Experienced trader feedback wanted - doubling positions when in a loss

S

silvermotion

Hello fellow traders

I have a small question about position doubling. One of my trading buddies Trades using the murrey math in sim and he doubles positions on the russell 2000 and SP500 eminis every 2 points the trade goes against him. (start with one contract on entry, then 2, 4, 8 ,16, 32, 64) Of course that allows him to escape bad trades with at least break-even. In the end, in sim, he ends up with zero losses and daily gains, everyday.

Id like to have some feedback from experienced traders about the long term viability of this way of trading. personnally, i believe he will tank his account) because in sim you can double forever, not in live) when he goes live using this strategy.

regards,

Gabriel H
 
I can't imagine this any different than playing roulette and betting on red, and then doubling your bet on red each time you lose until you win.

If you have infinite money, then sure, that'll work.

But a simple $50 bet becomes over $25,000 after 10 iterations.
 
Doubling down once or even buying a 3rd block the same size as the first two isn't so bad if your initial position is small enough and that's part of your plan.

Doubling your position every 2 points as the market goes against is a sure fire way to go bankrupt. It won't happen very often that the market goes 20 points against you, but it WILL happen and when it does, your friend is done.
 
Not a viable trading philosophy. What happens on the day that the market goes so far against him that he can't double down again? Risk Reward is all screwed up. Good traders are mostly humble and realize they can't do much better than 50-60% win/loss so the only way they can make good money is if they keep their losers small and let winners run for a 2:1 (reward:Risk)

Ever heard of Victor Niederhoffer?


Quote from silvermotion:

Hello fellow traders

I have a small question about position doubling. One of my trading buddies Trades using the murrey math in sim and he doubles positions on the russell 2000 and SP500 eminis every 2 points the trade goes against him. (start with one contract on entry, then 2, 4, 8 ,16, 32, 64) Of course that allows him to escape bad trades with at least break-even. In the end, in sim, he ends up with zero losses and daily gains, everyday.

Id like to have some feedback from experienced traders about the long term viability of this way of trading. personnally, i believe he will tank his account) because in sim you can double forever, not in live) when he goes live using this strategy.

regards,

Gabriel H
More...
 
Quote from silvermotion:

I have a small question about position doubling. One of my trading buddies Trades using the murrey math in sim and he doubles positions on the russell 2000 and SP500 eminis every 2 points the trade goes against him. (start with one contract on entry, then 2, 4, 8 ,16, 32, 64) Of course that allows him to escape bad trades with at least break-even. In the end, in sim, he ends up with zero losses and daily gains, everyday.

Id like to have some feedback from experienced traders about the long term viability of this way of trading. personnally, i believe he will tank his account) because in sim you can double forever, not in live) when he goes live using this strategy.
More...
http://en.wikipedia.org/wiki/Martingale_(betting_system)
 
Hello, I am an experienced day trader

and YES he will tank using that strategy.

you lose 500 dollars

next one you lose, you are in - 1500

next one -3500

so in 3 wrong trades, you are going home almost
 
Quote from silent creature:

Hello, I am an experienced day trader

and YES he will tank using that strategy.

you lose 500 dollars

next one you lose, you are in - 1500

next one -3500

so in 3 wrong trades, you are going home almost
More...

I can testify to this. It is a better idea to cut your losses and get out, instead of going into hope mode.

Not only that, but you'll hit a margin call liquidation if it keeps going against you, then you can't stack the positions.

Why not try reversing your position, luck is on your side more with that kind of move.

Better yet, make better trades and accept the losers. Set targets.
 
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