Martingales; Good, Bad, or just Misunderstood.
Member Since Jun 28, 2011
465 posts
Apr 06, 2014 at 23:19
One of the most berated tools available to traders is the martingale. For an industry that requires emotional control, its really interesting how the very mention of martingale will generate an amazing emotional response. I had to write this article for another project but felt that it would also do some good over here because there is a lot of bad information floating around the Ethernet.
https://forex-assistant.com/articles/Martingale.pdf
Questions and discussion is welcome.
Bob
https://forex-assistant.com/articles/Martingale.pdf
Questions and discussion is welcome.
Bob
where research touches lives.
Member Since Dec 15, 2010
795 posts
Apr 07, 2014 at 05:25
yep.. Im a martingale and grid trader..... I have a few demos running, but nothing real yet.
Click on my Name to see My Live Charts and Bio.
Member Since Jun 28, 2011
465 posts
Apr 07, 2014 at 07:59
Good to hear, are you familiar with the spit grid? It doesn't seem like it would but a split grid will dramatically increase the profit percentage of a standard grid while making the whole grid safer.
Pretty cool.
Bob
Pretty cool.
Bob
where research touches lives.
Member Since Aug 19, 2013
182 posts
Apr 07, 2014 at 18:33
Pooler posted:
I have run a type of Martingale grid trader on a live account since Feb. I have almost doubled my account ( $15 000) since then
Pooler could you please give some details as to how you are doing it? Thank you.
Viva La Puerto Rico!
Apr 08, 2014 at 07:35
That's kinda propriety knowledge . I just wanted to say that Martingale is a very misunderstood and incorrectly applied method. You also need a decent account size. I wanted to develop a method that trades profitably regardless of what price does. It took me 3 years but I've achieved that. There are no stop losses--just hedging and a type of martingale method.
Proof of what I'm saying is at https://www.myfxbook.com/members/Pooler/beeksvps-ver-9-live/862616. I automated this method and started on Feb 7 with a $ 14 800 deposit. I've withdrawn $ 6200 since then. The first 2 months I didn't trade optimally and I had to change accounts. You can calculate from these whether this is an effective method.
Proof of what I'm saying is at https://www.myfxbook.com/members/Pooler/beeksvps-ver-9-live/862616. I automated this method and started on Feb 7 with a $ 14 800 deposit. I've withdrawn $ 6200 since then. The first 2 months I didn't trade optimally and I had to change accounts. You can calculate from these whether this is an effective method.
Member Since Jun 28, 2011
465 posts
Apr 08, 2014 at 09:15
My god, my heart is still racing. OK, your curve is consistent and it says that it's profitable but 9 pages of open trades!!!! I still have not caught my breath. Warn someone next time, will ya?
Bob
Bob
where research touches lives.
Apr 08, 2014 at 12:27
Its a grid trading system that's 'always in'. As soon as a set of trades close then there is immediately a buy and sell opened again. So there will always be a minimum of 29 pairs x 2 trades open. Like I said--you need a decent account size to do this otherwise your money management will be under pressure.
Member Since Apr 08, 2014
1141 posts
Apr 08, 2014 at 15:19
Pooler posted:
I have run a type of Martingale grid trader on a live account since Feb. I have almost doubled my account ( $15 000) since then
Hi, its nice to know but how is the Máx. drawdown?
"I trade to make money not to be right."
Member Since Dec 15, 2010
795 posts
Apr 08, 2014 at 22:31
I have a both sided grid martingale... its a beautiful thing for sure... but can still blow a long term account if set to agressive. I built it myself.
Click on my Name to see My Live Charts and Bio.
Member Since Jun 28, 2011
465 posts
Apr 09, 2014 at 08:30
So did you develop these yourselves and what do you call it? I would like to go through the theory with either or both of you, only what you can talk about of course. Also, if this isn't the best place, we can go off board.
Pooler, obviously your not using a true martingale, but are most likely using the term to mean a recovery system of some kind.
I have developed a Fibonacci recovery system and paired it with a slow recovery to give a double recovery protection. What I am looking for is a better way to determine whether to do a buy or sell at any given point, not just at some limited ones. I wrote up my research and would be willing to trade for something that would generate a correct direction finder for a grid system,
75% or better would be perfect but any help would be appreciated.
By the way, it's cool knowing you guys are here, it was getting kind a lonely being the only fundamentalists in the house.
Bob
Pooler, obviously your not using a true martingale, but are most likely using the term to mean a recovery system of some kind.
I have developed a Fibonacci recovery system and paired it with a slow recovery to give a double recovery protection. What I am looking for is a better way to determine whether to do a buy or sell at any given point, not just at some limited ones. I wrote up my research and would be willing to trade for something that would generate a correct direction finder for a grid system,
75% or better would be perfect but any help would be appreciated.
By the way, it's cool knowing you guys are here, it was getting kind a lonely being the only fundamentalists in the house.
Bob
where research touches lives.
Member Since Feb 22, 2011
4862 posts
Apr 09, 2014 at 17:01
Martingale does work in the meaning the system will always be profitable in the end.
But as you said you need bigger balance to cover bigger lot sizes
and with such balance you can have more profit with other strategies.
Also there is always risk system or broker or VPS stop working and
for martingale system it could be disaster if the largest trade close as loss
Other system are not so sensitive for failure of 1 trade.
