Can your system have less then 5 consecutive losses | Forex Factory

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Can your system have less then 5 consecutive losses

  • #1
  • First Post: Nov 24, 2015 2:57pm Nov 24, 2015 2:57pm
If so, then it would appear that martingale would work for you? I am well aware of the dangers of martingale, but being that martingale is nothing more then "money management" the actual "system" which is used with martingale should also be discussed. Please post your trade explorer below, only if you have more then 100 trades, resulting in no more then 5 straight losses. I'd really like to expand on the system used, to see if we can lower the consecutive loss, then apply martingale to it to consistently earn money in the short term.
  • #2
  • Nov 24, 2015 3:49pm Nov 24, 2015 3:49pm
ofcourse it can have less then 5 losses, it can also have more than 10 or more.
and you can get them in a row too.
just flip a coin 100 times, maybe you expect that you will get heads 50 times but no,
you can get heads 70 times or only 25, there is no way to know,
after you flipped that coin 1000 times, you will begin to see heads closer to 50/50.
probability works over a very long time. martingale is very dangerous.
it will work for a time and then you will have a big loss that eventually blow your account.
I have been trying to solve this trading method for a long time, but in my opinion it is impossible.
there are better ways to trade, there is only one way martingale could work,
and that is if you have unlimited money
Bulls are stupid Animals!especially when Im short!
  • #3
  • Nov 24, 2015 3:53pm Nov 24, 2015 3:53pm
I, for one, follow one of the most basic rules while trading. I "almost always" respect what we know as an engulf. So say for an example the candle which is labeled with the arrow pointing down is my entry.
Attached Image (click to enlarge)
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Then the engulf would be the high of that same candle being engulfed to the upside. Labeled with the blue area of the chart.
Attached Image (click to enlarge)
Click to Enlarge Name: number2.PNG Size: 22 KB


Now the consecutive loses comes into play in which "after the first entry" i don't have 5 straight engulfs.

Of course many will say that "you can have more then 5 straight engulfs" but the reality is, based on the testing which I have done that losing 5 straight engulfs before you hit one of the daily pivots is basically as common as seeing a 30 pip spike up in a 1 min candle, then the next candle having a 30 pip spike down, then having a 30 pip spike up on the next candle. Basically, it is one of the rarest formations or occurrences in forex.
  • #4
  • Nov 24, 2015 3:58pm Nov 24, 2015 3:58pm
The snapshot below you can see the massive spike up, followed by the spike down.
The very first trade, which of course that graph doesn't reveal to you is that I took a long, as soon as I took the long, I decided to leave it open ,NOT RESPECTING the engulf. Instead of closing the trade, as what I should of done and reversed the order, I simply awaited the second buy signal, which not only came, but resulted in a massive profit that covered the loss. So between the two trades, their was a net profit, but for closing the first position in a loss it hit me with a "drawdown", as it should. All of that could of been prevented by simply sticking to the rules and respecting the engulf and reversing the order.
Attached Image (click to enlarge)
Click to Enlarge Name: spike.PNG Size: 36 KB
  • #5
  • Nov 24, 2015 4:00pm Nov 24, 2015 4:00pm
Quoting roughtrader
ofcourse it can have less then 5 losses, it can also have more than 10 or more. and you can get them in a row too. just flip a coin 100 times, maybe you expect that you will get heads 50 times but no, you can get heads 70 times or only 25, there is no way to know, after you flipped that coin 1000 times, you will begin to see heads closer to 50/50. probability works over a very long time. martingale is very dangerous. it will work for a time and then you will have a big loss that eventually blow your account. I have been trying to solve this trading...
I simply do not like the comparison of a "coin toss" or "casino games" to forex as my system isn't based on "ODDS" but on price action. My belief of what price action is, has led me to this system which I feel I can calculate the run to the nearest pivot without the engulf of the candle which caused me to entered.
  • #6
  • Nov 24, 2015 4:17pm Nov 24, 2015 4:17pm
Here is a perfect example of taking an entry based on my system.
Attached Image (click to enlarge)
Click to Enlarge Name: noobpie.PNG Size: 198 KB

You can see that "E" is the first candle which closed a cross the "entry" fib level. You then see we had 3 engulfs across other fib levels. I then took a long position of .8 lots once the 2 candle closed a cross entry. Once the price moved back down, I respected the engulf, by closing the .8 lot size for a loss, and then entered a bigger lot size in the reverse direction which resulted in a tp of the same amount of pips which I just lost but the move down ended up being the winner out of that range.
  • #7
  • Nov 25, 2015 4:46am Nov 25, 2015 4:46am
Quoting NoobPie
Can your system have less then 5 consecutive losses? If so, then it would appear that martingale would work for you?

