Martingaling - Looks so good until the inevitable
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Thread: Martingaling - Looks so good until the inevitable

  1. #1
    What lacked this kind of subject?

    I have been following (not cooperating ) into a signal provider through MQL5 for at least 4-5 months now after viewing some fairly phenomenal growth figures, coupled with very manageable lure down and who had managed to get a decent following for their services. What provoked my interest farther was that it was a Martingale Strategy that had gone on for about 3 decades and had over 5000 trades. Good effort actually. As you can see in the screen shot, the equity curve is amazing, and it isn't a testing curve from a egy tester, it's real trading. But I suppose with all good things, it had to come to an end.... Well not yet, but very possibly.


    From memory, the first deposit was $1000, and it grew to a profit at its peak of near $125,000 lt;----- Thats right, $125K which is quite a decent yield. That balance is down approx $55K in losses that are realised and almost $20K in unrealized draw down. What took 3 and years to construct has taken a combo of about 3 months and 20-30 something transactions of dropping trade, no SL, double up, farther losing transactions, nevertheless no SL, double upward and on and on it went. This is a Martingale at its best.

    For the provider, its not all bad. Even though they realise the declines now its still an extremely handy profit to rebuild out of, but contemplating a entire position size of about 18.7 standard lots ($187 each pip), and a current SL worth 111 points away in the market, that $20k can balloon by a different 20K. The chart shows its just so scenic and the martingale, like a cliff face has been attained and you have tumbled over it.


    It has been a phenomenal run. 5000 trades for $ 1K to $125K however, the writting's development is on the wall. All those small wins - $20, $150 etc to face a few creatures which have the trader frozen, thinking in what has always worked rather than allowing for thinking. The upside to it all, is that I think in the setup a considerable amount has been made by them through signal fees plus what they have pulled over time. The lesson is more for subscribers, who follow along and may simply jump in and be in the wrong place at the wrong moment.

    Worth much discussion!

  2. #2
    Quote Originally Posted by ;
    Moving Average -- MT4 Default MACD -- MT4 Default Force Index -- MT4 Default My EA will exchange both Long and Short positions (if payoff is permitted ). Here is a good example of a LONG position being opened: When the 3 indiors agree that the trend is LONG, a BUY is placed at .01 Lots with a TP of 40 pips. In the event the order hit Take Profit, a new order is started at .01 continuing at the direction of the first. This will last. If the price action reverses (finally it will), and also the order moves negative 40 pips, an additional...
    Very Kewl...

    I have been trying to keep on the right side of the daily action and trip in favor of the fad on price surges.

    The indiors I've had success with are:
    Moving Averages - Default MT4 to determine trend and TP points
    CCI - Default MT4 to determine primary trigger.
    Stochastics - Default MT4 for following trades.

    I've had some success with the Static Ranges, but want to use a Trigger on Grid methodology, forcing a minimum time plus defining a secondary triggering methodology. This ensures that the Death Candle is overriding in trading.

    Yet far price moves away, a minimum grid must be met in addition to a supplemental trigger. Profits are dictated by a Return to Home.

    You will find 3 agies I currently work with, 2 out of the 3 work under similar premise.

    The last efforts trades according to Stochastics, cost averaging in and once the trend continues and will as well Nedge trade if reversal criteria is met before to profit being accepted on the last trades.

    My public version is the one described and shows an in the example of AUDUSD indies the event of the price surge against trend, a supplemental trigger along with the Dynamic TP point.

  3. #3
    Hello - thank you.

    It's a learning curve for me. The EA uses indiors to start a trading sequence. Then it does not utilize the indiors and never stops.

    Moving Average #8211; MT4 Default
    MACD #8211; MT4 Default
    Force Index #8211; MT4 Default

    My EA will exchange both Short and Long positions (if payoff is permitted ). Here is a good instance of a LONG position being opened:

    After the 3 indiors agree the trend is LONG, a BUY is put at .01 Lots using a TP of 40 pips. If the order hit Take Profit, a new order is started at .01 continuing at the direction of the first. This will last.

    If the price action reverses (finally it will), and also the order goes negative 40 pips, an extra LONG order is started at .02 lots, using a TakeProfit of 50 pips and the TakeProfit of the 1st order is transferred into the TakeProfit of the 2nd order.

