Adaptive Martingale Manager

Adaptive Martingale Manager (concept)


Hi, first thread but something has been troubling me for a while now...

I'm not too bad at coding for MT4 but this task is completely beyond my understanding of order management.
Maybe somebody could help either validate/negate this idea in the context of programming.

I don't need a lecture, i'm experienced and fully understand the risk involved in martingale-like positioning.

The idea is to have a GUI that we can use manually that calculates lot-size's automatically based on the current symbols floating loss.
First we set a target and when adding to losing positions the ea instantly calculates a lot-size that covers the current loss.
The ea would monitor open positions on a given pair and close all positions when the set target value has been reached.

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Example #1

EA settings:
Target = 10 pips.
Target value = $1.00
--------------------------

Ea calculates the lot-size should be 0.01

We use the ea to enter a sell position (0.01)
Price moves against us 30 pips
We're now floating a loss of $3.00

- We decided to take another sell position...

The ea calculates the current loss of 30 pips (or $3.00)
Adds the target value of 10 pips (or $1.00)
And decides the lot-size for the position is 0.04 lots
0.04 x 10 pips = $4.00
Profit = $1.00

* In the next example i'll express a similar using hedging...

Example #2

We use the ea to enter a sell position (0.01)
Price moves against us 30 pips
We're now floating a loss of $3.00

- We decided to take BUY position...

The ea calculates the current loss of 30 pips (or $3.00)
Adds the target value of 10 pips (or $1.00)
And decides the lot-size for the position is 0.04 lots
0.04 x 10 pips = $4.00
Profit = $1.00

-----------------------------------------

So basically, anytime we think the market is going to move 10 pips in either direction we can click buy or sell and have the ea execute a position that not only makes the set target but covers the current floating loss for that pair.

Basic GU options could be:
Buy to profit
Buy to break-even
Sell to profit
Sell to break-even

I hope I've explained this well enough for you to understand and to discuss this concept as i believe this tool would be invaluable to discretionary traders in certain conditions.
I'm providing the following image as a way to explain the concept in a clear manner, not as a strategy.

Thanks in advance...

Ideally the EA could draw a horizontal line x pips either side of current market
This would visually represent where price would need to move in order to make a profit/breakeven, if you were to take another position.

Opinions on this idea greatly appreciated...
Cheers..

The code should be easy enough to develop, but i doubt you will be able to trade it successfully. I fear you will be clicking away and getting deeper into trouble with every click.

Lol, yeah true but that's what most of us do anyway except without recovery positioning..

I understand a tool like this could be dangerous in the wrong hands...

It's a good idea of mixing automatic martingale lot calculation with discretionary decision. But you have to be good at sensing where the market is going for this to be a great tool.

If you are capable of predicting 10 pips direction (as per your example) every 2 to 3 trades (should be not too much stressful), then you are ok.

Edit:
I just don't understand what is beyond your understanding of order management for this concept ?

Hi, I have developed some EA based on Martingale concept. my EAs were fully automated or Semi automated i.e: (you can open initial and/or successive positions manually and/or based on EA logic automatically and ea would incorporate the opened positions into the calculations and prepares for next positions or close them all in profit or loss base on your Setting inputs. by the way based on your assumption for manual order opening, I think you need an Indicator which calculates the open positions total profit/loss and calculates the new position size per market tick data for a new buy and a new sell.the all you need is to develop a script which use the indicators calculated size buy and sell position. whenever you reach to conclusion that new position in buy or sell should be opened, you will run the script for buy or sell.

Hey thanks for your input. Sorry I mean,i can code entry signals, exits and fixed lot sizes but nothing to this extreme (checking order info etc).

the problem with your logic of one position to compensate previous orders' loss is that your new order size will grow exponentially which is too dangerous and also impose great psychological pressure on trader who is also should analyse the market and decide for Buy or Sell Direction.

You don't have to worry as there is nothing extreme in checking order info.


OrderSelect( TicketNumber, SELECT_BY_TICKET );
double PL = OrderProfit();

Once you have your profit or loss, you can then calculate the size of your next order...

Not necessarilly, this depends on your Risk/Reward.

Example: 1 trade with 10 pips SL and 100 pips TP, you can lose 9 times in a row and be profitable the tenth.

And as stated in the first post, I think we are not here to discuss the dangerousness of the martingale, we all know about it.

ok if you already have an ea thats similar could you please help out and post it.

.

As said before coding this is no miracle and could be easily done within 30 minutes or so but discussing the disadvantages of martingale is exactly what you asked us to do. It is terrible money management and system design to base the lot size of the future trades on the (floating) loss of the account in hope to gain back money. Every trade should be looked at individually and the trade size should reflect the probability of the trade going into the green.

If you have a lot of losses it might even be good to reduce the lot size as the market currently behaves differently than expected.

You probably "could" create a profitable trading system using this approach but it only smooths out your equity curve until you go broke. MM always adds so much draw down to a strategy it is scary.

Hey RB,

I've worked with a similar idea only in that it will hedge a larger position after a set number of tries and will always look to close a net basket of trades in a positive value.

