Can Martingale/Average Cost Systems work long term? - page 3
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TWTrader - post your code, we'd love to see it!
As for whoever said on the last page that they have a system which is 100% loser - its probably because it loses on the spread. Reversing it would still lose on the spread, so it would still be a 100% loser.
TWTrader - post your code, we'd love to see it!
No he can't, because he's banned. Martingale/Cost averaging system is fine, provided you know when to take profit and stop trading. But the truth is always greed took over fear in that case. Martingale/Cost averaging will NEVER lose(provided you have infinite backup fund). It will work for you forever until there is one time you running out of margin. Thats all about it.
Regards,
David
How ironic really .. martingale always wins if you have infinite backup fund ... but if you had infinite backup fund, you wouldn't be trading in the first place .. you'd be on an island relaxing somewhere
not all the time example orders on the us dollar then the us diso
not all the time example orders on the us dollar then the us disolves the dollar as its currency due to mass inflation i think?
not all the time example orders on the us dollar then the us disolves the dollar as its currency due to mass inflation i think?
martingale work and win allways
if
1) correct protection of capital
2) don't re-invest profit
martingale work and win allways
if
1) correct protection of capital
2) don't re-invest profitwhat do you mean by 'correct protection' of the capital? and how could you possibly not reinvest when its actually there and it is part of the game
Would someone give an example of a profitble/safe martingale EA.
I was failed for several times ...
Martingale does not always "Win" given unlimited capital. Given unlimited capital it reverts to 1 on a 50/50 spread. With this being said the second you pay a spread, you are screwing the spread towards the dealer, sometimes more considerably than others.
In order for a martingale system to work, besides the proper management and risk controls, you need to have an edge or you will just be working back to 1. Two ways this can be accomplished is:
1 Superior timing (however, if your able to do that you probably are already winning)
2 Trading only during mean reverting times, however this would be considered a form of an edge. Martingale will work as long as the mean reverts, that is the whole premise of the stacking bets, however the quest to predict when a market will revert to a mean and when it is trending is a daunting task in itself.
It's been said in this thread, but I'll say it again, Martingale works perfectly... until it doesn't.
Martingale works
From my experience martingale EAs work but they must be monitored. At one point I was running so many martingale EAs that I was getting about $400.00 to $900 per day. I didn't monitor it and a sharp move with no retracements killed me as margin kept doubling as each sell limit was hit.
However since then I have used them successfully by not starting too large for the account and knowing the behavior of the pair I am using. Average Daily Range and True Range are very important to compare on a daily basis.
In addition, I find that martingale EAs work best in a counter trend after the London session closes or when there are no major announcements.
Also when you look back at a pairs history you may not take into consideration what announcements were made or if Ben Bernanke, Tim Geitner or Barack Obama spoke to make the currency go crazy.
These announcement/speech days are considered abnormal and will more often than not affect the range and behavior of the pair you are trading. So you must decide to take smaller losses when these events occur rather than ride them out and sustain bigger losses due to the limitations of these EAs.
Most brokers will not go beyond 50 lots (live) so that is your limit regardless of how much money you have in your account. At that point you would have to trade manually to keep up but your profit potential may not be worth the risk.
There's my two cents.
Martingale EAs
To Styex's point I will say this. The bigger the timeframe one uses to monitor regressions to the mean the better the performance of a martingale EA when reversing.
For instance if you put a 5EMA based on the high and the low on a 4 hour chart, you will notice as price runs up quickly and the candles (I prefer these over bars) are long, you will notice that a gap forms between the two moving averages as price continues to rise or fall.
When using other indicators such as RSI, CCI or even Stochastics you can to a reasonable degree find when the regression will occur (change settings of oscillators to suit your needs). The more the gap lasts due to the force of the move the better the retracement.
Typically the gap between the moving average and the opening price that forms when the new candle opens provides the best clue to mean regression.