New money management thinking - page 2
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The idea to double a loosing position is well known in the gambling world. The casinos to avoid losses have put a roof. a maximum bet. For example at the roulette if you start betting one dollar you can double till 250 dollars(maximum bet allowed). It means you can double 8 times. Considering that there are on the roulette table 37 or 38 numbers depending on kind of roulette (zero or double 00) you can easily understand how easy is to loose 9 times in a row. So what is good strategy to double loosing bets becomes easily a loosing one considering maximum bet. If we consider black jack is quite different because winning chances are close to 50/50.
Now in trading how many times you can double a position?How many times you can loose in a row?backtest can answer but I am sure that few times can work but even if does not work for one time you blow up everything even the previous wins.
The idea to double a loosing position is well known in the gambling world. The casinos to avoid losses have put a roof. a maximum bet. For example at the roulette if you start betting one dollar you can double till 250 dollars(maximum bet allowed). It means you can double 8 times. Considering that there are on the roulette table 37 or 38 numbers depending on kind of roulette (zero or double 00) you can easily understand how easy is to loose 9 times in a row. So what is good strategy to double loosing bets becomes easily a loosing one considering maximum bet. If we consider black jack is quite different because winning chances are close to 50/50.
Now in trading how many times you can double a position?How many times you can loose in a row?backtest can answer but I am sure that few times can work but even if does not work for one time you blow up everything even the previous wins.
You are right, but it's not a answer to the original post. What rockknmike proposed is not a martingale, it's not doubling a loosing position. What he proposed is to define a range (10 pips in his example) and to reverse his position each time the range is crossed. With a TP of 10 pips too and entering immediately a new position.
In fact this has nothing to do with money management, it's a trading strategy who wait for a breakout. I don't say anything on the profitability or not of such a strategy.
You are right, but it's not a answer to the original post. What rockknmike proposed is not a martingale, it's not doubling a loosing position. What he proposed is to define a range (10 pips in his example) and to reverse his position each time the range is crossed. With a TP of 10 pips too and entering immediately a new position.
In fact this has nothing to do with money management, it's a trading strategy who wait for a breakout. I don't say anything on the profitability or not of such a strategy.
Hi Ange,yes you are right. The discussion has turned on money management system with the help of Figurellis opinion . Back to the topic I have launched (suggested) the idea to put maybe a take profit level that can be understood from backtest.
Just to clarify what I said, of course reverse a position is just a strategy, but opening trade as % of capital is for me money management.
And note that you stated before my post that agree that "opening trade as % of capital is best money management technic".
What I said after this is that we can use this topic to discuss such technics, since the title has the phrase money management and this phrase was stated.
To be honest, as the topic title is "new money management thinking" and I like this subject, even in the case of the original idea is not precisely this and I'm outvoted, the discussion concept looks very good and I see no problem we discuss it in an abstract way.
Imagine if all your losing trade reach a break even point and all your winner run as you decide ?
How to do that ?
Example: EURUSD
You enter Long 1 lot at 1.4000
but the market goes opposite direction
You enter Short 2 lot at 1.3990
market goes the opposite direction again and go back at 1.4000, you enter Long 3 lot ... and so on.
When the market make a move of 20 pips one way or another you will reach the break even point, you can close it all.
Of course, when you are right at first you let it go for profitable trade.
Stay away from news and high slippage... that's all
I had made such an EA based on this kind of strategy. It's a strategy that opens stop orders(buystop and sellstop) in a price range and wait for break.
In most cases you will not have enough money to open new order before you can survive.
Imagine if all your losing trade reach a break even point and all your winner run as you decide ?
How to do that ?
Example: EURUSD
You enter Long 1 lot at 1.4000
but the market goes opposite direction
You enter Short 2 lot at 1.3990
market goes the opposite direction again and go back at 1.4000, you enter Long 3 lot ... and so on.
When the market make a move of 20 pips one way or another you will reach the break even point, you can close it all.
Of course, when you are right at first you let it go for profitable trade.
Stay away from news and high slippage... that's all
I have made this EA before and I have made 100% profit a year in 3 times a row. 4th year doesn't work and my balance go back to that same amount as 1st deposited. TP was moving further and further away every time then the trade was re-opened. TP was too far away and it will never reach there. So it was a dirty job to clean up the trades. Almost good but...
I have made this EA before and I have made 100% profit a year in 3 times a row. 4th year doesn't work and my balance go back to that same amount as 1st deposited. TP was moving further and further away every time then the trade was re-opened. TP was too far away and it will never reach there. So it was a dirty job to clean up the trades. Almost good but...
Hi rockknmike, don't forget that each time and step you lose, you pay the spread and must increase your 20 pips target to survive.
And, after doing this several times, like betting and pure Martingale strategies, sometimes market will increase the steps in a way you will lose all your money.