Along with this, I have had others working with the Hedging/Nedging idea, Hotpotato even worked out a specific EA that would work with, what I believe to be any Martingale trader as an additional logic on positions.

I do have a couple of issues with this idea, and Nope, the Martingale idea isn't one of them.

1. Working with a Standardized grid size. Calculating what may or may not be the perfect size grid to pair for profitability will take this idea and make it, well..not much better than a coin toss and even at that, it doesn't really take into account the news spike days, or the range days. One either crushing against, but only hitting a max value, just short or profitability to scale back against you...the other sitting in a relative infinity waiting for the break.

2. Even working with an adaptive range, and a max lot set, this can still be rather taxing on the account.

I've been testing inside of what I call market ranged trigger dynamics, which takes a lot of the guess work out of, how big of a grid to use in that it waits for additional triggers to cost average in on, but will only take them in a minimum pip range. Because the bulk of what I test with is in the M1 frame, positioning can be fantastic for a minimum trace back range, but often times, these ranges aren't enough and it still leaves a lot of wounded soldiers in the field.

If you are working with a Generic Grid, my suggestion would be to toss the idea and work on another...really, this has been tried by several others prior to me and I haven't seen anything positive come from it.

If you are working on a trigger base and dynamic range, move into a range greater than a net 10 pip profit...tighter ranges typically mean more positions. More positions means higher risk.

My current projects, work with both a standardized Grid, in that each position is the same as the primary, as well as setting in an incremental add on the same trigger base. They both work with multiple exit logics based on trailing stops as well as hard target values for stops...this is where I've been most successful. As much as we hear the cliche, "It's not where you enter that matters, it is where you exit", we still find it easy to focus more on taking the position and how to add than do in when and where to take a close.

The 2 accounts in test here, hard stops and dynamic...run for the same period of time, both started together a week ago. The dynamic, I close all positions on Friday so that it can start a fresh new week, hard stops, as it is an incremental add, can make some use of the range. The most interesting thing you will probably notice, is that the dynamic, which only adds the exact same positions size as the primary, is actually kicking ass over the incremental add and hard stops value.

Hardstops
http://widgets.myfxbook.com/widgets/1221068/large.jpg
Default - Dynamic
http://widgets.myfxbook.com/widgets/1222976/large.jpg


HARDSTOPS
DYNAMIC


It's not when you get in...it's when you get out!

Yes i did, some time ago.
But i was before and still am very sceptic about martingales.

Hi RB,

I hope this could be of help.

http://www.forexfactory.com/showthre...85#post7992585

It has advanced lot size calculation using martingale hedging and variable grid size and risk.

Its open source.

Regards,

Khalil

I haven't given up the fight with these, but appreciate your skepticism...

And, in moving along under the same guidelines, but more of cost fading, same sized lots with a trigger on grid and market dynamics...

http://widgets.myfxbook.com/widgets/1195546/large.jpg

http://widgets.myfxbook.com/widgets/1192710/large.jpg


2 accounts that have made fantastic gains, without the need for the Martingale or incremental adds on position sizes.

Account 1, is in a fair sized DD, but with 200% gains, net closed...who cares?
Account 2, a single pair in trade, small sized start and closing on 100%...

Both accounts have only been in test for a month.

Not to say that this is the only way...but it is showing merits as a different look.

In my personal opinion, some sort of "Martingale" ideas actually do work. However - since traders usually think along casino lines, they loose (just like in the casino.)
To all those traders out there so very sceptical about martingale systems I would ask to think about the following:
Most of us (traders) actually calculate a win/loss ratio before entering a trade - or at least, we should do these calculations.
Then, traders have certain "rules" - like not to take a trade with a ratio of less then 1.5 or 2.0 or higher etc.

Now - if I trade 1 lot with a 100 pip SL and loose my $1k in the process then, with a 2.0 ratio the implication is that I expect to make 200 pips on my next profitable trade.
But then - to make back my $1k I only need trade 0.5 lots (on a 200 pip TP)
Most traders find the above situation acceptable - simply because the lotsize is so much smaller on rhe second trade than the first.
Yet - surily, this is also some kind of Martingale?? (Because I have now doubled the number of pips I need to make)
The thing to remember is that it is NOT the lotsize or the TP/SL ratio or anything like that which determine your actual risk (or success)

The critical thing in the above example is that only the FIRST trade is calculated as a percentage risk on capital while the second, third etc. trades are calculated in such a way as to "recover" the loss - inevtiably somewhere sometime in the future, the trader will loose the account BECAUSE the trader has lost control of RISK ON CAPITAL.
No amount of backtests, forward testing or anything else will ensure success if the trader do not keep the focus on Risk on capital.

As such I would suggest to traders serious about Martingale - develop your system in such a way as to keep the focus on Risk on capital (WHILE recovering your losses.)
For myself - this is the only way to trade AND have peace of mind.

Thank you for all of your input/opinions. I'll utilize these concepts while coding this coming weekend...
Back to trading for now...
Cheers,
RB