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Reverse Martingale Strategy

  • #1
  • First Post: May 15, 2016 6:06am May 15, 2016 6:06am
Hi Everyone!

I learned this strategy recently and it is quite incredible so I thought I'd share it with you and see what you think? As we all know and have heard over and over again, our TPs must always have more pips in them than our SPs. The reverse martingale strategy is used to double our stakes in a particular direction using our profit. This way we can make a huge amount of profit without violating our risk management rules. For instance, let's imagine we identify a bull market and the price has the potential of going up 300 pips.


Trade #1: Buy 0.01 Lots of EURUSD @ 1.1200 SP: 1.1150 TP: 1.1300 Risk: 50 pips Potential Profit: 100 pips
Trade #2: Buy 0.02 Lots of EURUSD @ 1.1300 SP: 1.1250 TP: 1.1400 Risk: 50 pips Potential Profit: 100 pips
Trade #3: Buy 0.04 Lots of EURUSD @ 1.1400 SP: 1.1350 TP: 1.1500 Risk: 50 pips Potential Profit: 100 pips


Once the first trade is executed, we make 100 pips profit at 0.01 Lots which will be equal to US$10.00. This is while we only risked 50 pips which would be equal to US$5.00. Now we risk this profit and this time we buy 0.02 Lots again. Once the we reach the second TP, we make US$20.00 and then we risk the US$20.00 and we buy 0.04 Lots this time and we make another US$40.00!

Now if the first trade goes wrong, we only lose US$5.00. If the second trade goes wrong, we won't lose anything and if the third trade goes wrong, we will still make US$10.00 BUT if all three trades go as we predicted, then we will make a huge fat profit of US$70.00!
  • #2
  • May 15, 2016 6:10am May 15, 2016 6:10am
Can you post a pic to make it more clearer ?
  • #3
  • May 15, 2016 6:23am May 15, 2016 6:23am
What would you base your entry and direction on?
You cannot have that many consecutive losses when trying to martingale out of a loss. And you require some deep pockets and nerves of steel.
Being good at what you do is a result of having fun
  • #4
  • May 15, 2016 6:32am May 15, 2016 6:32am
Quoting RicardoDS
Can you post a pic to make it more clearer ?
Sorry I'm not good at making pictures but it's really clear. Try to draw the trades on your chart and you'll get the picture.
  • #5
  • May 15, 2016 6:35am May 15, 2016 6:35am
Quoting Egosuma
What would you base your entry and direction on? You cannot have that many consecutive losses when trying to martingale out of a loss. And you require some deep pockets and nerves of steel.
You can base your entry on a system that works for you. This is not about when/where to enter and/or exit. It's about snowballing your profit without violating your risk management rules.
  • #6
  • May 15, 2016 9:30am May 15, 2016 9:30am
Quoting msg1987
Hi Everyone! I learned this strategy recently............ Now if the first trade goes wrong, we only lose US$5.00. If the second trade goes wrong, we won't lose anything and if the third trade goes wrong, we will still make US$10.00 BUT if all three trades go as we predicted, then we will make a huge fat profit of US$70.00!

If the second trade goes wrong, we won't lose anything...
++++++++++++++++++++++++++++++++

How do you figure that losing on the 2nd trade costs nothing?
  • #7
  • May 15, 2016 10:21am May 15, 2016 10:21am
Quoting msg1987
Hi Everyone! I learned this strategy recently and it is quite incredible so I thought I'd share it with you and see what you think? As we all know and have heard over and over again, our TPs must always have more pips in them than our SPs. The reverse martingale strategy is used to double our stakes in a particular direction using our profit. This way we can make a huge amount of profit without violating our risk management rules. For instance, let's imagine we identify a bull market and the price has the potential of going up 300 pips. Trade #1:...
Hi msg,

Try out this EA.
Entry direction is for you to decide on whatever system you're using.
Pyramid EA will handle the consecutive entries and closure based on your settings.

Enjoy !
Attached File(s)
File Type: ex4 Pyramid_01.ex4   20 KB | 2,443 downloads
No guts, no glory
  • #8
  • May 15, 2016 12:20pm May 15, 2016 12:20pm
I'll simplify what he's doing without the use of any EA.
You can place all the orders & go fishing.

1-You get a "buy" signal.
2-Buy .01 with 50 pip trailing SL.
3-Place pending buy-stop to add .01 with a 50 pip trailing SL @ 100 pips higher than 1st entry.
4-Place pending buy-stop to add .02 with a 50 pip trailing SL @ 200 pips higher than 1st entry.
5-TP on all trades is 300 pips from 1st entry.

