Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

johnedward

Martingale Trading

Recommended Posts

Just wondering if anyone else here is using a martingale based strategy. Although it seems risky, I use one but diversify across 4 or 5 currency pairs at the same time (I only day trade forex) in order to keep my risk low. I've been trading since August and have only had one negative day (a doosie!).

 

Anyone here use one? Or have a strategy that is based on the martingale principle?

 

:missy:

Share this post


Link to post
Share on other sites
Just wondering if anyone else here is using a martingale based strategy. Although it seems risky, I use one but diversify across 4 or 5 currency pairs at the same time (I only day trade forex) in order to keep my risk low. I've been trading since August and have only had one negative day (a doosie!).

 

Anyone here use one? Or have a strategy that is based on the martingale principle?

 

:missy:

 

Dear John,

That sounds like my first rejection letter from Mary .

 

Because you are trading forex, your double up will work.

No currency will ever reach zero, so you just need sufficient funds to wait for the turn.

BUT

lots of stress... lots of pain... lots of anger.

And the risk / reward ratio is stupid

If you loose 4 trades in a row , you now risk 8 goons to win one. Thats 8 to 1 against.

Come on!!

Rather just buy the horse

Please let me know if anyone from TL is using a Martingale strategy.

I have this bridge for sale (Brooklyn)

Kind regards

bobc

Share this post


Link to post
Share on other sites
Just wondering if anyone else here is using a martingale based strategy. Although it seems risky, I use one but diversify across 4 or 5 currency pairs at the same time (I only day trade forex) in order to keep my risk low. I've been trading since August and have only had one negative day (a doosie!).

 

Anyone here use one? Or have a strategy that is based on the martingale principle?

 

:missy:

 

Hi John,

 

I don't necessarily agree with the earlier replies in the post. In theory, I think Martingale 'betting' could actually work as long (1) your trading strategy has positive expectancy, (2) you start out risking a very small portion of your equity, and (3) the win rate is high enough that you won't run the risk of losing all your equity before getting a positive trade.

 

In practical terms, especially if you're a discretionary trader with trading system that ought to produce a reasonable high win rate (e.g. over 25-50%), you run the risk of taking less than ideal trades and trying to make your money back by doing martingale.

 

Klotzki

Share this post


Link to post
Share on other sites

Klotzki, I think the previous posts all still point out the problem with the strategy..... and the reasons you may disagree - and even if in theory it "may" work are still largely irrelevant as the issue still remains - deep, deep pockets are required

I say this using your reasons as.....

(1) your trading strategy has positive expectancy....over a period of time, this may be the case, however a string of losses - in a row - may mean you go broke unless you have unlimited capital. There is one thing you can guarantee in back testing, and that is that your biggest loser is yet to come. If you are completely discretionary, then this is also likely to occur

 

(2) you start out risking a very small portion of your equity, ...again a string of losses - in a row - make the exponential nature of this strategy likely you will lose, unless you have deep pockets. what happens when margins go up and you have just had a string of losses? The equity has to be so, so small you would likely be better just using a stop loss and going again and even if you had a high win rate - you have to do a lot of trades to make any money as you would be unlikely to have any meaningful heat on the table.

 

and (3) the win rate is high enough that you won't run the risk of losing all your equity before getting a positive trade.....the win rate can still be 90% but lets say you get 10 losers in a row.... your contract sizes are

1,2,4,8,16,32,64,128,256,512

 

a one lot trader is unlikely to have capital to trade 512 contracts.

 

I am sure someone has tried, but I have not seen it as i usually avoid losers averaging losers, but I wonder if anyone has done variations of this and rather than doubling up used a geometric (?) progression of contracts sizes for each successive trade loser of....1,2,3,4,5,6....

you need less money and if you do have a really high win rate, it could work. ....or you work for a firm and just loose your job. :)

 

regardless, unlimited capital is required to make the strategy work. :2c:

Share this post


Link to post
Share on other sites

Siuya,

 

You don't necessarily need deep pockets. To illustrate what I've outlined, imagine a system whereby:

- You risk only 0.25% of capital (point #2)

- Win rate is 80% (point #3)

 

5 consecutive losing trades is less than 0.03% probability, and yet you'll still be in fairly good shape with an 8% drawdown. Doing monte carlo will also probably yield acceptable risk of ruin.