    If the price continues to go negative yet another 40 pips, an extra LONG order is started at .04 lots, using a TakeProfit of 50 pips as well as the TakeProfit of the 1st order and 2nd order is transferred into the TakeProfit of the 3rd order, and so forth. The process continues until the price reverses positive.

    I have a limit of 10 iterations of the Martingale so the maximum lot size originally is 5.24 lots.

    40 pips in space seems to work best with many pairs. Although, I use 50 pips on the JPY pairs.

  4. #4
    Quote Originally Posted by ;
    quote I think using the word ¨Stupid¨to describe the kind of trader you're referring to is quite harsh. Why don't you use the word ¨Bias¨. You have brought up the interesting topic of shedding a certain% of your account. Yet, if losing 10% of your account is a loss of 1200 pips, in comparison to 200 pips, would it they're fair to state you shouldn't HOLD that position for a 1200 pip loss compared to that of 200 pips, presuming that either respectively is 10% of your account. I however would agree that one should use a stop loss, and if you don´t then...
    I utilized martingale and created 3,000 single transactions, I can say that Martingale is never ever ever a holly grail ergy and you CAN NOT USE IT ALONE! It's only a tool that help you increase your winning chance. Indiors is needed by you, read the news. . .etc... to exchange and Martingale will help you increase your winning percentage. I find the entry point like a very long time trader but don't hold the place and sell it when I have profit so I done a cycle and do a new cycle. The most inportant will find the pair is uptrend DONT NOT TRADE THE DOWN TREND PAIRS. When a pair is firmly going up it will not fall as a wall, the autumn but will going up of it but after that just god know where it go

  5. #5
    LOL that the amount of bullshit and self from that guy,,critically. .

    1) he didnt exchange
    2) that he doesnt know the market
    3) he will keep wasting his time since he'd had enough cash in game to consider thru the way to trade correctly. Its like a noob maintaining a hobby living where u keep blowing up $500 dollars accounts.
    4) I have said in forum before everything u need to do to trade. If you can follow these and understand why, you will realized after following it, you r profitable
    5) Ya need to take self out of the equation. If you r still not good with it you will find better ways to earn money than smoke pot and calling urself a trader.

    Happy new year and yea dont let the noob trader bullshit you.

  6. #6
    Now I have been reading this thread.
    If you browse all the methods suggested for trading you realise and you also do some trading that there's no magic formula. Whatever indiors you utilize, they lagging, i.e., they describe the past not the long run. Major traders (my very best friend has a phd at maths and functions for a trader in London) utilize a variety of maths and computers to come up with price predictions for Currency Market transactions. Whatever you or I or anyone in that matter will see in an indior will have been viewed earlier and improved by major traders who have the brains and the tools for this.in short the price indies all available information and any system will prove dependable until is not reliable any longer. There have been numerous articles published including from the Economist where monkeys randomly choosing on investments on the computer did better than pools and better outcomes would be provided by a random choice.
    So you must place the discussion on the martingale in that context.
    Trading relies on volatility of Currency Market crosses, and there's no forecasting system which can provide a trusted tool for investment. Some indiors/system are better than others, but in the end of the day it s only a matter of time before any system that is used fails to provide the forecast.
    Currently trading is random in that sense but it s not entirely random. For one, currencies do not fall to 0 and they are inclined to proceed in ranges (broadly defined). The euro is not likely to 50 cents $ soon nor to 3. There are such matters as retrace and tension, breaks and range trading. An individual can expect a currency to maneuver between a range before breaking up 100 or even 200 pips in one. If a currency stays for too long at a range, odds are that it will break down or up (after the major traders will have eliminated all the s losses up or down) and these odds will increase with time. That is the difference between trading /betting in a casino since every event is separate from the precedent, where you can come across a row of 20 reds. Forex price aren't entirely random and with time that they have a tendency to the follow which pattern - range break, trend
    now major traders utilize a lot of hedging and averaging prices egies therefore there's no such thing as doubling back on the wager is absurd. Doubling down when you believe chances of triumph increase is something most of us do - as people - in our life, when for example we discuss everything at a friendship or when we work harder since we anticipate a promotion soon not to mention when we invest in our enterprise

    therefore this is the context where martingale systems must be analysed. A third and most significant element is that the plogy of trading. An individual can develop a system - any system - of trading and calmly accept and employ it if the losses are a couple of $ but totally go mad and loose assurance when loosing the money intended for retirement. This is also very human we all deal with disasters such as at work but eventually become very nervous when we risk loosing the job.


