Discussion of article "Martingale as the basis for a long-term trading strategy"
How many times must Martingale be completely discredited before people stop writing about using it?
It's an absurd failed betting strategy from the 1800's that is provably idiotic.
How many times must Martingale be completely discredited before people stop writing about using it?
It's an absurd failed betting strategy from the 1800's that is provably idiotic.
What is wrong about discussing Martingale and which strategy is less absurd than Martingale given that more than 90% of traders loose money trading with indicators supplied with MT4/MT5 and other platforms? 😥
BTW, what appears discredited by the masses many times is simply not correctly used by the masses.
Or do you have the secret formula?
I think generally martingales can work long term, but a number of factors need to be considered and optimization of the system needs to be implemented.
Using a martingale strategy myself I've learnt that a large deposit is needed, even for 0.01 lots. It'll give the system room to breath when markets suddenly trend for days without the needed pullback. I personally have a rule of no less than $3000/0.01 lot - this is conservative but gives me fewer headaches.
Moreover the opening of a new trade/batch should be improved upon. This is where indicators come in (or smart price action) - personally I think the H1 og H4 RSI could work to help with the direction of the next batch of trades. I don't want the system to open a new buy order when RSI is fx. > 60 or a new sell order when RSI is < 40. RSI levels are generally respected on H1 and H4 and the system should have room to breath from RSI 40 down to 20 or RSI 60 up to 80 (as an example) which should help keep the DD to a minimum.
Other ways of reducing risk would be to implement a loss minimization rule - when max no. of orders is reached the system should go into loss prevention/minimization mode. That my be implementing a tight trailing stop if/when it goes into profit but still has a way to go before hitting TP. One could also implement a rule based on supply/demand zones where the system closes in loss when/if the current open trades reaches these levels if the TP level is on the wrong side of the supply/demand zones. The batch will close in loss, but account is saved.
I hope this discussion is still open and if there are any MQL developers out there I'd be happy to discuss implementing these and testing.
/Christopher
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New article Martingale as the basis for a long-term trading strategy has been published:
In this article we will consider in detail the martingale system. We will review whether this system can be applied in trading and how to use it in order to minimize risks. The main disadvantage of this simple system is the probability of losing the entire deposit. This fact must be taken into account, if you decide to trade using the martingale technique.
Martingale operation may differ in different markets. Therefore, if possible, it is better to choose the market, which is the most suitable for this trading strategy.
Forex is considered to be a ranging market. Stock market is considered to be a trend one. Due to this Forex can be more preferable for martingale techniques.
The use of this strategy in stock markets is associated with a lot of dangers. The most important of them is that a stock price can be equal to zero. That is why long trading using the martingale technique can be very dangerous on the stock market. Short trading can be even more dangerous, because the stock price can soar to an unexpectedly high level.
Currency quotes in the Forex market cannot be equal to zero. For a currency rate to skyrocket, something incredible must happen. The rate is normally moving inside a certain range. How can we benefit from this?
As an example, let us view the monthly charts of Forex symbol quotes. Let's begin with USDJPY:
Author: Roman Klymenko