PacMan (my first hybrid) - page 41
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Currently I am looking at about 20-25% gains per month running on 3 pairs. But this can vary. 15% one month and 40% another month,
But 20-25 average,
I would like to see 50% or more average per month. But that might be greedy.
daveRight now I am going for 200% profit per month since my account balance is small and I have less to loose. When account starts increasing more and more, my risk ratio will become less and less to eventually top off at 50% per month in profit.
I tried to close losers manually for a couple of times, now I wish I had never touched them
My interventions made the whole situation even worse. Well, maybe I'm still not that good as a manual trader.
I came with one rough idea of loss handling: with the last increment we open another trade in opposite direction. Say we were buying eurusd, and it was going down. So we bought 0.1, 0.2, 0.4, 0.8 lots, and when buying 1.6, we also sell 1.6 lots. So we are 1.5 lots long in total. Now, if price starts to to up, we close 1.6 long with 1.6 short when long side hits tp, having lost anything but spread here, and hope price will go up even more to close the rest at 0.8 lots tp level. If price goes further down, we close our short side at next increments level with a few long orders starting with first (first 0.1, then, if we have enough profit, 0.2 or some of it etc.), and buy / sell 3.2 lots again. This stops loss from increasing exponentially (it increases linearly instead, but this is still better), and gives us more chances to wait for reversal. What do you think?
I tried a very similar idea when I worked on the hedge method for martingale. It seemed to work at first, but I backtested several situations when this aproach failed. I'm going to try your exact recipe if I find some spare time.
BTW: If you are using martingale on a live account and you hit level 4 things start to get too hot to handle you start to panic and you usually start making stupid decisions in order to save your account
. If you want to add some spice to it you can also loose your Internet connection (as I did today) and that is when you end up going crazy thinking of many different scenarios regarding what is going on with your trades...
BTW: If you are using martingale on a live account and you hit level 4 things start to get too hot to handle you start to panic and you usually start making stupid decisions in order to save your account
Sounds like overtraded account
I somehow manage to sit still until last progression gets to half of pipstep in loss. And then there is no such stupid thing I could not do 
I agree - the better the entry signals the smaller the probability of a bust, but I'm sure that there is no strategy (other than time travel
Sorry, but that is totally wrong. If we have a good enough signal (e.g. giving us a 10% edge) we can leverage this signal quality using martingale trades such that we can afford a simple stop after the highest level. The profits are big enough such that these losses don't create any danger of bust any more.
All my experiments have shown that.
The problem actually is that most signals are really almost equal to random and people don't notice because they choose favourable martingale settings that cover that fact because they work equally well with random signals until they don't.
If you have an edge, applying standard techniques gives you almost zero ruin probability with a reasonable growth rate. Of course what you can squeeze out directly depends on your edge. You can squeeze out more, but than you again get substantial risk of ruin again.
Martingale users should also note that if they are unlucky BUST can happen on the first trade. This of course would be OK if it was possible to achieve > 100% profit / month. 25% is just not enough, because you will need at least 5 months of successful trading in order to compensate for ONE loss which will drain the margin account.
For a 100% profit / month you need a very high trade rate with reasonable signals. This typically is a conflict because when you improve your signals the trade rate goes down. Consequently, this can only be achieved overleveraging your account. Bust is waiting around the door...
I still think that the best solution to this problem is to work out a well balanced exit strategy that will take some loss but will not drain the margin account.
I was thinking about closing portions of loosing trades with winners so that if a bust occurs it only drains some and not all of the margin account. If we are lucky enough we can still walk out with profit or break even.
...Yes, we need an exit strategy that has a high probability of getting out cheaper than with a simple stop loss. Currently, I am doing hedging experiments, but still with limited success. The difficulty lies in hedge management where quickly the hedge becomes your problem.