    Therefore money management is the vital aspect of trading for plogical reasons not only for profit reasons. Money management will not transform a bad trade to some good one (if you imagine it incorrect ) but wrong money direction may ruin a fantastic trade (for example you become scared and close too soon because you would like to recover losses).
    For the sake of the discussion lets assume that most part time traders can take care of a few hundred of draw downs but eventually become nervous when loosing thousands and stop trading when they loose tens of thousands. Today if you change the settings its exactly the exact same for major companies or traders the scale of the investment fluctuates.
    If you are planning to use the martingale you must therefore utilize a system which lets you trade at a level where you feel comfortable
    for example as many have posted here earlier if your signs are correct 50% of the period (better than average, like a money) you have 38% odds of hitting a 10 consecutive loss series after 500 trades.
    Therefore your money management must allow you to endure 10 such losses
    with a 400/1 leverage along with an initial investment of 2000 $ (first trade) after 10 lost transactions with SL in 100 you may need a margin of 27500 $ to cover your losses Your 11th commerce will need 5000 $ only in margin. Of course 33000$ is not peanuts for all. But if you have 1 million that .


    Today I have assessed 6 major currency pairs from 2007 on a total of 42 decades of trading and ve found this system very profitable on daily signals.The average profit is 40000 $ per year for an risk of 33000 $.

    I use it myself and use daily signs because I dont have time- nor patience to check my transactions very often and daily signs are the most appropriate for such signs.
    That I have loed an average of 70 signs per currency per year (long and short ) which gives me about 2800-3000 transactions to build on this system. I haven't found one event where you get 11 consecutive incorrect trades (wrong signals) which would require you to double .It is simply because on daily signs such trade can go on for 8 weeks (from the very first wager of 2000 euros to the 10th and last wager based on sign ) and I haven't found any event where a currency will go for 8 months at precisely the exact same direction without at least retracing a 150-200 pips. For the sake of the debate let's assume than such transaction (loosing) is possible - although improbable and not present in the previous 42 years - and therefore a s reduction should be placed on your own 11th transaction every 7 years - black swan- where you'd loose on entire year of profits - not unlike the large crisis of 2008 where major traders have lost huge quantity of money but less than they have made in the prior years -.
    So to sum up
    - martingale is always to be used in the bigger context of trading jungle
    - trading relies on signs although no one is perfect. After a number of incorrect signals on daily commerce there's always a change of approximately 100-200 pips
    - s reduction is 100, tp is 150. With decreasing martingale of that is a 3 to 1 benefit risk
    - money management is crucial. Trading with less than 40000 $ not advised. You have to be able to loose this money. Whether that means having 1 million or even 10 milllions or even 100000 $ on your bank account that s only between you and your emotions.
    - profit is 100-120 percent per year with major currencies pairs euro usd, gu yen etc in the previous 7 years

    please contredict me with arguments I will not respond to insults -or degrading comments.

  7. #7
    Quote Originally Posted by ;
    quote I utilized martingale and made 3,000 single transactions, I could say that Martingale is not ever ever a holly grail ergy and you CAN NOT USE IT ALONE! It's just a tool which help you increase your chance. You need indiors, read the news. . .etc... to trade and Martingale will help you increase your winning percentage. I loe the entry point like a very long time trader but don't hold the position and sell it when I have profit so I done a bicycle and execute a new bicycle. The most inportant will loe the pair is uptrend DONT NOT TRADE THE DOWN TREND...
    simply to reiterate what you have mentioned. Martingale is some of the money management with a trader can implement. In no way shape or form, should it be utilized as the SYSTEM you enter a buy or sell position. I found a very interesting post which ties into this . It all has to do with if a trader THINKS if he or she is a gambler for trading forex. The answer sets a group off. After reading this article it will be quite clear as to the function martingale SHOULD play at the manner in I think. Here is the link: http://www.investopedia.com/articles...r-gambling.asp

