How much money would you need to Martingale your way to profits?
- Thread starter 1a2b3cppp
- Start date
+1
(op, if you want to eek out a living on your millions put it in a CD...)
ES
(op, if you want to eek out a living on your millions put it in a CD...)
ES
I have no edge. I have never been able to predict direction, nor do I anticipate the ability to do so in the future.
Therefore I am limited to methods that either a) make money regardless of which way the market goes or b) make money eventually when the market goes in my direction. Options would be great for this except they expire. And I cannot predict when things will happen either.
If I could predict market direction there would be no need to scale in, or average down. Just buy as much as you can afford and hang on for the ride. But like I said, that's if I could predict direction, which I cannot.
FWIW, I would be willing to bet that 99%+ of people on this forum do not have an "edge." And 99.5%+ of people on this forum cannot define "edge" or give an example of one.
That being said, I fully admit I do not have one.
I don't believe that the markets are truly random, yet despite spending years trying to learn how, I am unable to predict direction (note to all the spam vendors on this site: this is not an invitation for you to PM me and try to sell me your shitty course about how to "predict" direction, mostly because I already know you are unable to predict direction yourself anyway).
The method I use is pretty similar to what I'm talking about in this thread. I'm just looking for a modification of it to use on a REALLY long term time frame and I wanted to get some input from other posters.
And @ the other posters, a properly sized Martingale will NOT blow your account. Trading isn't like Roulette. You don't keep adding indefinitely because unlike Roulette, which has infinite turns, the market does not have infinite range.
Most people blow their accounts Martingaling because they apply it over too short of a price range.
Someone will trade like a $10k account on the ES or something and start with 1 contract and double it every 3 points it goes against them. And they'll probably make some good money for a few days/weeks. And then one day the ES goes against them like 30 points and they blow their account or take a catastrophic loss because they close their trade too early (in anticipation of blowing their account).
Or people do it in Forex with micro lots starting at like 1 cent per pip. And they make a few bucks per week. Hooray, profitable system! This kind of crap is all over the Forex forums. Some people even run multiple versions at different intervals and sometimes even in both directions at the same time. Ooooh, clever! And the one day the EUR/USD has some massive spike and they blow their account.
Wrong position sizing.
So I'm interested in doing this over a much longer time frame, maybe only buying/selling a few times per year, with a much expanded range.
And I'm sure there's some way to hedge with options but I'm basically worthless when it comes to options so I'll let someone else handle that aspect of it.
But as long as the SPY doesn't just putz around with a 10 point range during the entire year, I don't really see this not making SOME money.
If I had bigger balls I would do the same thing on the short side at the same time and make money in both directions at the same time. But I am afraid to actually short the indexes because there is no upside limit and I don't want to be martingaling short into infinite upside.
Now, continue with the "but Martingale systems will always lose!!!" posts...
Someone will trade like a $10k account on the ES or something and start with 1 contract and double it every 3 points it goes against them. And they'll probably make some good money for a few days/weeks. And then one day the ES goes against them like 30 points and they blow their account or take a catastrophic loss because they close their trade too early (in anticipation of blowing their account).
Or people do it in Forex with micro lots starting at like 1 cent per pip. And they make a few bucks per week. Hooray, profitable system! This kind of crap is all over the Forex forums. Some people even run multiple versions at different intervals and sometimes even in both directions at the same time. Ooooh, clever! And the one day the EUR/USD has some massive spike and they blow their account.
Wrong position sizing.
So I'm interested in doing this over a much longer time frame, maybe only buying/selling a few times per year, with a much expanded range.
And I'm sure there's some way to hedge with options but I'm basically worthless when it comes to options so I'll let someone else handle that aspect of it.
But as long as the SPY doesn't just putz around with a 10 point range during the entire year, I don't really see this not making SOME money.
If I had bigger balls I would do the same thing on the short side at the same time and make money in both directions at the same time. But I am afraid to actually short the indexes because there is no upside limit and I don't want to be martingaling short into infinite upside.
Now, continue with the "but Martingale systems will always lose!!!" posts...
Averaging down is like crack x 10. It gives you a super high because most of the time you will make money. The problem is when do you say I am out when the market goes really against you? What is the limit? 5K, 10K, 15K, 50K? Most of the time it is enough to get you back at that + 2 points. The problem is what do you do when the market hits the 2008 scenario? This could happen in 10 years or next monday.
Most of us had gone through averaging down (hopefully in sim mode LOL). And it is not the way to do this long term. You might get lucky for a week, month even a year, but it is like driving 100mph without seatbelts. You are the fastest kid on the road and you are it until the accident......
Why don't you try a comet approach. Every time you see a comet, try to get on its tail and let it take you for a ride. Sometimes it will be for a wash, sometimes for 1 or 2 points and sometimes for 20. As long as you enter right AND do not let the market turn against you, over time you should make a profit.
Cheers!
Also make sure the market you are trading is moving. Sometimes it is te ES, sometimes it is the CL and sometimes it is corn. As long as there is movement ......
Most of us had gone through averaging down (hopefully in sim mode LOL). And it is not the way to do this long term. You might get lucky for a week, month even a year, but it is like driving 100mph without seatbelts. You are the fastest kid on the road and you are it until the accident......
Why don't you try a comet approach. Every time you see a comet, try to get on its tail and let it take you for a ride. Sometimes it will be for a wash, sometimes for 1 or 2 points and sometimes for 20. As long as you enter right AND do not let the market turn against you, over time you should make a profit.
Cheers!
Also make sure the market you are trading is moving. Sometimes it is te ES, sometimes it is the CL and sometimes it is corn. As long as there is movement ......
1a2b3cppp
Are you talking about martingaling into individual stocks or general indices? And perhaps you could describe a little more specifically how exactly this works...
For instance, how many points in ES do you add, or how big a decline for individual stocks do you add (so we are all on the same songsheet assume initial entry price $100)?
eg. Do you buy 100, 95, 90, 85 in size 1,2,4,8,..?
or buy 100, 95, 90, 85 in size 1,1,1,1,..?
or something else assuming 1st purchase at 100 in 1 lot...?
With more specifics perhaps we can give you / us a better understanding. Generally, it is a flawed strategy, but if you KNEW that a particular stock was a winner, that is your edge, this knowledge. But in this case, it is still a poor strategy relative to others because you are limiting your upside to a small % return of the amount you have allocated to the strategy.
Are you talking about martingaling into individual stocks or general indices? And perhaps you could describe a little more specifically how exactly this works...
For instance, how many points in ES do you add, or how big a decline for individual stocks do you add (so we are all on the same songsheet assume initial entry price $100)?
eg. Do you buy 100, 95, 90, 85 in size 1,2,4,8,..?
or buy 100, 95, 90, 85 in size 1,1,1,1,..?
or something else assuming 1st purchase at 100 in 1 lot...?
With more specifics perhaps we can give you / us a better understanding. Generally, it is a flawed strategy, but if you KNEW that a particular stock was a winner, that is your edge, this knowledge. But in this case, it is still a poor strategy relative to others because you are limiting your upside to a small % return of the amount you have allocated to the strategy.