discussion of martingale in trading

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ramzi
81
ramzi  
hi, is anybody here trade using martingale? im a fan of martingale. Lets discuss about how to manage or reduce risk using this method
Sergey Golubev
Moderator
106123
Sergey Golubev  

Forum on trading, automated trading systems and testing trading strategies

Trading: What is Martingale and Is It Reasonable to Use It?

Proximus, 2013.08.24 03:00

It works if the net profit factor is above 1 and the win rate is higher than 50%, martingale is a double or nothing either doubles your money or doubles your losses, so if you have a 60% win rate with 1:1 RR ratio you can use it safely, if not then dont.


Whats funny about forex that you dont start from 50% win rate from the start because the market is changing not a fix probability set like a roulette or blackjack game.So if you start it like a betting system you will have like 40% win rate with 1:1 RR if you take trades random, maybe on the 9999999999999999999999th trade you hit 49.9% but thats still not enough.So it is better to filter out crappy trades first and then increase your win rate to be martingale compatible! And this is the advantage of investing vs gambling, you can filter out bad trades, on the roulette or blackjack you cant filter out bad hands or spins unless you cheat, but surely not the statistical way!!


This is how my 60% win rate, real martingale system looks like, and how it should suppose to look like, on LEVEL 7 settings (2^7)

Here are my martingale type systems:

1) CLASSICAL MARTINGALE AFTER 567 TRADES (60% WR, 1:1 RR)


As you can see after 500 trades it barely hit LEVEL 7 and even if we would lost that we would lose only half of the profit and continue from there to grow it back!

Of course you need a big account for this like one that can support like 10 lot size trades to be only 1% account risk, but statistically its very improbable to blow your account since its only 1% risk versus huge potential gains...The martingale presented in this article is BS with like 40-45% win rate which is sadly not enough, not even 50% is, must be 51 or higher...

2) PROGRESSIVE DYNAMIC GROWTH MARTINGALE (60% WR, 1:1 RR)


3) PROGRESSIVE STATIC GROWTH MARTINGALE (60% WR, 1:1 RR)


4) ANTI MARTINGALE or INVERSE MARTINGALE (60% WR, 1:1 RR)


enjoy and good programming ;)


Sergey Golubev
Moderator
106123
Sergey Golubev  

Forum on trading, automated trading systems and testing trading strategies

Something Interesting in Financial Video

Sergey Golubev, 2017.09.23 07:34

Trading The Martingale and Anti Martingale Strategies

In today's lesson we are going to look at the two categories that most position sizing strategies fall into which are known as martingale strategies and anti martingale strategies.


A position sizing strategy which incorporates the martingale technique is basically any strategy which increases the trade size as a trade moves against the trader or after a losing trade. On the flip side a position sizing strategy which incorporates the anti martingale technique is basically any strategy which increases the trade size as the trade moves in the traders favor or after a winning trade.

The most basic martingale strategy is one in which the trader trades a set position size at the beginning of his trading strategy and then double's the size of his trades after each unprofitable trade, returning back to the original position size only after a profitable trade. Using this strategy no matter how large the string of losing trades a trader faces, on the next winning trade they will make up all their losses plus a profit equal to the profit on their original trade size.

As an example lets say that a trader is using a strategy on the full size EUR/USD Forex contract that takes profits and losses both at the 200 point level (I like using the EUR/USD Forex contract because it has a fixed point value of $1 per contract for mini forex contracts and $10 per contract for full sized contracts but the example is the same for any instrument)

The trader starts with $100,000 in his account and decides that his starting position size will be 3 contracts (300,000) and that he will use the basic martingale strategy to place his trades. Using the below 10 trades here is how it would work.

As you can see from the example although the trader was down significantly going into the 10th trade, as the 10th trade was profitable he made up all the his losses plus a brought the account profitable by the equity high of the account plus original profit target of $6000.

At first glance the above method can seem very sound and people often point to their perception that the chances of having a winning trade increase after a string of loosing trades. Mathematically however the large majority of strategies work like flipping a coin, in that the chances of having a profitable trade on the next trade is completely independent of how many profitable or unprofitable trades one has leading up to that trade. As when flipping a coin no matter how many times you flip heads the chances of flipping tails on the next flip of the coin are still 50/50.

The second problem with this method is that it requires an unlimited amount of money to ensure success. Looking at our trade example again but replacing the last trade with another loosing trade instead of a winner, you can see that the trader is now in a position where, at the normal $1000 per contract margin level required, he does not have enough money in his account to put up the necessary margin which is required to initiate the next 48 contract position

So while the pure martingale strategy and variations of it can produce successful results for extended periods of time, as I hope the above shows, odds are that it will eventually end up in blowing ones account completely.

With this in mind the large majority of successful traders that I have seen follow anti martingale strategies which increase size when trades are profitable, never when unprofitable.


ramzi
81
ramzi  
Sergey Golubev:


thank you very much for the info sir.. very helpful and i learn something from that.. but still looking for the right recipe in martingale :) im thinking of inserting this martingale strategy to the hedging technique so as you say to double up the winning trades instead of losing trades

Marco vd Heijden
Moderator
8173
Marco vd Heijden  

I have always believed that the martingale was a concept that was never really finished....

There is certainly room for improvements.

Yohana Parmi
4990
Yohana Parmi  
ramzi:
hi, is anybody here trade using martingale? im a fan of martingale. Lets discuss about how to manage or reduce risk using this method

Hi,

People who use Martingale or Averaging technique
must able to reveal the trend and actual SR before placing the positions
and they must have good M/M.

Otherwise, MC (margin call, stop out) is coming, it is just about time :)
be careful.

Good luck.

p.s

to manage or reduce the risk of those techniques, you can use consultation services.
you will meet the professional there.
https://www.mql5.com/en/job/consultation

Freelance service at MQL5.com: Consultation
Freelance service at MQL5.com: Consultation
  • www.mql5.com
Orders for the development of automated trading programs
ramzi
81
ramzi  
Marco vd Heijden:

I have always believed that the martingale was a concept that was never really finished....

There is certainly room for improvements.


yes sir, thats what im thinking too... but havent found the secret recipe yet 

ramzi
81
ramzi  
Yohana Parmi:

Hi,

People who use Martingale or Averaging technique
must able to reveal the trend and actual SR before placing the positions
and they must have good M/M.

Otherwise, MC (margin call, stop out) is coming, it is just about time :)
be careful.

Good luck.

p.s

to manage or reduce the risk of those techniques, you can use consultation services.
you will meet the professional there.
https://www.mql5.com/en/job/consultation


ok sir thank you so  much i will look into it :)

soubra2003
31844
soubra2003  
ramzi:
hi, is anybody here trade using martingale? im a fan of martingale. Lets discuss about how to manage or reduce risk using this method
How long you are a martinale fan?! How long you are in Forex?

I beleive that hundreds of trades a day in martingale will give the same results of few regular trades. But the risk will remains the edge..

Angelito Cartagena
395
Angelito Cartagena  
ramzi:

thank you very much for the info sir.. very helpful and i learn something from that.. but still looking for the right recipe in martingale :) im thinking of inserting this martingale strategy to the hedging technique so as you say to double up the winning trades instead of losing trades


Hedging and martingale combined are perfect strategy for disaster.....why complicate things?if most traders cannot be successful using conventional approaches then what made us think that their is such a thing that will work on a martingale approach. Sorry to spoil your hope!

12
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