Martingale?
- Thread starter MarketAddict
- Start date
I never said it was a trading strategyâ¦
well, there's a difference between Martingale and adding to losers. The problem with Martingale is your size can get way out of hand if you miscalculate an average move.
as far as adding to losers, you often hear Warren Buffet say, "I bought all I want at this price, but if it goes lower I will buy some more."
I have been having good luck adding to losers (and winners) on a stop to enter. That way, you don't keep adding all the way down.
Blanket statements like "Never add to a loser" are kind of shallow. If that was true then you should also say, "Always add to a winner."
I put it all on with a scale out stop. If I get stopped out I will re add on scale in stops to enter. And add another stop loss. So sometimes I am adding to winners, sometimes losers. But I start with max size, and if I get stopped out am always trying to get back to max size, then I just leave it alone.
But I am always spread to some extent or the other.
a more simple method would be, just put it all on with a stop for it all and never take a profit, but when you are shooting very badly that can be really demoralizing.
as far as adding to losers, you often hear Warren Buffet say, "I bought all I want at this price, but if it goes lower I will buy some more."
I have been having good luck adding to losers (and winners) on a stop to enter. That way, you don't keep adding all the way down.
Blanket statements like "Never add to a loser" are kind of shallow. If that was true then you should also say, "Always add to a winner."
I put it all on with a scale out stop. If I get stopped out I will re add on scale in stops to enter. And add another stop loss. So sometimes I am adding to winners, sometimes losers. But I start with max size, and if I get stopped out am always trying to get back to max size, then I just leave it alone.
But I am always spread to some extent or the other.
a more simple method would be, just put it all on with a stop for it all and never take a profit, but when you are shooting very badly that can be really demoralizing.
yes, thank you for elevating the thread back to it's initial weak start.
actually, I wouldn't say it started weak or strong.
If you were back testing random entry money management strategies and ranking them on risk of ruin, Martingale would come out number one, with no less than zero risk of ruin. That would catch your eye.
That's why I say it's a good place to start.
It's all fine and well to believe you are a really good guesser about what the market is going to do, whether it is based on charts, or books you read, or historical patterns, but in my opinion, you need some kind of money management strategy as a foundation.
Like the Good Book says, "A wise King counts the cost of war before going to battle."
When John Bollinger was giving lectures on his Bollinger Bands he lamented, "They are all enthused when I tell them about the Bands, but they go completely deaf when I talk about money management."
Martingale is the simplest of methods for any 50/50 gambler to understand. But most trader/gamblers think they are 1:2 or 1:3 RR. With their edge being their ability to guess. So, it gets modified.
So, to answer Opies question, "Have I ever got it to work?"
No, but I survived a weekend at Tahoe once, and after lodging, meals and entertainment, left with exactly what I showed up with. But my last bet was all I had to my name at the time.
Never again.
Yet, when I started trading forex, although it wasn't pure Martingale, there were elements of it in my money management strategy, and that's how I lost 30% in less than one day.
So that's why I would suggest if you think you have a good money management strategy, do a Martingale test before you go live to see if it is in there.
actually, I wouldn't say it started weak or strong.
If you were back testing random entry money management strategies and ranking them on risk of ruin, Martingale would come out number one, with no less than zero risk of ruin. That would catch your eye.
That's why I say it's a good place to start.
It's all fine and well to believe you are a really good guesser about what the market is going to do, whether it is based on charts, or books you read, or historical patterns, but in my opinion, you need some kind of money management strategy as a foundation.
Like the Good Book says, "A wise King counts the cost of war before going to battle."
When John Bollinger was giving lectures on his Bollinger Bands he lamented, "They are all enthused when I tell them about the Bands, but they go completely deaf when I talk about money management."
Martingale is the simplest of methods for any 50/50 gambler to understand. But most trader/gamblers think they are 1:2 or 1:3 RR. With their edge being their ability to guess. So, it gets modified.
So, to answer Opies question, "Have I ever got it to work?"
No, but I survived a weekend at Tahoe once, and after lodging, meals and entertainment, left with exactly what I showed up with. But my last bet was all I had to my name at the time.
Never again.
Yet, when I started trading forex, although it wasn't pure Martingale, there were elements of it in my money management strategy, and that's how I lost 30% in less than one day.
So that's why I would suggest if you think you have a good money management strategy, do a Martingale test before you go live to see if it is in there.
How to lose 360K using Martingale (with bitcoins):
http://www.reddit.com/r/Bitcoin/comments/1rnsof/user_xyz2013_just_tried_to_double_his_016_btc/
http://www.reddit.com/r/Bitcoin/comments/1rnsof/user_xyz2013_just_tried_to_double_his_016_btc/