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Double or Nothing Scaling

  • #41
  • Mar 11, 2017 9:24am Mar 11, 2017 9:24am
Quoting dagoods
{quote} take a range bar chart. set your ea to trade every single candle. when the high or low of the previous candle breaks enter, with a target of 1 candle. for example if your using a 10 pip range bar candle, your target is 10 pips, your stop loss is 10 pips. lets call tha a candle break trading method. can you find a situation where you have ten candle break trades in a row that do not go to target, but instead go to the stop loss (-10 in the example) that is to say ten times in a row you enter a trade and it goes to stop loss. Remember the...
does yr martingale lose in a trend or in a consolidation ? most martingales follow sequences. Either its buy buy buy...or sell sell sell etc... OR... its buy sell buy...or sell buy sell. Which sequence does your martingale follow ?
  • #42
  • Edited 5:35pm Mar 11, 2017 9:31am | Edited 5:35pm
Quoting reteid2222
{image}

bet the first boob on red... then if it loses put the other boob on black. 100% guaranteed system of fun! lol
  • #43
  • Mar 11, 2017 3:54pm Mar 11, 2017 3:54pm
Quoting dagoods
{quote} NO! think in terms trade sets, or a set of trades. the result of one trade is not relevant with this type of money management. what is relevant is to NEVER EVER have more than 10 losers in a row. random entries like you are proposing is not a trading system and wont work. period. think in terms of of finding a system that only ever has 4, 5 6, losers in a row. that is all that matters. everything else is noise. find that system and you are golden.did i already give you such a system? you need to go test and find your own way man. here >>>...
ok but then, which sequence does your martingale follow for you to have ten losses in a row ?
  • #44
  • Mar 12, 2017 7:41am Mar 12, 2017 7:41am
Quoting 853358
Good day all, I understand the pessimist members, which believe, that martingale won't work. Simply think about, all the trades, who don't use martingale and burst their accounts. So, the connection can easily be made that martingale won't work, because of the fact the fact after every loss, under the martingale money management, you are increasing your overall risk to the market. However, what the pessimistic trades isn't noticing, is that "scalpers" trade with an actual "expectancy" which is why you see many of them have "Accurate" entries". A...

This excites me as in post 11 I was talking about using multiple trades instead of one to diversify the risk, so if they all don't begin chains of losses at once, you in theory are given more lives. Since the only threat to martingale is running out of funds.
But Martingale is based on p=0.5 , what if your probably is higher, like 60% or 70%. What is your strategies probability?

And I like how you cut it off after 4 losses. I was also thinking about this. Instead of rapidly scaling your trades by 2x, perhaps delay or at one point accept a loss, as if you have a probability above 50 percent, you should be able to recover it back.

How about this method where 1 is the size of the initial trade. Where it's sort of like lagged martingale. Where is unusually large chains of losses occur, you say okay I might just accept some of the earlier trades as losses but try to get back the last trade.

Eg: 1
loss 1 - 1 conventional Martingale -1
loss 2 - 2 conventional Martingale -2
loss 3 - 2 conventional Martingale -4
loss 4 - 4 conventional Martingale -8
loss 5 - 4 conventional Martingale -16
loss 6 - 8 conventional Martingale -32


Alternatively what if you only increase your trade size after each loss by like 50 percent. This would be used to minimize the size of losses, so you wouldn't gain any profits from this, rather reduce overall size of losses
Eg: 2
loss 1 - 1 effective loss -1 conventional Martingale -1 normal loss -1
loss 2 - 1.5 effective loss -0.5 conventional Martingale -2 normal loss -2
loss 3 - 2.25 effective loss -0.25 conventional Martingale -4 normal loss -3
loss 4 - 3.375 effective loss -0.12 conventional Martingale -8 normal loss -4
loss 5 - 5.062 effective loss -0.06 conventional Martingale -16 normal loss -5
loss 6 - 7.593 effective loss -0.03 conventional Martingale -32 normal loss -6

I donnu this is all theory, perhaps a versatile mathematician can grace us with the optimal scaling size for martingale which yields the highest number in terms of losses and wins combined. And further how that changes as the probability of the strategy being traded increases.


