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Bullet-proof martingale!?!
- Thread starter Xtrader59
- Start date
Do tell.
Quote from Xtrader59:
Martingale would be the perfect strategy if it didn't blow up the account in the long run. But... is that always the end? Maybe not necessarily.
I have been trying this "strategy" (may it be called so?) and I think there is a safe way to use it.
If there is anybody interested I will disclose it all here. Then somebody could help me solve a few open questions about it.
No need to worry telling me I am crazy, I am a noobie, a clown or anything alse, that this doesn't work and never will and so on. I know all that and all opinions and questions are welcome. But profit is coming at a decent and reallistic rate and risk seems extremely low (one of my doubts about the "system" is exactly a safe way to increase the risk. Where is the reasonable limit?)
Just for reference and to start discussion if there are people interested: I am estimating expected average return in something around 2 to 5% monthly with near zero risk. Obviously there will be negative weeks, but tend to compensate in the following ones.
It is all very discretionary, very trend bound, no blind entries ...
Well, let me see if this old theme still gathers interest.
Good trading to you all.
You can't blindly follow a rule like this. What if you come across that "exceptional" setup, based on your past experiences. What I do isn't necessarily a Martingale but rather, a bigger line on a trade that has a higher probability than one with a lower probability. In order to truly be able to distinguish between these two events you have to have a lot of experience because all markets are unique and each day has its own unique characteristics. You have to take the time to develop that 6th sense.
There are times to trade consistent sizes, times to Martingale, and times to average. There is simply no substitute for experience.
There are times to trade consistent sizes, times to Martingale, and times to average. There is simply no substitute for experience.
Quote from atticus:
Decrease size when losing. Trading without leverage is investing.
Quote from Xtrader59:
If you never bet against the trend, martingale will be used only to correct your timing errors and scale up in the direction of the trend. Of course, on a reversal you will lose but since you are operating very small there is no hurry in closing position or stopping out.
Point proven. You mention timing and trends. Reference what I said about your "edge". If your indicators or edge are that good, a martingale system isn't necessary due to the fact that you will just take the trade with full size at the appropriate time.
All that you've indicated is that you need more time and energy devoted to your edge. Believe me the only thing that you've proven here is that you're taking probably too many trades that are too large.
Hell, I'd say you're probably better off working on discipline and going larger on each trade and take less of them. Simply the amount of times a trader exposes his capital to the markets is ratcheting up one's risk (many new traders miss this total concept).
Much better to take your time and only take the best trades.
Good Luck!
Quote from ProfitTakgFool:
You are right, even with an edge you can blow up. You have to have a circuit breaker that will cut you off when you reach a certain point and hope they don't kill Bin Laden just after your put on your fourth short.
I keep monitoring the trend all the time and never pyramide against it. If you keep the "grid step" large you will probably never go beyond the third level. Begining from 0,01 lots you will not go larger than 0,07 (0,01 + 0,02 + 0,07). Small risk.
I keep very detailed records and examine my trades very closely. I actually use three methods. Same size, martingale, and average. It would take me a while to describe when I use which one but suffice it to say, I'm looking for distances between support and resistance levels. If I take a long and it goes against me but the next support level is 1 point away I will average into the trade. If the next support level is 10 points away I will stop out and <i>consider</i> a DD on the next trade but that depends largely on the type of setup I get on that subsequent trade. It must be a higher prob. trade for me to do a DD. If not then I just go same size.
Quote from Xtrader59:
I totally agree. Do you keep a track record of your trades?
Ahhh....now this is where we disagree. The longer a trend persists the lower the probability it will continue. I fade moves so if I sell a move up and I get taken out I'm looking for something more parabolic. If I get it I'm hitting it harder. If it's the same lazy drift then same size.
It's important to note, you are trading Forex, I'm trading fut's -- totally different beasts so we're kinda comparing apples to oranges.
It's important to note, you are trading Forex, I'm trading fut's -- totally different beasts so we're kinda comparing apples to oranges.
Quote from Xtrader59:
I keep monitoring the trend all the time and never pyramide against it. If you keep the "grid step" large you will probably never go beyond the third level. Begining from 0,01 lots you will not go larger than 0,07 (0,01 + 0,02 + 0,07). Small risk.