Not so - an error of tenses, there: it would apear that a Martingale "would have worked for you", with hindsight, over the period during which you observed fewer than five consecutive losses. It will still destroy your account, with certainty, if you use it going forward, regardless of what's happened in the past: the longest losing run is always one which you haven't yet experienced.
  • #8
  • Nov 25, 2015 5:58am Nov 25, 2015 5:58am
Hi NoobPie,

Your hypothesis is interesting enough to deserve the work and time you are throwing at it, so don't give up. Even if you fail at first shot, discover why and find a way to circumvent and launch a second shot and so on. I'm sure you will find interesting things.

Don't be afraid by people advocating the common beliefs and think outside of the box.

Best of luck,
BT
Simplicity is the Ultimate Sophistication.
  • #9
  • Nov 25, 2015 7:28am Nov 25, 2015 7:28am
Quoting Xela
{quote} Not so - an error of tenses, there: it would apear that a Martingale "would have worked for you", with hindsight, over the period during which you observed fewer than five consecutive losses. It will still destroy your account, with certainty, if you use it going forward, regardless of what's happened in the past: the longest losing run is always one which you haven't yet experienced.
I guess since you are going to use the language "hindsight" then you shouldn't say "with certainty" that anything will happen in the future either. The reality is people blame martingale for the destruction of accounts, when the reality is accounts which DON'T use martingale ALSO get destroyed. In other words, martingale isn't the issue, it is the system which is used with martingale. So even if the longest losing run is always the one which you haven't yet experienced, the reality is your system is based on what HAS happened, meaning things you have searched and held to be true. Your pessimistic P.O.V. will not get us anywhere. Hopefully you would be able to add something to the thread and not just be the voice of negativity as to why "martingale" is a bad thing.
  • #10
  • Nov 25, 2015 7:32am Nov 25, 2015 7:32am
Quoting broketrader
Hi NoobPie, Your hypothesis is interesting enough to deserve the work and time you are throwing at it, so don't give up. Even if you fail at first shot, discover why and find a way to circumvent and launch a second shot and so on. I'm sure you will find interesting things. Don't be afraid by people advocating the common beliefs and think outside of the box. Best of luck, BT
Thank you very much for your kind words. I understand that people are full of negativity because of their own lack of success trying the same. Hopefully people will be able to add their accounts here, so we can see the consistencies in their trades, which of course, will lead us to an interesting conversation about martingale and how it should be used with those systems.
  • #11
  • Nov 25, 2015 7:43am Nov 25, 2015 7:43am
Quoting NoobPie
{quote} Thank you very much for your kind words. I understand that people are full of negativity because of their own lack of success trying the same. Hopefully people will be able to add their accounts here, so we can see the consistencies in their trades, which of course, will lead us to an interesting conversation about martingale and how it should be used with those systems.
NoobPie, I don't think that all of them are negative, don't be too hard, they kindly advise that martingale is dangerous, sometimes in an arrogant way, I agree. Just telling what we (almost) all of us know is the wrong speech in my opinion as we all have to walk our own path in this world. I would rather say, you are a open minded person in experimenting with martingale but be careful and do it with funds you are able to lose.
Simplicity is the Ultimate Sophistication.
  • #12
  • Nov 25, 2015 5:34pm Nov 25, 2015 5:34pm
i have been playing with a system for months that doesnt go past ten. its a type of grid. most grid are like : B-B-B-B or S-S-S-S or B-S-B-S or S-B-S-B but mine doesnt follow this type of patterns. sometimes i wanna believe its the holy grail but something inside tells me its just matter of time til it blows.lol
  • #13
  • Nov 25, 2015 5:43pm Nov 25, 2015 5:43pm
Oh and this is the type of grid that i look at. It is a point and figure chart but also a grid chart. I prefer them over candlesticks for many reasons.
Attached Image (click to enlarge)
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  • #14
  • Nov 27, 2015 8:59am Nov 27, 2015 8:59am
Well today only 3 trades, and a total of 16% profit growth. The highest amount of pips I was in red was only 3. Here you can see I took a long after a rejection of the entry to sell side. Had the candle simply closed on the line which says 0.0 The buy would of been dead, and I would of went short. Instead the price closed back across the 0.0 line with about 3 second left and it resulted in 10 pips green with 0 pips in drawdown. Those are the formations which I sit and wait for.

Attached Image (click to enlarge)
Click to Enlarge Name: nice.PNG Size: 104 KB
  • #15
  • Nov 27, 2015 5:30pm Nov 27, 2015 5:30pm
Quoting NoobPie
If so, then it would appear that martingale would work for you?
The attached XLS shows the probability of encountering X consecutive losses within a sequence of Y trades, if your system has a win rate of Z%. You can change the values in the gray background cells. The values in the table body are rounded to the nearest whole percent; a value in yellow means either greater than 99.5% or less than 0.5% (absolute certainty does not exist). The table makes the assumption that all trades are independent, i.e. that no 'serial correlation' exists: to whatever extent wins and losses tend to cluster, the probabilities are understated.