  8. #8
    Quote Originally Posted by ;
    quote Just to reiterate what you have mentioned. Martingale is a portion of the currency management with a trader can execute. In no way shape or form, if it be utilized as the SYSTEM in which you enter a buy or market position. I discovered a rather interesting article which ties into this indirectly. Everything has to do with if a trader THINKS if he or she is a gambler for trading Foreign Exchange. The answer then sets a bunch off. I believe after reading that article it'll be quite clear regarding the function martingale...
    Fascinating post, but chiefly semantics really. Virtually every transaction can be thought of a gamble in the sense that was commonplace. Many poker players have a system of sorts to determine when it's to their advantage to up their bet, whatever actions the game may entail at a particular stage in the game, or fold. However poker players are deemed pure gamblers, even though they could be taking certain actions given what cards, by way of example, they can view on the table along with the only statistical odds of the drawing a card they would have to win or, in least, raise their probability of winning. I am not so sure this is so much different from a trader taking a short out of a descending trend line on the idea that, in the past, price has admired that trend line, and they are gambling that price will continue to do so.

    Aside from that, I believe I agree that, on occasion, increasing lot size on a particular leg of a position at a particular juncture in some pair's trajectory can be advantageous in terms of both increasing your cost basis in the internet position in addition to enhancing your ability to exit the entire position web profitable (I guess, for lack of a better term, I call this quasi-martingaling, as you're not doubling up, you're only increasing the lot size by some incremental amount to cancel your poorly timed entrances accepted up to that point). But just to be clear, I am not a single entry trader; I enter between 1 and 5 times before bailing out (more if I have mucked things up badly) and utilize entrance sizes of between 1/5th and 1/4th of 1 times equity. To put it differently, over my multiple entrances, my entire position is assumed to be not more than 1 x ray equity in size (again, assuming that I have not made a mess of stuff ).

    Most seasoned traders poo-pah adding to a position that is in the red, however I have no issue with that, especially if I am holding the position, in part, as a result of positive swap or it is apparent that, as an example, the range is a little wider than I originally expected or, even more often, I misread the trend for one reason or another. Naturally, there are also scenarios in which adding an oversized lot only for the sake of moving the ordinary price of your standing nearer to market price makes little sense (I admittedly have done this on more than 1 occasion, largely from a failure to recognize a trend is experiencing a change or price is breaking out from a range of which I was taking advantage).

  9. #9
    Quote Originally Posted by ;
    I've been reading this thread today. You realise, if you read each of the methods suggested for trading and you do some trading that there's not any magic formula. Whatever indiors you use, they lagging, i.e., they explain the past not the the future. Major traders (my very best friend has a phd at maths and works for a trader in London) use a variety of maths and computers to come up with price forecasts for Currency Market transactions. Anything I or you or anybody in that issue will probably see in an indior will have been seen before and better by major traders who have...
    Not to select too much, however a 100 pip loss (SL) to a 150 pip triumph (TP) is a 1.5 to 1 risk-reward.

    However, I believe that I backtested a comparable egy on MT4, with mixed results. I say blended because my feeling was that the system actually did require a degree of user intellect to be successful. In case the system was deployed in the management of the trend, it did fantastically.

    Say for instance, you set a martingale to brief and just brief EUR/USD around the start of May 2014 (when it had been in 1.4000 or so) with a 50 pip SL and 50 pip TP and lot dimensions starting in .50 standard lots. Here are the results from May 1st, 2014 to December 31st, 2014:



    Not too shabby, right? $28660 in profit on a first investment of $10K over 8 weeks....

  10. #10
    Quote Originally Posted by ;
    quote to not pick a lot of, but a 100 pip loss (SL) to a 150 pip win (TP) is a 1.5 to 1 risk-reward. However, I think that I backtested a egy on MT4. I say blended because my feeling was that the system did require a level of consumer intelligence to be successful. If the system was set up from the management of the tendency, it did really fantastically. Say for instance, you deployed a martingale to brief and only brief EUR/USD around the start of May 2014 (if it had been at 1.4000 or so) with a 50 pip SL and...
    If you attempt to run the same EA with the same parameters counter-trend, however, a issue immediately develops; the EA quickly runs into trouble when it gets to 2.0 normal lots and no longer has sufficient equity to double again.... Decreasing lot dimensions to .25 lots: same result; decreasing lot dimensions to .10 lots: same result; diminishing lot dimensions to .05exactly the same result; decreasing lot dimensions to .02exactly the same result....

    Actually, decreasing the lot size really allows for even greater reductions, because the EA is still able to continue to double up to a certain stage, after which it can no more double as a result of decrease in equity....

    Thus, naturally a blind setup of a martingale that doesn't take into account current tendency -- disaster, only more rapidly....

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