Martingale! How to apply it as safely as possible!

Greetings,

There is so many different opinion about using martingale. We all know martingale could be very profitable, but also very dangerous to the trading account.
Please share your experience, how to trade safely or as safe as possible, using martingale method.

safest way to trade it is to avoid like the plague. trust me you will live to regret otherwise

How to use martingale as safely as possible: You don't.

My opinion only and I have to admit I do use it sometimes and like all trading tools one must know all his tools well and be an expert at using them with regards to trading so that you choose your tool carefully for each situation separately.

Martingale can work if you know how to apply it as safely as possible but if you use it then you need to pick your trades extremely carefully so you don't over increase lot size. My advice is not to use martingales unless you have to and if you do then use it when price shifted greatly from your starting price, and I mean huge shift otherwise send me your money directly rather than giving it to the broker.
It does look attractive to the inexperienced trader because it gets you out of trouble many times but that's where it goes all wrong when there exists a strong price direction of >300 pips
The last thing I will mention is get the hell out of the trades ASAP if you are using them at any cost even if you are holding small losing positions.

My point of view on martingale system.
http://www.forexfactory.com/showthre...86#post9039486

Hi Imperial,
Just a heads up as to what I am doing to help others. I am trying to get a broker to agree to set up clients accounts to trade simultaneously similar to a PAMM account except it is to operate individually.
If and when I do get that set up I will inform those that were interested in trading with us. I have some wealthy friends interested in starting up an account as well and they have zero knowledge in this industry.
If anyone ready this can help in some way even if you can recommend a broker please do so BUT only ASIC regulated brokers will be considered because ALL brokers are risky at least asic regulated ones we can get our money from.
Roboforex have a great system to do this but Latvian and some other dodgy regulation...hmmm

martingale,i have used this strategy before and theres one lesson i learnt,you can be lucky 100 times in a row but all it takes is one wrong move and you are wiped out clean..

Here's what I have been doing lately.
rr 1:4 multiplier 1.25 1:500 leverage


Then a 70 pips gap made me go negative . Not recommended.
Be sure to use max 1:150 leverage to cover a 100 pips gap.


Oh, deposit should be $100-200 then every 100% withdraw the initial balance.

first question before is "why use martingale"? if "could be very profitable, but also very dangerous" and maybe out there a method, style, whatever the name which could be very low risk and profitable.

Nathan Tuccii came up with "Martingale–The All or Nothing Strategy"

Read more here... http://winnersedgetrading.com/martingale/

We all know that by default the classic martingale system has negative long term expectation per trade because of capital limit. In theory if you have unlimited capital, martingale will be the only system to trade....
However, there are some "secrets" and tricks which can be used so you can create profitable martingale (type) system. Of course this is not easy task but can be done.

First of all, the classic martingale system is too aggressive. You have to use much smaller multiplier! X2 is to risky and actually reduces the probability for survival.

Also you need some system to be used as a foundation. You don't just shoot random trades and then double the lot size after each loss. This doesn't work with limited capital. This foundational system has to have its own probabilities, and ways (filters) to analyze and categorize market behavior. And then according to the present market situation, you can apply the correct strategy.

After my extensive testing with automated systems, I found a few potentially viable approaches which can be used in combination with martingale.

One approach (potentially the best so far) is to use combination of mean reversion setups and grid averaging. Normally this system will not be profitable. However, there is one little trick! Consider the following facts:

1. Due to the fractal nature of the price action, the length of the "coast line" is always multiple times larger (in terms of pips) then the actual range. Also the price range in one timeframe is always equal to the square root of the other time frame multiplier (a smaller time frame). For example if 60min. ATR (n) = 20, 240min ATR (n) will equal 20* √4. These principles are very well explained by the famous mathematician Benoit Mandelbrot (the father of fractal geometry) he did a lot of studies on financial prices....Part of his theory is the measurement of fractal roughness....

2. The fact that you can utilize the fractal roughness of the market by exploiting one small "flaw" which exist ONLY on the FOREX market! It's the fact that you can close individual trades without FIFO. (But if you live in the USA - you are screwed thanks to regulators like CFTC.....)

Using these two facts, you can build pretty robust martingale system.

This is the basic principle and structure of the system:
1. Determine the current market situation. (Trend strength on major time frames, expected price range, fundamental picture....ect..)
2. If conditions are right, wait for current price to exceed the expected price range, and when it does - start the grid program.
3. If at any time during the grid program, the price goes back to the equilibrium point, then close all trades.


How to build the grid?
1. Calculate the "grid gap" based on the expected price range and the current volatility.
2. Start the grid with very small lot, then on each additional trade increase the lot size by your x multiplier or by adding the initial lot.
3. With the exception of the first trade(no TP or SL), each additional trade will use the previous entry price as TP.
4. Instead of stop loss on individual trades, we use drawdown limit for the whole position.(We measure the gap between equity and account balance)




This is the basic structure. However it is best to use some discretionary inputs especially in terms of fundamentals. For example we turn off the system if some major event is expected. Like Brexit or some major monetary policy change, bank intervention....ect.. Or we can set the system to trade only short or only long. We can manually reduce trade size or increase grid gap in order to absorb larger volatility.

I made this into automated EA, but it's not finished yet. Now experimenting with different parameters and calculations and the system still needs more work on the filters. However the initial test results are very promising.
Here are the test result for EURUSD for the last 9 months.

Low risk:


High risk:

Start with a pure martingale program with stop and profit at same level.
Find the best indicator with high winratio for enter a trade so you can reduce consesutive losses and compare with a pure martingale.
Better to create an expert adviser without matingale that has a winratio off 50% or more if this is possible.

Is there a expert adviser with martingale where the first 4 trades are"virtual" and just start working with the 5 trade.

You can use the Fibonacci.

Set your RR to fib ratio.

1 then 3 then 9 and so on.

Always in profit.

Hi AlphaOmega! Did you get your system based on the fractal of the ATR finally work?. It seems a good idea.