How much money would you need to Martingale your way to profits?
- Thread starter 1a2b3cppp
- Start date
Yeah, not very clear, so let's start with the table I meant to have in the first post--basically the levels using 2% threshold...
10.82
10.61
10.40
10.20
10.00
9.80
9.61
9.42
9.24
9.06
8.88
8.71
You start at $10 (just a number, nice and round). So you sell after a 2% gain or buy again after a 2% decline from $10 ($10.20 and $9.80, respectively).
Now, say $10.20 is hit, so you sell the position initiated at $10 and are flat with a new buy order at $10 (right, 2% decline). Problem is, if $10.40 is reached (the next 2% level from $10.20) you have no shares to sell, so you just missed out on a 2% rally. All you can do is update your levels and enter a new buy at $10.20. Now you have two limit buys sitting at $10.00 and $10.20. So on until a 2% decline reaches one of those buys.
This happened to me much of this year as the market melted higher. Even right now I am flat waiting for my next level to be breached. It got within 8cents before the recent pullback.
Hope that helps. It is in no way perfect, but does provide some extra income in a flat, channeled market or when the market dips then recovers.
As an example, I implemented this right at the May 6th flash crash.
So I bought 5/6, then more at 5/19. Holding two levels.
Then sold on 6/15 as a rally ensued.
Market dropped and bought on 6/29, then promptly sold on 7/7 and 7/23.
I'm now flat as market rallies
Pullback and I buy on 8/11 and 8/24,
selling those two positions on 9/1 and 9/13.
Once again flat.
Had a quick final buy and sell on 11/16 and 12/3, respectively.
And I'm flat and have been since 12/3.
Works for me, I'm sure others have reservations or don't like it, but to each's own...
Cheers and get some sleep,
masterjaz
If you say, market is random for the most part, that means it is NOT random at certain times, right?
Are you sure they don't "work" for everyone or just you?
No riddles, simple question: do you really think carpenter is able to do his job without learning and practice?
Wrong. I've spent enough hours (years to be more exact) to know that ALL OF THEM ARE PROFITABLE and the matter why they are not for most people is exactly not enough deliberate practicing and lack of psychological (more exactly, emotional) ability to trade correctly.
Hmm... I like the idea of presumption of innocence, but when someone says something like this, it sounds like "oh please, someone, show me a profitable system".
Look, the market may be random, or it may be predictable. My point is that regardless, I cannot predict it. So whether or not is is predictable is irrelevent to me.
I'm sure no one has a consistently profitable indicator-based system. Especially not with the commercially available ones (free or otherwise).
I won't rule out the possibility that somebody somewhere has an indicator that is profitable, but I can absolutely guarantee you that if someone does, it's kept under lock and key, is not for sale, and has never been mentioned anywhere, especially not on an internet forum.
If I really wanted to continue your analogy, I would say that a carpenter needs his tools, but he needs tools that work. Not random bullshit tools that don't help him do his job.
No. lol. You've got to be trolling me now.
Hmm... I like the idea of presumption of innocence, but when someone says something like this, it sounds like "oh please, someone, show me a profitable system".
If you could prove that indicators work (since you just claimed that, "ALL OF THEM ARE PROFITABLE"), you would become a very, very rich person. You would instantly blow out out EVERY other indicator salesman, company, and guru out there. You would have 100% of the marketshare with no competition.
Of course, if indicators worked, you would just sit at home trading all day making millions.
But they don't, so neither of those scenarios will happen.
But do you consider market in general to be random, or to have certain occurences, when it is not random?
What do you mean by "profitable indicator"? How do you check their profitability?
How do you know if tool works or not if you don't know how to use it? If you give the electric saw to a bushman, who has never seen it before and has no idea how it works, the best he can do is cut his arm off with it.
No.
Wrong again. All more or less sane methods are profitable indeed, but very few people work hard enough on their professionalism as a trader to become profitable traders.
Good trader will make any reasonable system profitable, bad trader will screw any up.