So now it's possible for you to work with mathematical facts, that carry neither an unduly optimistic nor a negative personal bias, and are expressed neither humbly nor arrogantly.
Attached Image (click to enlarge)
Click to Enlarge Name: PPI 135.png Size: 19 KB
Attached File(s)
File Type: xls Probability of X consecutive losing trades.xls   26 KB | 1,180 downloads
  • #16
  • Nov 27, 2015 5:41pm Nov 27, 2015 5:41pm
The other problem that comes in here is that if you have a system with an x% win rate (and it IS doable to make a system that has a guaranteed win rate) that the size of the 100-x% loss trades are likely much bigger then the x% wins. Still, it would be possible to martingale even those big loosers (nice sheet hanover!) provided that your margin AND account size AND number of allowed orders for the broker would be able to cover it. In the end, martingale is self-defeating. i.e. it is not an 'edge'. Still, that's not to say it cannot be used profitably. It seems.
Not financial advice. For testing purposes only. Do not use on live account
  • #17
  • Nov 27, 2015 6:07pm Nov 27, 2015 6:07pm
Quoting NoobPie
Well today only 3 trades, and a total of 16% profit growth. The highest amount of pips I was in red was only 3. Here you can see I took a long after a rejection of the entry to sell side. Had the candle simply closed on the line which says 0.0 The buy would of been dead, and I would of went short. Instead the price closed back across the 0.0 line with about 3 second left and it resulted in 10 pips green with 0 pips in drawdown. Those are the formations which I sit and wait for. {image}
Hi NoobPie

Could you please elaborate a little more on your system?. I'm very interested on it because I use something similar, but am not understanding exactly how you define your "engulf", and where is the entry, SL and TP for each "martingale try".

Thanks in advance

masilva
  • #18
  • Nov 27, 2015 6:14pm Nov 27, 2015 6:14pm
Quoting roel13
The other problem that comes in here is that if you have a system with an x% win rate (and it IS doable to make a system that has a guaranteed win rate) that the size of the 100-x% loss trades are likely much bigger then the x% wins. Still, it would be possible to martingale even those big loosers (nice sheet hanover!) provided that your margin AND account size AND number of allowed orders for the broker would be able to cover it. In the end, martingale is self-defeating. i.e. it is not an 'edge'. Still, that's not to say it cannot be used profitably....
All in all it boils to much to theory, which is what I don't like speaking about. Why don't I like speaking about theory? Well, only because theory tends to get away from what the focus should mainly be, and that is how well does the system actually work. You may have a trader who has a very high win rate (even 100%) but when you look at his/her drawdown in % or pips, it clearly reveals how poor the system actually is. How many times have you seen a trader hold a position for 6 months, in which he gained 2.1% profit, but that same trade put his account in red well over 30%.
My system focuses on accuracy. So much so that I use martingale as I inch my way with ever loss to reaching x amount of pips profit. Essentially, with every loss the stop loss gets smaller and smaller, as the breakout formation nears much closer to completion. What people end up calling "support/resistance", based on the setup I trade, was an engulf that resulted in a breakout out of the accumulation zone, and a clean run to the nearest pivot. That is what we see in the picture below, which also resulted in about 3 pips drawdown, and clean run to the next pivot to the upside.
Attached Image (click to enlarge)
Click to Enlarge Name: nice.PNG Size: 104 KB


All EU had to do was closed on the 1m chart under 0.0 and that would of resulted in a close of the buy orders, and then a reverse, but we clearly see that the 0.0 was touched but never closed across, and that started that nice 30+ push to the upside on EU
  • #19
  • Last Post: Nov 30, 2015 5:23am Nov 30, 2015 5:23am
Quoting roughtrader
ofcourse it can have less then 5 losses, it can also have more than 10 or more. and you can get them in a row too. just flip a coin 100 times, maybe you expect that you will get heads 50 times but no, you can get heads 70 times or only 25, there is no way to know, after you flipped that coin 1000 times, you will begin to see heads closer to 50/50. probability works over a very long time. martingale is very dangerous. it will work for a time and then you will have a big loss that eventually blow your account. I have been trying to solve this trading...
Exactly said... If you have unlimited money only then martingle will continue otherwise it will blow up

Forex trading is like "Weather forcasting" NO ONE can predict.... & there is NO guarantee...

Only chance we have is to reduce our loss as much as possible by reducing "trading lots"

Bigger the lots... sooner you will fall (one or two mistakes... GAMEOVER)

Smaller lots with most precise & wisely trading will forfeit the "Judgement Day"
It is the dust where you came from & it is the dust where you shall return
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