Does a safe Martingale exist ? - page 11

Joshua Graham  
Knight_Rider:
Spacing too big no profits spacing too tight burst your account. Rather then trading against the trend why not make it your friend. You earn more and sleep easier at night. I have burst enough account so yes I have actually used it. Yen pairs gap 100 pips and you wet your pants about DD and worry how to close. Hah enough is enough.

If you don't use it as part of a systematic approach to managing risk, then you will probably not be successful (profitable). Often times when people are only guessing on what the market might do, the risk management aspect takes a back seat and is ignored (because the accuracy of the predictions somehow remove all of the risk).

There are range limitations, but if you use a spreadsheet and make observations for the pair you are using, then you can manage the risk properly within the ranges, including using an equity stop loss for the tsunami events. Trying to avoid risk will only make you lose more in the short/long run.

Shunmas  

Replying to the OP, when we use the words "SAFE" and "MARTINGALE" in one line (or together), we are violating the basic (first) principles of Risk and Reward. Because the standard martingale system is not worth the effort, even when you have huge balance such as $1M. Better to copy signals and make money and never ever use martingale as the death trade will wipe the whole account.

BUT, at the same time, if you have a $10K account size, then use lower lot size and keep the TP high enough so as to give breathing room to trades and all trades should close as basket.

Joshua Graham  

^^ Can you explain how exactly martingale violates Risk/Reward principles.

Most people who criticise martingale either assume there is one size fits all, or do not understand or have a complete, systematic approach to trading financial markets. I can prove that martingale outperforms single lot sizes in every tradecycle, over many repetitions. Single lot sizes when combined with averaging would require that you wait in the trend LONGER waiting for a reversal. The same or lesser drawdowns can be achieved with martingale, and you can get in and out much quicker.

I'm very interested to hear the alternative (transparent) method that works so well that does not employ martingale.

Shunmas  
4EverMaAT:
a complete, systematic approach to trading financial markets. I can prove that martingale outperforms single lot sizes in every tradecycle, over many repetitions. Single lot sizes when combined with averaging would require that you wait in the trend LONGER waiting for a reversal. The same or lesser drawdowns can be achieved with martingale, and you can get in and out much quicker.

Hi there, thanks for your reply. Would you mind explaining the logic of scientific principles. We can get an EA made out of it and see if it works or not.

Thanks

wintersky111  

When we talk about Martingales, the crux is to 1st start off by relating with PDFs or there will be meaningless talk. Under a Gaussian Distribution, which assumes I.I.D conditions (independent, identically distributed data), mean reversion of movements is very likely to take place & continuous movements are very rare. Here, a Martingale works better, with risk of extreme events reduced. However, as we all know, the financial markets have fat tails. The degree of fat tails is debatable with more robust methods of calculating kurtosis, but there is a definite amount of fat tails certainly. Under this situation, a normal martingale here gets more risky as price directions & losses can become very time-extended for long periods of time.

Second, given the condition of general (but not very long) persistence in market states (not volatility), it makes alot more sense to bet using an anti-martingale instead.

Third, systems are not I.I.D certainly. They contain user-defined characteristics depending on the indicators present in the system. The success of a martingale depends on the edge of the system too. If your system has no edge, the presence of a martingale will only lengthen the time before your account drops. With an edge, it can be possible to have a system using martingale. & that is because you have left the random/Gaussian PDF behind by applying the Martingale to your system's Probability Distribution Function of wins and losses.

Hope this clarifies the issue as to why some people have used Martingales successfully over multiple years while others have not.

Yours sincerely,

Wintersky

manone  

i am trying a commercial EA call ForteFX in demo, I am only newbie in using EA, which claim to be safe martigale ea

[Deleted]  

Ok, here is the deal.

I developed a Martingale EA which tries to be as robust/safe as possible for these systems.

Key points are: selective entry points based on multiple time-frames to avoid long reverse trends, limiting the drawdowns but when those are reached the robot uses an anti-martingale system to dismount those positions(do not close them all like 99% of the other systems).

So back to the deal, I would like to find a group of testers (similar to what they did with Blessing) that are able to backtest, optimise and if possible forward test it. Not to waste our time, I need people that are familiar with those processes. In exchange if you find a good setting, and prove it works in one month forward, I will grant you a licence of the system.

Currently the system is optimised for only EURGBP_M1. It works well with low volatility pairs.

I back tested for this year, and it does 15-20% a month with around 100 trades/month.

Thanks

[Deleted]  

Sorry, I opened a new thread for this item.