Martingale system in Trading
- Thread starter osho67
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Quote from Humpy:
Oh really ?
Care to explain ?
see this example
http://elitetrader.com/vb/showthread.php?s=&postid=1933998&highlight=martingale#post1933998
If your trading/timing strategy have a positive edge of lets say 70-to-30% or higher I dont see why it should'nt work if you have enough equity to sustain maybe 20-30 losing trades in a row. But it's a totaly crazy idea and you get almost the same exponential growth by pyramid and compound profits the normal way.
Why it martingale does'nt work in roulette is becouse the Casino has the edge, not the gambler (52-to-48% to their favor).
Why it martingale does'nt work in roulette is becouse the Casino has the edge, not the gambler (52-to-48% to their favor).
is it possible though? I personally trade with quite tight stops and have had amazing success this past year (turned 2k into 60k as you can see from the '5-10% per day' journal made by spanish89)
However, my brother trades what you could say is a martingale system. He doesn't use stops. However, He is the richest person I know (money not made from trading....in fact its best if i dont tell you how he got it!)
But with such an amount of money, he is never 'in trouble' when an instrument goes badly against him. He has an account of *about* £600,000. He spreadbets at £20 per point (so if he buys the dow at 10000 and closes it at 10040 he makes £800 (40 PIPS * £20 STAKE))
He's been on the wrong side of moves that have gone thousands of points against him and he has just averaged down. He's done it for years throughout all kinds of markets/news announcements/chrisis etc.....
I guess im saying, if you have lots of money and trade in small amounts relative to that large amount of money, is consistent success a possibility?
However, my brother trades what you could say is a martingale system. He doesn't use stops. However, He is the richest person I know (money not made from trading....in fact its best if i dont tell you how he got it!)
But with such an amount of money, he is never 'in trouble' when an instrument goes badly against him. He has an account of *about* £600,000. He spreadbets at £20 per point (so if he buys the dow at 10000 and closes it at 10040 he makes £800 (40 PIPS * £20 STAKE))
He's been on the wrong side of moves that have gone thousands of points against him and he has just averaged down. He's done it for years throughout all kinds of markets/news announcements/chrisis etc.....
I guess im saying, if you have lots of money and trade in small amounts relative to that large amount of money, is consistent success a possibility?
Biggest thing that's a problem is greed affecting your positon sizing. If you have $500,000 and are happy to make small $30 profits, then when mammoth moves against you happen taking $100,000 of pain and closing out at a $4000 profit... I suppose it can work. I doubt many could stomach something like that.
I'm martingaling into OIL right now, I closed out my old martingale on the last spike, but I royally screwed that trade up... I went through about $7000 of pain to make $700, because I started out very greedily with a large position. Now I exposed myself to 300 shares of USO... so if oil gets cut in half it won't be significant. If you long term scale into a commodity that won't become completely useless, with unnervingly small size, I don't see how you can lose, but you may be wasting capital while oil consolidates/stays flat for a decade.
I'm martingaling into OIL right now, I closed out my old martingale on the last spike, but I royally screwed that trade up... I went through about $7000 of pain to make $700, because I started out very greedily with a large position. Now I exposed myself to 300 shares of USO... so if oil gets cut in half it won't be significant. If you long term scale into a commodity that won't become completely useless, with unnervingly small size, I don't see how you can lose, but you may be wasting capital while oil consolidates/stays flat for a decade.
Quote from asap:
Long-Only DAX Anti-Martingale System Update:
Very cool. I'm working on a similar auto method but with intraday tic data. Timely exits are critical, in my opinion.
An idea is to run both a short and a long "box" at the same time. (i.e. make a graph with a short-only Dax method and see what it does to your 2000-2003 period, when you add both equity curves)
JW
Martingaling is doubling each successive bet (trade) in order to win back all bet units +1 on the next winning spin. By definiton, Martingaling doesn't work if you don't double each successive lot size.
So what I said was correct. If you are truly anti-martingaling, your huge winner will be wiped out by one small move against you. Just like how with Martngaling, a huge drawdown is turned into a winner by a small move in your favor.
No money management system will turn a losing trading method into a winning one. It's mathematically impossible.
Focus on developing a trading method that has a positive expectancy and risk:reward after all associated trading costs, not on a money management scheme.
Martingale or any of it permutations won't put the odds in your favor.
Focus on developing a trading method that has a positive expectancy and risk:reward after all associated trading costs, not on a money management scheme.
Martingale or any of it permutations won't put the odds in your favor.