Should we really discount Martingale?

Ian Venner
2397
Ian Venner  

Everyone says Martingale will blow your account, and I agree under most circumstances it will but, what if the system over a whole year backtest has a maximium 6 consecutive losses and an average of 2, would this not seem to be a good system to apply martingale to ?

William Roeder
25353
William Roeder  

No.

Just because a backtest had a maximum of 6 doesn't mean a forward test couldn't have 10 in a row. The last trade would have to have 1024 times initial lot size. Do you have a $million account for that margin? If no, then you have blown your account.

qjol
3201
qjol  
WHRoeder:

No.

Just because a backtest had a maximum of 6 doesn't mean a forward test couldn't have 10 in a row. The last trade would have to have 1024 times initial lot size. Do you have a $million account for that margin? If no, then you have blown your account.

to be precise 1023, LOL & what about the money he needs for the loss of the first 9
Ubzen
5300
Ubzen  
SDC:

Everyone says Martingale will blow your account, and I agree under most circumstances it will but, what if the system over a whole year backtest has a maximium 6 consecutive losses and an average of 2, would this not seem to be a good system to apply martingale to ?

Depends on the system and the trader. Are you trading for Capital Preservation or Capital Growth? Which Money Management Guarantees a Maximum drawdown of X?
mbirrell
232
mbirrell  
I think is guessing without any true logic. If you are a gambler go for it. I would only increase lot size by a small percent - not double that is for sure!
CJS
43
CJS  

Well, even if you do not blow your account, your pos size in the major part your winning trades has to be ...how much? 1 microlot?


In my opinión, is better to asume some losses and built a different strategy.

Tjipke de Vries
6857
Tjipke de Vries  

Also with a million account you can get losses, Every broker allows a maximum lotsize we can't trade more then that

Ofcours you can maybe split the trades in allowed lotsize but what will happen if we all use martingale maximum lotsize

with prices of currencies ? ....... A lot of spike prices ?

Although sensible use of martingale can be very profitable,

I think if you wanna use it then use it for strategies with a higher profitchance atleast more then 50%

and don't start it with a small account risking a margincall.

The system SDC you talk about looks to me a good system to use with martingale if it is not risking too much the trade

But keep then following that system with martingale. if there are enough trades and you will see 6 losses in a row.... or more... it is risky

So what system do you talk about... One that can have 6 losses in a row ?

Ian Venner
2397
Ian Venner  

I think some who replied might be assuming to start with 1 lot.

I used 0.01 initial lot size, so the sequence is 0.01, 0.02, 0.04, 0.08, 0.16, 0.32, 0.64, 1.28 only now after 8 losses, do we start to enter the domain of larger lot sizes 2.56, 5.12, 10.24 so after ten consecutive losses its time to start sweating on a 10 lots trade ....

Ian Venner
2397
Ian Venner  
@deVries the system is really nothing special, just a modified macd to display the hourly chart on a 15 minute chart i put it into my EA just to see what its signals would do and it wasnt profitable, but the consecutive losses looked low so I considered what martingale might do for it.
Simon Gniadkowski
17401
Simon Gniadkowski  
SDC:

I think some who replied might be assuming to start with 1 lot.

I used 0.01 initial lot size, so the sequence is 0.01, 0.02, 0.04, 0.08, 0.16, 0.32, 0.64, 1.28 only now after 8 losses, do we start to enter the domain of larger lot sizes 2.56, 5.12, 10.24 so after ten consecutive losses its time to start sweating on a 10 lots trade ....

Lots size is only meaningful in relation to your account size, one persons sweating point is not the same for another person. I have always worked in %ages, 1% is 1% regardless of account size . . .
Ubzen
5300
Ubzen  
RaptorUK:
Lots size is only meaningful in relation to your account size, one persons sweating point is not the same for another person. I have always worked in %ages, 1% is 1% regardless of account size . . .

This is exactly what I do also. I usually have a Variable called Size%=1 and Reward%=1; This usually translate into Size(Take-Up)1% of my Margin-Per-Trade and Return(Profit>=)1% of my Margin Close_All. The truth is this really doesn't have Nothing to do with Money Management its More Lot-Sizing. True MM would say something like Whats 1% of my Equity? Ok, Trade, don't lose more than that. IMO, someone cannot practice True Money-Management unless they know the True-Edge of their System (Kelly-Criterion).

With the Size approach, my systems takes bigger sizes as the Money grows. Therefore the Risk is always the same as it was on day-1.