Does a safe Martingale exist ? - page 20

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Forum on trading, automated trading systems and testing trading strategies

Martingale vs. Non Martingale (Simplified RoR vs Profit and the Illusions)

Sergey Golubev, 2024.06.29 14:06

Developing Zone Recovery Martingale strategy in MQL5

Developing Zone Recovery Martingale strategy in MQL5

In this article we will create the zone recovery martingale forex trading strategy expert advisor (EA) in MetaQuotes Language 5 (MQL5) for MetaTrader 5 (MT5) step by step. The zone recovery martingale strategy is a common strategy that is oriented to counter loosing positions by opening opposite positions with a slightly greater trading volume that cancels the losing positions. It is basically a trend following strategy that does not care about the direction of the market, with the hope that at one point, the market will be trending either downwards or upwards and eventually particular targets will be hit.

 
iGoR:

Hi,

With this topic I would like to contribute in a very serious way to the world of the martingale "believers".

For those who don't know me or doubt my intentions google on "fxigor".

So I hope with this topic that I can make a new wind blowing in martingaling.

Let me first answer the question to this topic : NO. Pure Martingale in combination with what ever kind of trading system will sooner or later result in blowing up your account.

As A. Elder wrote in his book "trading for a living"...if you would start trading with 1 dollar and you have 37 consecutive losses in a row then on the 38th trade you need to invest the whole WORLD capital....

I know that most of you will say that 37 consecutive losses will never happen and I agree with this. But if you use a pure martingale system and start of with 1 micro lot then after 10 consecutive losses your next contractsize is 10.2 full lots!!

This means that you need to reserve so much of your account balance to make sure that you can take in 10.24 Full lots. But if you do not have any losses that you will hardly make any profit because you trade default only with 1 micro lot. If you have a broker that has a 100:1 leverage you can even forget martingale already. In other words "typical martingale".

The reason for this problem is that martingale looks to a profit that is equal to the loss. Like in a casino and playing black or red then profit and loss are equal.

But if you would now concetrate on a trading system where your avg profit is a bigger then you avg loss or a trading system that has a T/P that is bigger or several times bigger then the S/L then that will give you a total different aproach on martingale.

If you look in the spread sheet that I post then you will very clearly see what the possibilitys are on a T/P or avg win that is bigger then the S/L or the avg. loss.

One extreme:

If one has 12 consecutive losses with a system that has a profit that is equal to the losses it took then on the 13th trade it needs to take in position size that is 4096!! x times bigger then its first trade.

The other extreme:

If one has 12 consecutive losses with a system that has a profitable trade that is 4x times bigger then the loosing trades it took then on the 13th trade it needs to take in position size that is only 15 contracts!! (that contract size is 273 x times smaller with a system that has only 4x times more profit).

Some of you who have experience with trading systems or martingale will now say: It is far more difficult to trigger a T/P that is 4x times bigger then the S/L (ex. 10pips loss and need to hit 40pips T/P is far more difficult then 10pips S/L and making a 10pips T/P) (or that the positive hitrate will drop drasticly).

But if you can also realize that you do not nescessarly need to always recover your total loss and that it does not need to be 4x times as much profit then your loss then you should see that there are quite some possibilitys to find a nice compromize between sometimes "boring" normal trading and extreme martingale trading.

I hope I can bring some of you to new ideas in combination with some trading systems that you had but were not interisting enough to trade or to future systems that you will now try to look at.

For me it most cerntainly did! (do not aks about my results or systems, this topic is to help you in your search)

If you have any questions or need any help then just post....

Friendly regards...iGoR

This is ill-conditioned question because martingale is intrinsically "adding more risk" oriented approach.

You may have good martingale system somehow manages better this risk-adding system. But you will never be a completely risk-free.

If you ask me, never begin learning it as it will complicate order management system.

 

Martingale can be use on the opposite trade.

eg. Floating on your 1st 10 buy positions with 0.01.

What to do next?

Open sell position with 0.10 lot.

What happened next?

Your float will not or make small increase as price drop further.

Wait the price starting to move up to TP the sell position.

Open a 11th buy position.

If 11th position floating again, repeat the opposite trade again with 0.11.

 
there is geometric martingale, and then there is arithmetic martingale
 
so you would basically not put it on your life savings, but you will put it on money that you don't fear losing.
I ignore martingale since the returns are not impressive regardless of the linear account gain curve
 

there are many ways to make martingale less risky.

Here one particular and easy example: if you have more than 1 position and hit break even, close everything and restart (open again the "first" position in the same direction). This way, you will climb up the ladder until you reach your initially envisioned profit.

 
Eugen Funk #:

there are many ways to make martingale less risky.

Here one particular and easy example: if you have more than 1 position and hit break even, close everything and restart (open again the "first" position in the same direction). This way, you will climb up the ladder until you reach your initially envisioned profit.

another technique


int OnInit()
{
    initial_balance = AccountInfoDouble(ACCOUNT_BALANCE);
}


void OnTick()
{

   current_balance = AccountInfoDouble(ACCOUNT_BALANCE);


  if( current_balance > initial_balance){

      //logic and criteria to place positions
    }

}


This won't trade any more that day the initial account balance was breached. But you will still gamble with the equity - in the strong willed belief that your EA is profitable. 

Two variables for account balance - the initial will be defined in OnInit as it will never update. The current balance will be defined in OnTick, it will update every tick.

 
Jean Francois Le Bas #:
there is geometric martingale, and then there is arithmetic martingale

What is difference geometric martingale and arithmetic martingale? 

 
If you are doing martingale, that mean that you have many trades. Becuse of that it is important that you use fofrex rebate provider to get additional money from trading without any additional risk.
 
I have stopped using the martingale system because I believe it’s not safe. We can never know when the market will be continuously manipulated. Instead of chasing high profits with high risk, what matters more to me is my psychological well-being and mental state.

No one can get used to having trades float for days, weeks, or even months. I wouldn’t be able to enjoy my life and would constantly be worrying about my trading positions.

That’s why my strategy always involves placing a Stop Loss (SL) on every position, and I’ve stopped using EAs that don’t utilize SL. Months of profits can be wiped out by just one mistake.

In my opinion, the martingale system is like gambling, where you are forced to win on that particular entry. It’s extremely dangerous.
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