Gorgeous Uncle Martin Gale - The Thorny Road to Millions or Total Collapse ! - page 13
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I don't have a stop and I don't think there will be any difference.
It's all been calculated for a long time.
With classical martingale with doublings in order not to lose 100K martingale cycles with 95% probability you need to have capital of about 32M.
Hence the formula.
100K martingale cycles is a reasonable number to have enough for a lifetime. Net profit turns out, respectively, 100K bets. And now the question - why the owner of a deposit of 32M bets needs 100K bets for 50 years? An ordinary bank deposit gives a much higher return with a much higher probability. (over 99%).
Reducing the number of cycles or confidence probability will reduce the capital required. But it will not always change the essence.
Martingale is about shifting frequent small losses into a zone of large and rare losses. And the only way to win with it is to stop using it in time (before this very rare and big loss, which gathered all small ones). Or the system can be "cut" in such a way, that nothing is left of the idea of Martingale (last winning compensates all losses), and we get just money management with few fillings, which has only the name of Martingale.
Who's talking about classic martingale?! If we assume that after the signal from a certain indicator, the price rolls back on the average in 2.3 steps, it is desirable to take a bigger step, at most 5, we set a stop at step 6 and in 2015 beyond step 6 the price has moved without a break only 2 times, at the beginning of the year and in August! In all other cases we make money and the system works.
Of course using Martin is suicide, the same as trading with MACD, Stochastic, etc., we need a set of tools and specific settings which we pick from experience!
Who is talking about classical Martingale?! If we assume that after the signal from a certain indicator, the price rolls back on the average 2.3 steps, it is desirable to take a bigger step, maximum 5, we set a stop at step 6, for 2015 beyond the 6 step price has moved without a hitch only 2 times, at the beginning of the year and in August! In all other cases we earn, so the system works.
Of course using Martin is suicide, the same as trading with MACD, Stochastic, etc., we need a set of tools and specific settings which we pick from experience!
Quite a pragmatic approach. Indeed, no one here is trying to prove that classic martin allows you to make money, that would be foolish. So there is no point in using theoretical disproofs of the profitability of classical martingale as an argument.
If profitability is high, then stop losses 2-3 times a year are perfectly acceptable, as the resulting profits can be quite decent.