Martingale system during earnings.

N

Neet

We know at the roulette table it is suicidal due to house edge (0 and 00) plus table limits.

However, no such limit exists in the stock market.

On top of that we can make "educated" bets when choosing companies during earnings play.

For example:

Bet 5k on earnings.

Win, sell, collect, repeat.

Lose, double up on another earnings play.

Choosing only solid companies, no small cap risky stuff.

I have tried this system twice a week since May and have only lost 2 in a row.

Risky, you bet, but i got deep pockets and so far it is working great.

Thoughts ?
 
It'll work great until you hit the deveation from the mean and take 10 losers in a row. Then you best have deep pockets. But yes, in theory if you have the bucks to cover the consectutive losses then it will work. However, at some point there would be an issue of liquidity. If you happen to be the one holding a huge number of shares/contracts, who do you unload on? I think that's what just happened to that hedge fund which got smoked on their NG play. They had far to big of a position to start unloading without impacting the market.
 
Quote from CaptainObvious:

It'll work great until you hit the deveation from the mean and take 10 losers in a row. Then you best have deep pockets. But yes, in theory if you have the bucks to cover the consectutive losses then it will work. However, at some point there would be an issue of liquidity. If you happen to be the one holding a huge number of shares/contracts, who do you unload on? I think that's what just happened to that hedge fund which got smoked on their NG play. They had far to big of a position to start unloading without impacting the market.
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10 losers in a row based on pure luck has low odds but very much possible.

10 losers in a row based on educated stock picks when in theory, earnings won't take all of your principal, is a completely different scenario.

Liquidity is not a problem if you pick the right stocks with the necessary volume.

However, I'm all for the improvement of the system so open to any ideas or concerns.

Thank you.
 
Under what conditions do you buy and what exactly is the sell signal?

I worry about the opening gap. Sometimes people sell on good news. Prices can open lower. I vaguely remember being caught in a more than 10 point opening gap once or twice.
 
As someone else posted...the liquidity problems replace this...Now if your talkin' Retail Spot Forex coupled together with unit sized increments...well then your talkin' my language...:)

I have all but abondoned martingale with my latest system, but I am very attracted to it and return often :)

However, no such limit exists in the stock market.
 
Quote from Hook N. Sinker:

Under what conditions do you buy and what exactly is the sell signal?

I worry about the opening gap. Sometimes people sell on good news. Prices can open lower. I vaguely remember being caught in a more than 10 point opening gap once or twice.
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I buy based on market expectations, atmosphere, technical analysis and fundamentals.

Selling is the easy part. As soon as you are comfortable with the profit during afterhours or pre-market, depending on the time of announcement, you get out. Or you can take it to the next level and see how it performs during market hours, entirely up to you.

However, if the play ends up a negative one, then you double up and move up to the next target. Depending on how much you "lost", if you lost say 1%, then I don't see it necessary for you to double up, doing 1.3x might be sufficient, this increases your opportunities in the long run to finally nail it. Market during earnings is extremely volatile therefore even a loser at some point can be a winner and viceversa. Usually when Im riding a winner I take the profits and end the day with a smile.

The system is not for everyone either but it's a beauty nonetheless.
 
Quote from ElectricSavant:

As someone else posted...the liquidity problems replace this...Now if your talkin' Retail Spot Forex coupled together with unit sized increments...well then your talkin' my language...:)

I have all but abondoned martingale with my latest system, but I am very attracted to it and return often :)

However, no such limit exists in the stock market.
More...

Never traded the FOREX but I've heard great things about it.

Why did you stop using Martingale, did it hit you hard in the past ? When combined with other variables, excluding luck, it is defintely one of my favorite systems.
 
I find that I must start out so small and except lower overall yields to the portfolio to be able to survive the huge waves that eventually arrive.

The concrete model that I discovered only yielded me 10% a year for too much labor....I am too old to wait.

Michael B.


Quote from Neet:

Never traded the FOREX but I've heard great things about it.

Why did you stop using Martingale, did it hit you hard in the past ? When combined with other variables, excluding luck, it is defintely one of my favorite systems.
More...
 
Yep! I hear ya, but it's to risky/expensive for me to consider. My brother had a somewhat similar concept and was trading options. He had a 3 year run that was fantastic. When the loser came he got slaughtered for tens of thousands. His mistake was staying in the same trade and eventually the options have to expire and he just ran out of time. It doesn't sound like you're doing that.
I suppose with proper trade management and deep enough pockets you probably got a winner.
There are plenty of ways to make a buck in the market. If it works, don't fix it.

Quote from Neet:

10 losers in a row based on pure luck has low odds but very much possible.

10 losers in a row based on educated stock picks when in theory, earnings won't take all of your principal, is a completely different scenario.

Liquidity is not a problem if you pick the right stocks with the necessary volume.

However, I'm all for the improvement of the system so open to any ideas or concerns.

Thank you.
More...
 
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