Sorry, but that is totally wrong. If we have a good enough signal (e.g. giving us a 10% edge) we can leverage this signal quality using martingale trades such that we can afford a simple stop after the highest level. The profits are big enough such that these losses don't create any danger of bust any more.
That is one way to look at this, but if you take a stop loss after the highest level you'll most likely drain most of your account. In order to afford a stoploss at the highest level (I'm assuming 5) is to trade something like micro lots on a > 10000 USD account. This is actually pointless, because you'll never get better returns than those you get from mutual funds, which are much safer for long term (at least 6 months) investing.
Lets assume that you are using a pip and lot progression of PacManJr with a micro account ( 1 lot = 10000 USD) and you start your martingale sequence with 0.03 lots (0.03, 0.07, 0.15, 0.34, STOP):
StopLoss at level 5 costs you 46,07 USD
TakeProfit of around 10 pips gives you 0.30 USD
You need 154 successful trades to cover ONE loss.
GOOD LOCK
All my experiments have shown that.
The problem actually is that most signals are really almost equal to random and people don't notice because they choose favourable martingale settings that cover that fact because they work equally well with random signals until they don't.
If you have an edge, applying standard techniques gives you almost zero ruin probability with a reasonable growth rate. Of course what you can squeeze out directly depends on your edge. You can squeeze out more, but than you again get substantial risk of ruin again.
I agree - signals are very important, but you cannot depend only on entry signals.
Yes, we need an exit strategy that has a high probability of getting out cheaper than with a simple stop loss. Currently, I am doing hedging experiments, but still with limited success. The difficulty lies in hedge management where quickly the hedge becomes your problem.
I'm also doing experiments with hedging, but there is always that ONE bad decision that can take you out of the game very quickly.
@ David - Just curious why PacManJr might behave differently on a Demo account than a Live account? I'm glad it did because I avoided the big loss at the end though
but was just wondering if you knew why?
Thanks (See attached pics
...
You need 154 successful trades to cover ONE loss.
...This is of course quite a bad winner/loser ratio. Choosing different lot sizing can improve that ratio quite a lot. The standard technique of doubling lot sizing is more or less the worst case in that respect. It is advised that levels above 6 are added in order to lose in a graceful way, avoiding being hit by the full stop loss. Lot sizes should grow more linearly and tp should be adapted for compensation.
Still, having too many losers vs winners will kill you just a bit more slowly, we still need an edge.
This is of course quite a bad winner/loser ratio. Choosing different lot sizing can improve that ratio quite a lot. The standard technique of doubling lot sizing is more or less the worst case in that respect. It is advised that levels above 6 are added in order to lose in a graceful way, avoiding being hit by the full stop loss. Lot sizes should grow more linearly and tp should be adapted for compensation. Still, having too many losers vs winners will kill you just a bit more slowly, we still need an edge.
I was thinking more about your better entry signal aproach. What if we apply the martingale progression with a reasonable pip step and lot size as a STOP LOSS technique? We can choose our best scenario to be break even and the next levels to take a small STOP LOSS. This would give us the comfort of a safe stop loss and if all goes wrong we can fire up the martingale recovery progression. Just a rough thought... What do you think about it?
Statement
until 8.6.07
Best Regards.
I was thinking more about your better entry signal aproach. What if we apply the martingale progression with a reasonable pip step and lot size as a STOP LOSS technique? We can choose our best scenario to be break even and the next levels to take a small STOP LOSS. This would give us the comfort of a safe stop loss and if all goes wrong we can fire up the martingale recovery progression. Just a rough thought... What do you think about it?
I don't understand what you mean by using martingale as a stop loss technique. Please explain and give an example.
Here is an example that illustrates that we can have much better winner/loser ratios with less aggressive settings:
pipstep 10, tp 20, max level 5, 1 lot at every level, stop loss at level 6 (50 pips total distance)
=> avg profit 200-300$, loss at sl 1500$ with probability 13% (no edge)
an edge of 10% at every level would reduce loss probability to 6%