All in all - it works but there are better systems to bring you profit
But as you said you need bigger balance to cover bigger lot sizes
and with such balance you can have more profit with other strategies.
Also there is always risk system or broker or VPS stop working and
for martingale system it could be disaster if the largest trade close as loss
Other system are not so sensitive for failure of 1 trade.
All in all - it works but there are better systems to bring you profit
Member Since Jun 28, 2011
465 posts
Apr 09, 2014 at 21:53
togr; maybe an idea to help protect against a single large failure would be to add a slow recovery algo as a back up, the negative is that it lowers the percentage of profits but it does add stability. What it won't do is to protect against a currency failure. Unfortunately, me and a few other fundamentalist, think that at least one currency failure is a real possibility.
You still need to be vigilant, rough waters ahead.
Bob
You still need to be vigilant, rough waters ahead.
Bob
where research touches lives.
Member Since Feb 22, 2011
4862 posts
Apr 10, 2014 at 10:38
I have couple of MT systems that actually works
https://www.myfxbook.com/members/togr/martin-338-xm/647416
But the R/R ratio is not so good as for 'standard' systems
https://www.myfxbook.com/members/togr/martin-338-xm/647416
But the R/R ratio is not so good as for 'standard' systems
Member Since Jun 28, 2011
465 posts
Apr 10, 2014 at 18:53
Togr, help me out with something.
Here's the arithmetic, 100,000 units per lot is 1000 units per .01 lots. A pip is .0001 Multiplying this out
1000 X .0001 = .10 units per each 1 pip change in price. Lets change that to Euros to mach your trades.
Therefore we would expect a 1 euro profit or loss for a 10 pip change in price for every .01 lot traded.
This trade was from your account, it closed on 04.08.2014 15:28
Currency EURUSD
direction Buy
Lot size 0.06
SL -35.80 Pips
TP 30.20 Pips
Open at 1.37563
Closed at 1.37865
Pip Profit 30.2
Cash profit 0.18
Length of trade 4h 57m
Percentage of profits. 0.38%
Each .01 lots makes .10 euros so a .06 lot trade would have a +/- of .60 for each pip.
30.2 pips profit should have generated a (.60 X 30.2 =) 18.12 euro profit but yours shows a .18 profit, 1/100th of what we would expect. How is this done?
The profit is in US dollars so to convert euro to dollars we multiply by the latest close price, !8.12 euro X 1.37856 =$24.98
With the size of the account, making .18 euros is about right, I just can't figure out how you pulled this off. Straighten me out will ya. Thanks
Bob
Here's the arithmetic, 100,000 units per lot is 1000 units per .01 lots. A pip is .0001 Multiplying this out
1000 X .0001 = .10 units per each 1 pip change in price. Lets change that to Euros to mach your trades.
Therefore we would expect a 1 euro profit or loss for a 10 pip change in price for every .01 lot traded.
This trade was from your account, it closed on 04.08.2014 15:28
Currency EURUSD
direction Buy
Lot size 0.06
SL -35.80 Pips
TP 30.20 Pips
Open at 1.37563
Closed at 1.37865
Pip Profit 30.2
Cash profit 0.18
Length of trade 4h 57m
Percentage of profits. 0.38%
Each .01 lots makes .10 euros so a .06 lot trade would have a +/- of .60 for each pip.
30.2 pips profit should have generated a (.60 X 30.2 =) 18.12 euro profit but yours shows a .18 profit, 1/100th of what we would expect. How is this done?
The profit is in US dollars so to convert euro to dollars we multiply by the latest close price, !8.12 euro X 1.37856 =$24.98
With the size of the account, making .18 euros is about right, I just can't figure out how you pulled this off. Straighten me out will ya. Thanks
Bob
where research touches lives.
Member Since Feb 22, 2011
4862 posts
Apr 11, 2014 at 08:52
ForexAssistant posted:
Togr, help me out with something.
Here's the arithmetic, 100,000 units per lot is 1000 units per .01 lots. A pip is .0001 Multiplying this out
1000 X .0001 = .10 units per each 1 pip change in price. Lets change that to Euros to mach your trades.
Therefore we would expect a 1 euro profit or loss for a 10 pip change in price for every .01 lot traded.
This trade was from your account, it closed on 04.08.2014 15:28
Currency EURUSD
direction Buy
Lot size 0.06
SL -35.80 Pips
TP 30.20 Pips
Open at 1.37563
Closed at 1.37865
Pip Profit 30.2
Cash profit 0.18
Length of trade 4h 57m
Percentage of profits. 0.38%
Each .01 lots makes .10 euros so a .06 lot trade would have a +/- of .60 for each pip.
30.2 pips profit should have generated a (.60 X 30.2 =) 18.12 euro profit but yours shows a .18 profit, 1/100th of what we would expect. How is this done?
The profit is in US dollars so to convert euro to dollars we multiply by the latest close price, !8.12 euro X 1.37856 =$24.98
With the size of the account, making .18 euros is about right, I just can't figure out how you pulled this off. Straighten me out will ya. Thanks
Bob
Well it is account in USD so no need to convert EUR USD.
The thing is it is special XE Market account on which all trades are divided by 100. Profitable and loosing as well
It is not consistent though as sometime it moves 3.0 pips and do not count single cent profit
sometime sit moves 1.0 pip in loss and count 1 cent loss already:)
But for that type of Martingale with fixed SL and TP it does not matter