 

Klotzki

Share this post


Link to post
Share on other sites

80% win rate? If u came up with said holy grail would think obtaining the "deep pockets" part isn't a problem. Unless of course avg loser = 4x avg winner like it usually is with such high probability systems.

 

Siuya,

 

You don't necessarily need deep pockets. To illustrate what I've outlined, imagine a system whereby:

- You risk only 0.25% of capital (point #2)

- Win rate is 80% (point #3)

 

5 consecutive losing trades is less than 0.03% probability, and yet you'll still be in fairly good shape with an 8% drawdown. Doing monte carlo will also probably yield acceptable risk of ruin.

 

Klotzki

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • Date: 29th March 2024. GBPUSD Analysis: The Pound Trades Higher But For How Long? The global Stocks Markets are closed due to Easter Friday (Good Friday). The NASDAQ continued to follow the sideways trend while other indices again rose. The SNP500 reaches an all-time high, but the NASDAQ remains under pressure from Tesla, Meta and Apple. The Euro continues to trade lower against all major currencies including the US Dollar, Euro and Japanese Yen. The British Pound is the best performing currency during this morning’s Asian session. However, investors are largely fixing their attention on this afternoon’s Core PCE Price Index. GBPUSD – The Pound Trades Higher but For How Long? The GBPUSD is slightly higher than the day’s open and is primary due to the Pound’s strong performance. At the moment, the British Pound is increasing in value against all major currencies. However, the US Dollar Index is also trading 0.10% higher and for this reason there is a slight conflict here. If investors wish to avoid this conflict, the EURUSD is a better option. This is because, the Euro depreciating against the whole currency market avoiding the “tug-of-war” scenario. The GBPUSD is trading slightly lower than the 2-month’s average price and is trading at 49.10 on the RSI. For this reason, the price of the exchange is at a “neutral” level and is signalling neither a buy nor a sell. The day’s price action and future signals are possibly likely to be triggered by this afternoon’s Core PCE Price Index. Analysts expect the Core PCE Price Index to read 0.3% which is slightly lower than the previous month but will result in the annual figure remaining at 2.85%. The PCE rate is different to the inflation rate and the Fed aims for a rate between 1.5% to 2.00%. Therefore, even if the annual rate remains at 2.85%, as analysts expect, it would be too high for the Fed. If the rate increases, even if only slightly, the US Dollar can again renew bullish momentum and the stock market can come under pressure. This includes the SNP500. Investors are focused on the publication of data on the UK’s gross domestic product (GDP) for the last quarter of 2023: the quarterly figures decreased by 0.3%, and 0.2% over the past 12-months. This confirms the state of a shallow recession and the need for stimulation. The data, combined with a cooling labor market and a steady decline in inflation, increase the likelihood that the Bank of England will soon begin interest rate cuts. In the latest meeting the Bank of England representatives did not see any members vote for a hike. USA500 – The SNP500 Rises to New Highs, But Cannot Hold Onto Gains! The price of the SNP500 rises to an all-time high, before correcting 0.33% and ending the day slightly lower than the open price. Nonetheless, the index performs better than the NASDAQ which came under pressure from Tesla, Meta and Apple which hold a higher weight compared to the SNP500. For the SNP500, these 3 stocks hold a weight of 9.25%, whereas the 3 stocks make up 14.63% of the NASDAQ. The SNP500 is also supported by ExxonMobil’s gains due to higher energy prices. The market will remain closed on Friday due to Easter. However, the market will reopen on Monday for the US and investors can expect high volatility. Investors will also need to take into consideration how the PCE Price Index and the changed value of the US Dollar is likely to affect the stock market next week. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Michalis Efthymiou Market Analyst HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • MT4 is good and will be good until their parent company keep updating the software, later mt4 users will have to switch to mt5.
    • $SOUN SoundHound AI stock at 5.91 support area , see https://stockconsultant.com/?SOUN
    • $ELEV Elevation Oncology stock bull flag breakout watch , see https://stockconsultant.com/?ELEV
    • $AVDX AvidXchange stock narrow range breakout watch above 13.32 , see https://stockconsultant.com/?AVDX
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.