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How much money would you need to Martingale your way to profits?
- Thread starter 1a2b3cppp
- Start date
No you don't... exponentially averaging down is a one way road.. no recovery - unrealistic sizing. do the math on paying yourself a penny a day.. doubling every day for 30 days.
Incrementing size at regular linear intervals allows you to shape the retracement profile necessary for an exit.
Adding 1 x original size every .50 requires a 50% retracement to break even.
The general idea is to have many exits near entry without scaling size before your position gets drawn down locking you in for the long haul.
Incrementing size at regular linear intervals allows you to shape the retracement profile necessary for an exit.
Adding 1 x original size every .50 requires a 50% retracement to break even.
The general idea is to have many exits near entry without scaling size before your position gets drawn down locking you in for the long haul.
Quote from david666:
That's not right...you need to double your shares every 50 cents not keep buying the same amount. You'd reach millions of shares very fast
Quote from david666:
Even if you double down every 5 spy points in 2008 you'd be buying 4 million shares by the end at a margin of 260 million dollars
Right, 5 pts was a bad example. Say 20 pts. He could solve for the number to not exceed max leverage. But he would only be long 100 shares for the better part of 10 years and hence earn less then a CD.
Quote from Maverick74:
Like the other poster said, with Reg T margin and doubling all the way down you are going to need potentially billions of dollars. The margin for 100 puny shares of SPY is 6500. That is insane.
What?
Who is using margin?
Oh, maybe I should've mentioned that in the first post. I want to do this without margin.
Right now SPY is like $130, so 100 shares would cost $13,000.
Is having a 100% risk of ruin important to you? Because that's what you have long-term with any Martingale strategy.Quote from 1a2b3cppp:
Seems like there could be a lot of "float" (is that what it's called?) using this method.
For example, during the year of 2004 the entire yearly range of SPY was $10. So you probably would've sat on your money and done nothing the entire time, potentially in the money or out of the money, waiting for something... to break out of the boring $10 yearly range.
I'm not really concerned with making instant profits, though. I've sat through years of drawdown (or float or whatever it's called) before. It's not really a big deal to me.
Quote from Yisterwald:
Is having a 100% risk of ruin important to you? Because that's what you have long-term with any Martingale strategy.
You misread the first post. Please reread it and rejoin the conversation when you understand how there is no risk of blowing your account with proper position sizing and pricing. We're not talking Bollinger Band martingaling that causes people to blow their accounts when price moves 10% or anything like that.