I am looking at money management methods for forex to improve my pnl and I am arriving at Reverse Martingale (Anti-Martingale). Has anyone here tried this method before? Sorry if this has been asked before. Thanks.
Reverse Martingale (Anti-Martingale) for forex
- Thread starter vivaskyliska
- Start date
I'm sure they have, but the very few among them who are still here have probably learned better, or at least learned to keep fairly quiet about it.
To put it politely, it's not a very sensible idea. (Someone far more outspoken and far less tactful than myself might even describe it as "ridiculous nonsense".)
Less damaging and dangerous than an actual Martingale, for sure, but Paroli/anti-Martingale staking is still illogical and highly misguided.
Here's the main point: there's no sense in allowing the position-sizing for a forex trade to be determined by what the outcome of the previous bet happened to be. It has no logic at all, and ultimately boils down simply to a variation of the "gambler's paradox".
Either your system/methodology has a genuine edge (positive expectancy) or it doesn't.
If it does, then it doesn't need a "staking plan" in which the next position-size is determined by the outcome of the previous bet.
If it doesn't, then you shouldn't be trading with it at all, let alone trying to make it more profitable (or "less unprofitable") by messing about with its stakes in that kind of way, in a misguided attempt to give it an edge it simply doesn't have.
These things are all just a distraction from learning the realities of money management and risk-management.
I'm afraid they're quite commonly discussed among spot forex traders.
I'd advise you not to let your time be used up with nonsense like this, when you could instead spend it reading a simple book which explains the logic and math of position-sizing principles, and then you can put all this "reverse Martingale" stuff behind you.
(If you want a recommendation, I'd suggest either Profitability & Systematic Trading by Michael Harris, or Trade Your Way to Financial Freedom by Van K. Tharp - especially the second half of the book ... but there are others, too: it doesn't really matter too much where you get this kind of information from, as long as it's a proper textbook and not online chat/websites/videos/forums where spot forex traders discuss it, as they tend collectively to be somewhat naive and questionable in their judgments around subjects like this. No disrespect to anyone intended, but that's the way it is!).
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I'll be kind and give it to you.
https://www.forexfactory.com/printthread.php?t=22663
It can only be done with algorithm and only human intervention is to start it when a news event happens.
Position sizing increases:
1
2
3
4
5
6
7
8
..etc
or
1
2
4
8
16
32
64
..etc
Its all based on the cross of a support /resistance level based on a news event. Or multiple crosses.
Human intervention can be taken out also, by using volatility proxie: STD ATR. The system would be running 24/7. Looking for spikes in ATR STD.
Or imagine if you were applying to a individual stock.
#shares
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when would you lose? When would you win?
Its almost impossible for a human being to apply it manually. Human nature prevents you from doing it. That's why a automated system is needed.
All profit and losses are based on price moving either up or down. Meaning price has to change. Pure efficiency is never seen. Where price stays constantly fixed at one level, and steps up or down in microseconds after news event. So direction price moves has no relevance.
https://www.forexfactory.com/printthread.php?t=22663
It can only be done with algorithm and only human intervention is to start it when a news event happens.
Position sizing increases:
1
2
3
4
5
6
7
8
..etc
or
1
2
4
8
16
32
64
..etc
Its all based on the cross of a support /resistance level based on a news event. Or multiple crosses.
Human intervention can be taken out also, by using volatility proxie: STD ATR. The system would be running 24/7. Looking for spikes in ATR STD.
Or imagine if you were applying to a individual stock.
#shares
1
2
3
4
5
6
when would you lose? When would you win?
Its almost impossible for a human being to apply it manually. Human nature prevents you from doing it. That's why a automated system is needed.
All profit and losses are based on price moving either up or down. Meaning price has to change. Pure efficiency is never seen. Where price stays constantly fixed at one level, and steps up or down in microseconds after news event. So direction price moves has no relevance.
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Lets say your applying it on a stock that has high liquidity and can be shorted or longed as needed.
SR = 50.00
For each cross it costs you 10 cents (spread)
ATR STD spikes, the closest SR level is 50
The stock goes up through 50 (resistance), the algo goes long 1 share at 50.10
The stock retraces goes down below 50, the algo goes net short 2 shares at 49.90
Loss equals 20 cents on the first share, with 2 share position short at 49.90
The stock reverses and goes back up through 50, now 3 shares long at 50.10
Cumulative loss is 20 cents on the 1 st, 40 cents on the next two shares short, with a position long 3 at 50.10,
Finally the stock moves past 50 dollar range because of a news event or catalyst and goes to 55..
long 3 @ 50.10, 3 x 4.90 = 14.70 gain - 60 cents loss from previous crosses = 14.10 profit
factor in commissions, and you have a net gain. The most crucial part of this is looking for spiked in ATR/STD combined with a news event. And look for the closest outlier for your SR level.
SR = 50.00
For each cross it costs you 10 cents (spread)
ATR STD spikes, the closest SR level is 50
The stock goes up through 50 (resistance), the algo goes long 1 share at 50.10
The stock retraces goes down below 50, the algo goes net short 2 shares at 49.90
Loss equals 20 cents on the first share, with 2 share position short at 49.90
The stock reverses and goes back up through 50, now 3 shares long at 50.10
Cumulative loss is 20 cents on the 1 st, 40 cents on the next two shares short, with a position long 3 at 50.10,
Finally the stock moves past 50 dollar range because of a news event or catalyst and goes to 55..
long 3 @ 50.10, 3 x 4.90 = 14.70 gain - 60 cents loss from previous crosses = 14.10 profit
factor in commissions, and you have a net gain. The most crucial part of this is looking for spiked in ATR/STD combined with a news event. And look for the closest outlier for your SR level.
Nothing is "highly liquid" during a news inducing 10% spike.
SPY has pretty good liquidity, even during news.
Here's AAPL, it used EOD to make trades on daily charts.
Here's AAPL with multiple crosses.
Notice share count increased to 5, the crosses result in -11. But all it would take is greater than 2.20 dollar shift to get into profit territory.
Notice share count increased to 5, the crosses result in -11. But all it would take is greater than 2.20 dollar shift to get into profit territory.
Here's AAPL with fixed profit targets based on wave variance.
