size of the move based on recent past moves. For 1.2152 bounce, it could be up to 1.2201 or 1.2227 based on the chart reading.

To me, PPZs are the strongest levels for a bounce play.
The Thief of Wall Street
  • #359
  • Dec 29, 2014 1:32am Dec 29, 2014 1:32am
Quoting Chicky
{quote} When to cut-loss 1: If you carefully check 1.2152 on a eur/usd daily or weekly chart. It is an important level. I place a pending long there with few pips stop loss let's say 10 pips. When to take profit 1: My Take Profit in this case would be 12 pips, that is, at 1.2164 When to cut-loss 2: If you carefully check 1.2152 on a eur/usd daily or weekly chart. It is an important level. I place a Market Long Order now at the price of 1.2190 my sl would be few pips below 1,2152, let's say 1.2142. That will be a 48 pip stop loss. When to take profit...
Sorry Chicks....

Ya've lost me.

You are waiting for a 50 pip drop off the top of the day on a weekly sell off chart to hopefully play for 50 pips, counter the main and overall trend?

If you are waiting for a pending long, why not directionally play short to the 2152, and then wait for signs of reversal?

On both a daily and weekly chart, I see absolutely no significance in your level...and also see the same flaw in your logic as do with what you would typically find in most systems that catch falling knives or stand in the front of speeding trains...
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #360
  • Dec 29, 2014 1:54am Dec 29, 2014 1:54am
Quoting Magix
{quote} Sorry Chicks.... Ya've lost me. You are waiting for a 50 pip drop off the top of the day on a weekly sell off chart to hopefully play for 50 pips, counter the main and overall trend? If you are waiting for a pending long, why not directionally play short to the 2152, and then wait for signs of reversal? On both a daily and weekly chart, I see absolutely no significance in your level...and also see the same flaw in your logic as do with what you would typically find in most systems that catch falling knives or stand in the front of speeding...
LOL. You are doing good at what you do. Bounce Playing is not in your nature, I think.
The Thief of Wall Street
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