Does a safe Martingale exist ? - page 6

taz_1891  

I have read your post. I guess i didn't clarify myself properly (im bad at that).

The part you copied into your reply pretty much says what im trying to say. If you remove a smallish SL and increase it and average down your % of winners will go up.

That we all know.

We also know by doing this it can take one trade to kill your account IF you don't intervene at some point.

Is there a way to safely do that (hence the title of the thread - well kind of) without risking the account. Traditionally, people martingale to recover a losing position. We also know what eventually happens in that trading scenario.

What you displayed on your two attachments seems good (not disputing that). Trading the trend. We all know that getting on a trend is a good way to collect pips/average up. There is only one certainty in FOREX though - something that is 100%. And that is:

- What goes up does come down.

- What goes down does come back up.

Im not saying it will return to its point of origin but some type of retracement is inevitable. If that is the case then how do you capitalise on it?

That is my point. If a trade goes against you then at what point do you cut it away... or do you cut it away?

You have personally set a small SL and a higher TP to take advantage of runs/trends. Definately nothing wrong with that if you can pick them. But i thought we were talking about "Does a safe martingale exist".

I guess i have changed your word 'martingale' with 'averaging down'.

Does it? If it does then we can make some serious dosh. If it doesn't (which i suspect) then its life as usual

iGoR  
taz_1891:
.....................

That is my point. If a trade goes against you then at what point do you cut it away... or do you cut it away?

You have personally set a small SL and a higher TP to take advantage of runs/trends. Definately nothing wrong with that if you can pick them. But i thought we were talking about "Does a safe martingale exist"........................

Hi Taz,

It depends on what you understand by safer ?...

Mathematical LAWS for EVERY! system:

1) S/L > T/P = hitrate > 50% = Avg win/loss ratio per trade < 1

2) T/P > S/L = Hitrate 1

Some people have spend their whole life in trying to turn led into gold. The same goes for trading systems. Some people have spend their whole life trying to combine some of the best elements of rule 1 with some of the best elements of rule 2.

Up till now nobody succeed and nobody ever will because if he could he would give proof of a holy grail and that markets are predictable..

With your suggestion to work with bigger stoplosses to have a hitrate more then 50% but still find something that could get you out with smaller losses is trying to combine some of the mathematical laws of rule 1 with rule 2 ( a hitrate > 50% and an avg. win/loss ratio > 1 or = 1). That is a mathematical contradiction or paradox.

BTW...I would be very very carefull with your statement about the 100% certainty that price always comes back. Take a gbp/usd chart and place it on monthly time frame a check out what happend Nov. 1980 and Mar. 1985. We are now 15 and 20 years later and price has still not seen those price levels again (and every other pair shows similar price levels).

Friendly regards... FXiGoR

taz_1891  

Hi Igor,

I think you have missed a part of my post. It was as follows:

"Im not saying it will return to its point of originbut some type of retracement is inevitable"

Even though it hasn't returned to those figures in 15 years it doesn't need to in order to potentially reach a BE/profit scenario. That was my point and is a 100% certainty in FOREX. Price will certainly retrace/reverse at some point by 'X' amount. When/where and by how far is another matter entirely (and obviously the most important ).

If we are calculating expectancy, the following formulas are more accurate:

(#wins/#trades)(win size) - (#losses/#trades)(loss size)

or

(win rate)(win size) - (1-win rate)(loss size)

- Ofcourse im aware this isn't a mathematical debate (which i really don't want to get into) but in response to your previous formula, it is all about the hitrate. You can still extend you SL and come out ahead if your increased hitrate is beyond the the difference of the two stoploss settings.

IE: If you multiply you SL distance by 2 and thus your hitrate is increased by > 2 then overall your expectancy will have increased and the adjustment to your SL would be valid.

So again, this comes back to another completely off topic area of discussion about 'how to optimally set stoplosses'. Many valid ideas but previous support/resistance, potential %DD, %RR (would be used if you were expecting price to hit a predefined level) etc etc. It has been discussed that a fixed pip SL isn't optimal at all and your traded lot sizes should be based upon where your SL should be optimally placed (if you were trading 'x' % of your account per trade). Totally dependant on trading technique (discretionary/fundamental/mechanical etc) Again - off topic and for another thread.

So overall i guess im in disagreement with your statement. "a hitrate > 50% and an avg. win/loss ratio > 1 or = 1. That is a mathematical contradiction or paradox." It is another way of saying you have a postive expectancy system and in the long run.... will make money from it. I certainly believe this has been accomplished (many times infact). You just won't read about it much on forums.

I am enjoying this discussion thanks. I will be quite busy with work/family from now till the end of the year (international move coming up) but will do my best to keep responding.

Thanks again

Taz

brainet  

i like martingale, i think its logic system that i can understand.

Bob Davids  

Hi iGor,

I've read through quickly and skipped a few boring stuff(which I felt bored). Let me tell you 1 thing, Martingale is a person's name. He invented "increase" stake when losing, so the late winner on bigger stake would make enough to cover the previous losses. So, your word of "this is not Martingale" doesn't make any different because in the end we "increase" our lot size, and profit from the later winner.

Now, I understand from your screenshot, you have dozens of false signals before the real trend kick in. So, you are safe to said you'll be having lots of wrong trades initially that will kick up your lot size, but then when the real trend kicks in, you'll have a bigger lot size to win more. I understand trend trading most of the time has a decent small stop loss with huge take profits. Risk vs reward ratio wise, it is very suitable for lower progression(small multiplier) that will protect initial lot size.