***The only difference is I used a trailing SL (available in all MT4 platform) so you don't have to monitor the trade.
***There's no reason to have a TP of 100 pips on the first 2 entries if you're going to immediately open a larger position in the same direction. That just costs more in commissions/spreads. Just add to existing position & move SL.
  • #9
  • May 15, 2016 12:56pm May 15, 2016 12:56pm
Hmmm seems like pretty nice
  • #10
  • May 15, 2016 5:59pm May 15, 2016 5:59pm
Quoting srt
I'll simplify what he's doing without the use of any EA. You can place all the orders & go fishing. 1-You get a "buy" signal. 2-Buy .01 with 50 pip trailing SL. 3-Place pending buy-stop to add .01 with a 50 pip trailing SL @ 100 pips higher than 1st entry. 4-Place pending buy-stop to add .02 with a 50 pip trailing SL @ 200 pips higher than 1st entry. 5-TP on all trades is 300 pips from 1st entry....
I am not sure if mt4 provides a trailing stop on pending orders. I will check tomorrow.Pyramid EA posted maintainS the initial stop on all orders, so that it is harder to be hit, and TP is at %equity increase. It was not made for this thread but for personal experiment. However concept is the same.
No guts, no glory
  • #11
  • May 15, 2016 7:03pm May 15, 2016 7:03pm
Quoting diamonddbw
{quote} ++++++++++++++++++++++++++++++++ How do you figure that losing on the 2nd trade costs nothing?
Because we're investing the profit of the first trade in the second trade so if the SP of the second trade is executed, then we will only lose the profit of the first trade, so overall we won't lose anything if we look at all these three trades as one trade.
  • #12
  • Edited 9:05pm May 15, 2016 7:07pm | Edited 9:05pm
Quoting abokwaik
{quote} Hi msg, Try out this EA. Entry direction is for you to decide on whatever system you're using. Pyramid EA will handle the consecutive entries and closure based on your settings. Enjoy ! {file}

Thank you! I'm guessing it doesn't have any criteria for entry? It just enters a position as soon as it's attached to the chart and then starts the pyramiding/snowballing process based on that entry? Am I right?

Did you write this yourself? Do you have the source code for it? The difference between Reversal Martingale and Pyramiding is that in Reversal Martingale we double the stakes and risk the profits of the previous trade in the snowballing process whereas in Pyramiding, we don't double the stakes and we add a fixed size to our position in every step. But I can see that in your EA, we can set it up to either increase the Lots or even decrease the Lots or perhaps stick to the same size which is pretty cool.
  • #13
  • May 16, 2016 2:08am May 16, 2016 2:08am
Quoting msg1987
{quote} Thank you! I'm guessing it doesn't have any criteria for entry? It just enters a position as soon as it's attached to the chart and then starts the pyramiding/snowballing process based on that entry? Am I right?
Right.

Quoting msg1987
{quote} Did you write this yourself? Do you have the source code for it?
Yes.
No guts, no glory
  • #14
  • May 16, 2016 2:40am May 16, 2016 2:40am
Quoting msg1987
Hi Everyone! I learned this strategy recently and it is quite incredible so I thought I'd share it with you and see what you think? As we all know and have heard over and over again, our TPs must always have more pips in them than our SPs. The reverse martingale strategy is used to double our stakes in a particular direction using our profit. This way we can make a huge amount of profit without violating our risk management rules. For instance, let's imagine we identify a bull market and the price has the potential of going up 300 pips. Trade #1:...
Hi,
Have you a specific signal in order to go into the trade in buy or sell?
  • #15
  • May 16, 2016 2:43am May 16, 2016 2:43am
This strategy has been previously shared by rags2riches before..
Pips Collector EA, No Martingale, No Grid
  • #16
  • May 16, 2016 3:01am May 16, 2016 3:01am
Quoting abokwaik
{quote} Right. {quote} Yes.
I did a backtest and it seems like it keeps opening new positions so you can't really walk away from the station. Is there anyway to tell it not to open new positions when all the stop losses are executed or something?

And about the source code, I'm guessing you don't feel comfortable sharing it?
  • #17
  • May 16, 2016 3:04am May 16, 2016 3:04am
Quoting armyda
{quote} Hi, Have you a specific signal in order to go into the trade in buy or sell?
No. You obviously need to enter when the potential of the profit is at least 6 times more than your initial risk. For example if you wanna put the stop loss at 100 pips, there will be a potential of 600 pips in the opposite direction.
  • #18
  • May 16, 2016 3:05am May 16, 2016 3:05am
Quoting huatboyz
This strategy has been previously shared by rags2riches before..
I didn't know! Thanks!!
  • #19
  • May 16, 2016 5:04am May 16, 2016 5:04am
Quoting msg1987
{quote} I did a backtest and it seems like it keeps opening new positions so you can't really walk away from the station. Is there anyway to tell it not to open new positions when all the stop losses are executed or something? And about the source code, I'm guessing you don't feel comfortable sharing it?
Here ...

Attached File(s)
File Type: mq4 Pyramid_01.mq4   10 KB | 2,233 downloads
No guts, no glory
  • #20
  • May 16, 2016 5:09am May 16, 2016 5:09am
Quoting msg1987
{quote} Because we're investing the profit of the first trade in the second trade so if the SP of the second trade is executed, then we will only lose the profit of the first trade, so overall we won't lose anything if we look at all these three trades as one trade.
So what happen if first trade we lose ???
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