Of course you are wrong too about 100% market share etc.
Consistently profitable method does not mean that. It only means, that you can consistently make money by trading.
And many circumstances limit how much you make, mentioning liquidity may be just enough already.
As for vendors market share, are you sure consistently profitable traders all dream to become vendors?
I already said it doesn't matter, because I cannot predict it.
It's probably not entirely random.
"profitable indicator" = an indicator where following its buy and sell signals leads to an increase in account equity over a long period of time. No cherry picking results the way indicator vendor salesmen do and only show times when it worked correctly. They all lead to profitable trades sometimes.
Indicators are tested with backtesting or live forward testing.
Now, if you're a good troll/guru/vendor, you will tell me how "backtesting is worthless" and "you can only test going forward." That's what "gurus" say in defense when someone shows proof that their system doesn't work. Gotta maintain their guru status to sucker in the noobs. lol.
How do you know if tool works or not if you don't know how to use it? If you give the electric saw to a bushman, who has never seen it before and has no idea how it works, the best he can do is cut his arm off with it.
Are you now going to tell me that I'm using the indicators wrong?
It's pretty common to say that.
People like to blame a trader's lack of success on being "unable to follow the rules of the system." "Gurus" are notorious for that. It's the best excuse for when their system doesn't work. But in my experience, even if the rules were followed perfectly, the trader would still lose money.
But, give me an example of some "more or less sane methods" that are profitable.
What is "any reasonable system?" You're being ambiguous.
100% was an exaggeration, but if you had a profitable indicator-based method I can assure you that word would quickly spread and you would have more customers than you knew what to do with. More than any of the wildly-successful trading conmen "gurus" right now who charge students $100s to $1,000s per month yet still neither student nor "guru" can trade profitably.
If they are probably not entirely random, why don't you put your efforts into researching markets, finding those cases of them not being random and building a trading system around it, rather than trying a strategy, which is typical for casino addicts?
Have you ever met a casino addict, who is consistently profitable in the game, where he has no edge?
Don't worry, I am not going to try to sell you anything and most likely will get bored and leave the thread at all.
But yes, I will say that mechanical backtesting of discretionary trading methods is worthless. Trading is much like art or sports, how can you seriously intend to backtest performance of an artist or an athlete?
So you tried, lost and came to conslusion it all is system's fault? I would say THAT is truly common among rookies, who are consistent losers. And getting excited with the martingale idea as the result is just as common too, I must notice. I've been there myself.
"Reasonable" system, in my view is something that uses nuances of market behavior, which one is able to show and FORWARD (not mechanically back(!)) test and which includes wise money management, which makes the risk of a big loss as small as it can be.
Why would successful trader necessarily want to compete with the gurus and system vendors? Some do that, but that's absolutely not what most people start their trading career for.
No there's no surprise for me, that most successful traders never bother to share their experience at all, not even speaking of strategy nuances.
I've never met anyone who is consistently profitable in casinos (with the possible exception of poker players but that's not really a "casino game" in the traditional sense of the word).
Suddenly all of your posts in this thread make sense.
That's the worst analogy I've heard all day. But it's only been "today" for an hour and 33 minutes so far.Trading is much like art or sports, how can you seriously intend to backtest performance of an artist or an athlete?
That was ambiguous, and without having an actual example of one, that doesn't help.
Indicators and money management can all be quanitfied entirely to the point that all discretion is removed. It should be easy to demonstrate a profitable indicator system.
Exactly, me neither. With the exceptions of good poker players or card counters, which do have an edge.
Now, how do you think, if market is random and you enter randomly, applying a strategy, typical for addicts (not pro card players) to a market with negative expectancy against you (random - deal costs), are you going to make money with such a strategy?
Of course they do, I make my living by trading.
If you are deliberate enough to keep trying to make money by trading, you will realize that there are two kinds of trading: mechanical and discretionary. And that I was perfectly right about the second being a form of an art.
Sorry, no examples, I promised to not sell you anything and not going to give something valuable for free either.