D'Alembert-Based Trading Systems - page 2

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Hi Malchik.

Thanks for your encouragement and the EA.

I found the EA about a week ago and couldn't get it to work either;

I think it's based on a Martingale strategy.

I managed to build an EA using the online EAB for the breakout system I referred to in a previous post. I had to leave the house before testing had concluded so I'll see what's up when I get home. Things looked pretty good about 2/3 through the test; the account had doubled using single lots. Maybe this is a start...

 

WNW

I have only paper traded it, when I started it, it was for fun and I was thinking wouldnt it be funny if we could do better with a flip of the coin.

So the numbers are from MT4 charts and allow for the spread even the trail allows for the spread. I agree it needs more timethats why Ive started it. I didnt think anyone would do it continually.

one of the reasons I would like the flip done electronicly is, I dont always flip the same, like the height and the catch are different from day to day.

 

Im wondering what would happen, if you had two accounts with the coin flip method. When the flip is short you short one account and long the other.

I know there would be times when the losses in one account would be much higher then the wins in the other. but with proper MM to start I think this would have some promise. what do you think?

Also thinking the asian box method might be good for this

 

Docb

DocB:
WNW,

Betting systems are designed for fixed odds play. You bet $100 on Red and you win $100 plus get your original $100 back. I think one must apply the same fixed odds approach to using betting systems in FX. In other words the TP and SL must be equal ( taking into account spread , commission etc.; The House) The advantage of FX is the ability to use fractional lots (mini or micro), large leverage, and to be simultaneously long and short without having to offset positions. We have to find ways to use this to our advantage. The higher the winning percentage the better but more important is the maximum number of wins and losses in a row. Most of these betting systems call for a winning streak to make you money. Please pay attention to Maximum Consecutive wins consecutive losses on the Meta Trader report and how many time it has those runs. I know Trade Station reports show the number of times you had 4 wins in a row, 8 wins ,etc but don't know if Meta Trader gives that info from backtesting. That might be a good place to start for a new indicator or counter. Maybe you guys have it already. A good system that can knock out a series of 4 consecutive wins is what we are looking for. It sure smells like a trend continuation or breakout system would fit the bill but I prefer counter trend or reversal systems as it is easier to define the risk or SL from a given point. Fact is just, about anything will work but it does need to be able to string the wins together.

DocB

Hi Doc,

1-I am not sure at all that fixed odds systems couldn`t be applied to non fixed odds strategies..To apply them you need a 50/50 win loss and MINIMUM tp=sl..OR 70/30 win loss ratio and MINIMUM 30/70 tp to sl ratio..OR30/70 win loss ratio and a MINIMUM of 70/30 tp to sl ratio (sorry for being so repetitive )..BASICALLYYOU NEED AN EDGE,at least a neutral one,but the higher the better... so,they could be perfectly useful to improve the already good expected return of a system with,let`s say40% av wins and an avW/avL ratio of 3 to 1..(expected return is 0.4*3-0.6*1..=0.6 per trade)

2-The key to do so,as you rightfully pointed out..lies in the consecutive wins,consecutive losses,average consecutive wins,average consecutive losses..AND,EXTREMELY IMPORTANT..their std deviation from average..as an example,imagine the previously mentioned system..

and imagine that every 10 trades it has 4 consecutive wins and then 6 consecutive losses(I know I am oversimplifying,the right strategy then would be to bet the house,4 consecutive times after the system has had 6 consecutive losses..;)..just keep with me a little..std deviation from average consecutive wins and average consecutive losses is 0

CASE A: 1 LOT "BET" PER TRADE

WWWWLLLLLL=+3+3+3+3-1-1-1-1-1-1=+6..for every "set" of 10 trades..so for 20 trades your return would be +12

CASE B:LEVEL 2 STRATEGY..LEVELS ARE 1LOT AND 2LOTS(you double the trade size after 1 win and reduce it to 1 after 1 loss)

WWWWLLLLLL=+3+6+6+6-2-1-1-1-1-1 =+14(+28 for 20 trades but don`t use this now)BEST CASE..but what if std deviation is extremely high like in

WLWLWLWLLL=+3-2+3-2+3-2+3-2-1-1=+2..or +4 for every 20 trades "set"..obviously level2 will not improve anything here

To continue with this example,imagine that std deviation is not 0 but there are 2 cases possible for every 10 trades set(WORST AND BEST CASE)

WLWLWLWLLL=+3-2+3-2+3-2+3-2-1-1=+2

4W+6L=+14

TOTAL=+16 for a "set" of 20 trades which compared with case 1 (+12 )is a 33% improvement in expected return

So,if you have a system with a trading edge..you can use one of the betting strategies to improve on its results..nd you don`t necessarily need for these trading strategies to have tp=sl..but you need a std deviation of "average consecutive wins/losses" that allows for it..

Regards

Simba

 

Hi Simba,

You are right you do not need a TP/SL it just works nicely for computing fixed odds. What you do need as you pointed out is get a handle on the statistics related to the winning streaks. in some ways having a variable system ( one that takes profit at different levels and or changes SL/TP) is more akin to sports betting where you have variable odds on each bet . Some games you get 3-1 odds , 7-2, 8-1 (real underdog) so your payoffs are variable. What this means is that by picking higher odds for your bet at any point in the series you can change your money management expectations. The SL/TP will always determine our "odds" . If you use a 20 pip SL/ TP you are risking $200 to make $200. If you change the TP to $300 you are risking the same $200 for a higher payoff. You are changing the odds. The problem is we are not changing the "expectations". Where in the series do we want to do that? The standard deviation would say bet the house like you say Simba. The problem is every trade is different and if you change the TP/SL you have created a completely new set of probabilities unrelated to the previous out come. By asking a trade to go form making $10 to making $200 we have no idea if it will fulfil that. One would need to run backtest with variable TP/SL on all levels of your betting Matrix. A fixed SL/TP is closer to a even money bet for me. Now put a 70% winning rate( our advantage over the coin toss) on that and you should rock. I like droesparky idea about being simultaneously long and short ( this is one of the great advantages of FX over any other market). I always like hedged situations. If we can continuously skim a little (hedged) with little drawdown I am all for it. What is the Asian box method?

The key to all this is TO TAKE MONEY OFF THE TABLE, you must pay yourself!

DocB

 

Are there any OTHER gambling type methods out there besides Martingale, Fibonacci, and Binary Equation?

 

I haven't read this thread thoroughly and what I'm about to say may not apply.

One of the biggest myths among new traders is that you can somehow money manage a non winning method into a winner.

Over the long run, it cannot be done.

If a system will not show a profit with fixed bets, there is no MM technique that will make it profitable.

 
billbss:
I haven't read this thread thoroughly and what I'm about to say may not apply.

One of the biggest myths among new traders is that you can somehow money manage a non winning method into a winner.

Over the long run, it cannot be done.

If a system will not show a profit with fixed bets, there is no MM technique that will make it profitable.

THANK YOU!!!!!! I started a thread on MM where I asked what was so special about it. So far, the replies are... well... you can check out the thread here:

https://www.mql5.com/en/forum

 

If you have a sound method to begin with, money management can maximize profits.

By a sound method, I mean that risking exactly the same amount each trade will show a profit.

The optimal money management method is the Kelly Criteria.

However, for Kelly to work you have to have good statistics on your system. You have to know the win rate, average winning trade amount and average losing trade amount. You have to have enough back data for the statistics to be meaningful.

 

:D i heard about d`alembert money management system for casino games ) like roulette..its quite better as martingale . IMHO

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