Pardon my English, I'm just too lame to use technical term. Forgive me if I sounded too damn noob.

Regards,

David

iGoR  
davidke20:
Hi iGor,

......................

Now, I understand from your screenshot, you have dozens of false signals before the real trend kick in. So, you are safe to said you'll be having lots of wrong trades initially that will kick up your lot size, but then when the real trend kicks in, you'll have a bigger lot size to win more. I understand trend trading most of the time has a decent small stop loss with huge take profits. Risk vs reward ratio wise, it is very suitable for lower progression(small multiplier) that will protect initial lot size.

........................

Regards,

David

Hi David,

I have send you a mail to your yahoo adress.

Friendly regards...iGoR

iGoR  

Hi Taz,

I would like to continue with this topic. Trying to give proof if some sort of a safe "martingale technique exist". And doing this by giving 100% undebatable proof and results.

I invite you to participate in this topic but please do this with elements that you are 100% sure of because you clearly gave proof to yourself and others by testing every claim that you make and every word you say.

And carefully read what others say so that there is no misunderstanding on what others said.....

1) At some point you talk about discretionary trading and fundamentaltrading. To understand each other very well and in such a way that we can not have any discussion,I am ONLY talking about MECHANICAL trading that can be underbuild and given 100% proof of by back tests.

2) A positive expectany can be produced by a system that has a 40% hitratio with an avg. win/loss ratio of 3.

But that is absolutly not the same as a system that would produce a higher then 50% hitrate with an avg. win/loss ratio > 1. Because this last is a holy grail.

You say they "talk" about it on other forums. My friend they talk about God already more then 2000 years. Up till now nobody could show a picture of him. In science they see this as not existing.

3) You talk about resistance and support ?...can you explain this in a 100% scientific way and programmable way ?....will you connect 2 points or 3 points ?....do they need to be EXACT the same price or do you allow a little bit of deviation ?...if yes how much ?...5pips, 10pips, 20 pips ? and who says so or decides this ?...

4) You say I use a fixed stoploss ?....No I did not say this. I suggest again to read very carefully what I say about my stoploss. "I place it on strategic places. Over a top or under a bottom and the signal that gives the entry needs to give a S/L -20pips or smaller". I said also that fixed stoplosses are plain stupid.

5) If somebody says that price will always come back but not nescessarly to the entry point then that is the same as saying: if you look long enough to the sky you will see a lightning. If it is not today then maybe next year. That is saying: everything is possible. But if everything is possible then I want to place my S/L according the average moves we can expect. That is with trend following systems a small S/L and backed up by backtests to get the value and big S/L's for the ranging systems (again backed up by backtests).

Every trader has his opinion and ideas about trading. But 99% of the people are losing money through trading. There are only 2 ways to explain this OR... their ideas and opinions are completaly wrong OR they are so stupid to do the opposite of their opinions.

With all due respect Taz but I suggest that we stick to facts and 100% proof and not to rumours or feelings or what we think or heared or red somewhere.

Friendly regards... FXiGoR

PS. Support and resistance are random price paterns. In the zipfile you see a spreadsheet that produces random charts when you push on the flip a coin button. When you push that button you can make as much support and resistance levels as you want. I even managed to find head and shoulder patterns (as you can see in the images I made).

Files:
zipfrog  

Why don't you do this experiment and then tell us if it works?

xx3xxx  

is this stupid strategy safe ?

whenever there is quiet tokyo or late late evening hours USA session

you have 10 chips or 10 playing cards

half of it is black , half of it is red

--

in a demo account

every 20 minute or so

you pick a card

if it is black, then

you BUY at 10 pips away (set limit order - so if you want , since the market is ranging, you can set all limit order at exactly the same price, i.e. if the order is not filled, and get hit, you won't pick another card)

SL -150 pip, TP +10 pip

i.e. red you SELL, with the same SL , TP

=======

you pair up your hedge pair (i.e. 1 sell or 1 buy) of those that you don't hit TP i.e. all opens remains which are losing -- to PAIR THEM UP

when the market is still ranging quietly, you try to release all your single out (i.e. those can't pair up ) try to be zero or little profit or loss (say +15 to -15 , to close)

as an illustrated example, you got 4 buy and 2 sell, still open, so you got 2 pair PLUS 2 net buy, so you try to exit for that 2 buy -- at your own cost / profit

then

for those PAIR UP, one pair by one pair

when there is a clear trend, you release those HEDGED lock , i.e. release it in a way to capitalise the emerging trend

this way, will you have a safe way to make profit ???

keyword : demo, stupid , methodology

====

after you do the experiment, you should reach a conclusion for this method

is it safe , or so stupid, that pip cost eat away all your profit

then put your THINKING CAP on

is best martingale use similar methodology ????

- put aside all the loss, try to randomly bet and how much is the pip spread cost

then you should have a FIRM answer to the question to this thread

my main assumption is 2 fold, first if it does exist, would we have unlimited "free energy"

second -- how about pip spread cost, in the assumption that all are limit order and execute precisely in the right price, weekend gap has been dealt with, otherwise pip spread cost is high == the experiment that I've done is similar -- manual and try to use similar methodology for series of hedging -- result : what a waste of time

iGoR  

XX3XXX,

As always I do not understand one bit what you try to explain. I red your post at least 5 x times and don't understand what your posting has to do with martingale....

You explain some sort of rules of a system that "maybe" tries to proof something. If so then I am interested in your results and your conclusions. If you do not know the outcome and the results of your own rules then I do not see the point of your posting.

Friendly regards....iGoR