But yes I very recently started a similiar strategy with about 4 trades, where id accept a loss if the losses reached 5-6 phases. I'd like to know more about how you trade and any more tips
HMSR
  • #45
  • Mar 12, 2017 12:47pm Mar 12, 2017 12:47pm
Quoting Hmsr
Edit: Just realised this is the Martingale Strategy Hello I am looking for any criticism, and too methods of implementation. Forex is 2 dimensional, price is 1 dimensional. Price can only go up or down. Suppose the market is random, suppose it's not. ...
Sorry mate but I have to disappoint you.

  1. Market price series is being far from normally distributed.
  2. They are not stationary.
  3. They have heavy (fat) tails on right side.
  4. Most (more than 90%) of full series of all trades (z-score) could be considered a Bernoulli scheme which in particular means that the probability of win/loss of each next trade does not depend upon the previous trade result. And this accordingly means that you may have any number of consecutive losses which may lead to StopOut/MarginCall.

All these above points are getailed explained in this good article.
Martingale is for sure a sort of gambling.

Attached Image (click to enlarge)
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BR, alex
  • #46
  • Mar 12, 2017 7:23pm Mar 12, 2017 7:23pm
Quoting 853358
{quote} I actually use martingale, after the first loss. So once the accumulation is confirmed, I then identify which of the 21 it is, then begin using martingale after the first loss. After the first loss, I am only allowed 2 more. I believe, that it is best to enter a currency when it is "flat" compared to when it is "breaking out". I essentially exit, when most of the people enter.
ok i think i see now, so your martingale follow buy sell buy or sell buy sell sequence, where you double after the first loss, like 1-2-4 and then you stop, right ?
so your martingale is capped to 3 steps ? but does your system never lose 3 times in a row OR do you take the loss if the third attempt fails without adding more ? thanks
  • #47
  • Mar 20, 2017 9:31pm Mar 20, 2017 9:31pm
Quoting metta87
{quote} ok i think i see now, so your martingale follow buy sell buy or sell buy sell sequence, where you double after the first loss, like 1-2-4 and then you stop, right ? so your martingale is capped to 3 steps ? but does your system never lose 3 times in a row OR do you take the loss if the third attempt fails without adding more ? thanks
Perhaps there is a way to scale down, like 1-2-4-2-1, or 1-2-4-8-4-2-1, But to me it would only make sense with a winning kind of strategy where like 5 fails in a row are very unlikely.
HMSR
  • #48
  • Mar 25, 2017 10:34am Mar 25, 2017 10:34am
Quoting Hmsr
{quote} Perhaps there is a way to scale down, like 1-2-4-2-1, or 1-2-4-8-4-2-1, But to me it would only make sense with a winning kind of strategy where like 5 fails in a row are very unlikely.
But if you scale down like that, in the 4th or 5th trade, your risk reward will have to be greater than r r : 1:1. Right ?
And i definitely agree with you, better use a capped martingale when your system doesnt give you many losses in a row.
  • #49
  • Mar 25, 2017 10:38am Mar 25, 2017 10:38am
Martingale is good if you run it without fundamental moves
Risk comes from not knowing what you're doing.
  • #50
  • Mar 25, 2017 10:53am Mar 25, 2017 10:53am
Quoting dragonexpert
Martingale is good if you run it without fundamental moves
What do you mean by " without fundamental moves " ?
  • #51
  • Mar 27, 2017 12:39am Mar 27, 2017 12:39am
Quoting metta87
{quote} What do you mean by " without fundamental moves " ?
Avoid using Martingale right before and after red news and risk events, which could potentially cause fast and wild price fluctuation.
  • #52
  • Edited 2:45am Mar 27, 2017 2:35am | Edited 2:45am
Quoting Hmsr
Edit: Just realised this is the Martingale Strategy Hello I am looking for any criticism, and too methods of implementation. Forex is 2 dimensional, price is 1 dimensional. Price can only go up or down. Suppose the market is random, suppose it's not. We can agree that price has a 50% chance of going X pips either way. So, the strategy. Suppose you trade a strategy where is price breaks a certain level upwards or downwards there is a 50% chance of success. So if you win you win. If you lose you lose. Now suppose when you lose, you hedge that loss,...

Do not do this unless you want to burn your account.

Those longish runs of losses my seem to be unlikely but they will happen and when they do they will kill you.

Imagine you have a 10 pip stop and target with 1 per pip.

Assuming 50/50 (which is understating it because of the spread) If you lose 10 times in a row, the 11th trade will need you to risk, 1024*10 = 10,240 the 12th 20,480 and so on, and all this to gain 10!



10 losses in a row has only a 1 in 1024 chance of happening.

Also forget the ideas of only doubling 3 times or 4 times, or whatever before quitting, getting killed by 3 small swords hurts just as much as one big one.

You might of course get lucky for a while, but Martingale is pure gambling! if you continue to play you will eventually lose everything.
I live entirely from the growth of my personal trading account
  • #53
  • Mar 27, 2017 2:42am Mar 27, 2017 2:42am
Quoting FerruFx
{quote} Yes that's definitively gambling. A trade should be opened (and sized) with a reason ... not based on a scenario which might unlikely happen ... Please don't get me wrong. That's just an opinion ... No disrespect intented here.
The assertion that Martingale will eventually fail is not an opinion it is a mathematical fact.
I live entirely from the growth of my personal trading account
  • #54
  • Mar 27, 2017 2:58am Mar 27, 2017 2:58am
Quoting guybaker
{quote} The assertion that Martingale will eventually fail is not an opinion it is a mathematical fact.
The only case a martingale would not fail is with a infinite capital.

So obviously your comment is perfectly right!
MT4/MT5 EAs/Indicators/Alerts coder
  • #55
  • Mar 27, 2017 4:48am Mar 27, 2017 4:48am
Quoting FerruFx
{quote} The only case a martingale would not fail is with a infinite capital. So obviously your comment is perfectly right!
Suppose Gann with his 90% winrate used martingale to hedge his losses, would it have been a reasonable kind of thing for a trader with his record to do?
HMSR
  • #56
  • Mar 27, 2017 5:34am Mar 27, 2017 5:34am
Quoting Hmsr
{quote} Suppose Gann with his 90% winrate used martingale to hedge his losses, would it have been a reasonable kind of thing for a trader with his record to do?
90% winrate doesn't mean anything. You can have a 99% winrate but be negative.
MT4/MT5 EAs/Indicators/Alerts coder
  • #57
  • Mar 27, 2017 5:41am Mar 27, 2017 5:41am
Quoting Hmsr
{quote} Suppose Gann with his 90% winrate used martingale to hedge his losses, would it have been a reasonable kind of thing for a trader with his record to do?

Firstly, I am sceptical of anybody who claims a 90% win rate.

If you have a true edge, set your position size based on your risk calculations. If you have a true edge, you don't need to gamble and increase your position size.
I live entirely from the growth of my personal trading account
  • #58
  • Mar 27, 2017 5:42am Mar 27, 2017 5:42am
Quoting FerruFx
{quote} 90% winrate doesn't mean anything. You can have a 99% winrate but be negative.

Yeah good point... 1 pip target 10 pip stop, 90% win rate,still losing because of spread.
I live entirely from the growth of my personal trading account
  • #59
  • Mar 27, 2017 5:48am Mar 27, 2017 5:48am
Quoting Hmsr
{quote} Suppose Gann with his 90% winrate used martingale to hedge his losses, would it have been a reasonable kind of thing for a trader with his record to do?

Oh and Martigale is not hedging. Hedging would be a position running in parallel that might offset potential losses, Martingale is doubling down on the next event, there is no relationship between the two events. You could use Martingale on a coin toss game, the size of the bet has no affect what so ever on the outcome of the toss, you see? in a 50/50 game there is ALWAYS a 50% chance of losing.
I live entirely from the growth of my personal trading account
  • #60
  • Mar 27, 2017 7:18am Mar 27, 2017 7:18am
Quoting guybaker
{quote} Yeah good point... 1 pip target 10 pip stop, 90% win rate,still losing because of spread.
My point was not about the spread.

Most traders forgot the RR into the profitability equation. Winrate alone isn't enough to say a strategy is profitable.

In my example of 99% winrate, if the remaining 1% is a loss bigger than the previous 99% profit, the final result is a loss ... despite the 99% winrate ... not even taking into account the spread.
MT4/MT5 EAs/Indicators/Alerts coder
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