Why martingale EAs look profitable… until they aren’t (especially on gold) - page 9

I have seen people trading for years on grid and still very much profitable. I think its about when to exit a trade when things go south. But grid as a strategy is not bad at all IMHO. Martingale on the other hand is not my cup of tea.
There is only one thing you need to know about Martingale. It is not question if it fails, but when! It will fail. Just a matter of time. You should stack towards winners, not add to losing trades. As simple as that. When you stick to grid / DCA / martingale systems, take a loss. Just cut it. Protect the capital. And start again. Manage your trades. 
Classic martingale is a direct path to blown accounts. Trading without a fixed equity stop isn't strategy, it's just gambling against the clock. The only way any system survives long-term is with predefined risk caps, hard limits on total drawdown, and capital preservation strictly overriding recovery
Erman Ardianto #:
I can't close the possibility of someone able to do martingale safely.

The closure is in your previous statement:

Erman Ardianto #:
[M]artingale strategy need unlimited fund...

No one has infinite funds. More capital merely means that the trader can hold losing trades longer, and the lifetime of that trader is also finite.

The simple idea to approach trading using martingale, grid, no stop loss etc etc is ludicrous. Many of those who start trading come with a gambler mentality. I reached the conclusion that there is no point in trying to teach people how to trade. Almost nobody listens and that's why over 90% of traders lose their money in the long run.
Daniel-gheorghe Muresan #:
I reached the conclusion that there is no point in trying to teach people how to trade.

That's a bit unfortunate. What if you helped one trader turn things around, and didn't even know it?

Also, nothing says "born again" like a blown account.

So what is needed to be successful in trading?


Everybody is saying martingale is gambling, but scalping, daytrading, swingtrading, newstrading, session start trading and every other type of trading is more or less gambling too. 

Using calculations to get a statistical advantage or get the highest probability of where price should go. still gambling.

You have a stoploss in place to know how much you can lose (if your broker does live up to that guaranty). This will only put your stops on the chart for others to "hunt", specially your broker.

Which bring us to A- and B-book trading. Is your order staying inhouse and traded against your brokers other "players", or is it going outside to the banks.

If it is going inhouse, then you will get slipped to the level where your broker have orders waiting. Smaller orders will work here, but try a couple of lots in size and you will get slipped all the time.

If it is going outside your brokers firm to the real market where banks and other firms sit at the other side of your trade, then there will be a different kind of order handling. Fill or kill, All or none, Immediate or cancel to mention a few.

And the order isn't a mixed forex pair, its split into the base and quote of that pair. A hole new ballgame which need larger positions to begin with. Not your regular forex broker, not your regular forex player.


You don't know where the price is going next. Unless you have some sort of fix and fixes are usually expensive or just plain illegal.

People seems to miss the obvious, luck. Why did you open or close that trade where you did, was it a hunch, did some indicator tell you to do it or something else.

No matter why, there must still be an opposite order to take your trade at that level. Unless you can see those stops you need luck on your side to "win", specially if you are scalping.


The bottom line is this.

Unless you can see every other players stoporders, or at least most of them, you will never know where price is going. (This is called a fix, an expensive one too)

So luck and a system/strategy that work in both backtesting and forward testing is at least a starting point. No guaranties though...

Thomas Olof Gardling #:
So luck and a system/strategy that work in both backtesting...
How does one go about empirically testing luck as if it's a system of codified trading rules?
Ryan L Johnson #:
How does one go about empirically testing luck as if it's a system of codified trading rules?

You don't, just saying that luck is part of it since we as retail traders don't have the muscle to get more information. (specially if you are scalping the market)

Most indicators is derived from moving average. No matter how you bend it and put your favorite colors on it, it still calculates, in some way, the average of N bars.

Real volume, real 10+ DOM and fundamental information will give you better odds, but you need to understand it first.

Thomas Olof Gardling #:
You don't...

Got it. Thanks.

Thomas Olof Gardling #:
[J]ust saying that luck is part of it since we as retail traders don't have the muscle to get more information. (specially if you are scalping the market)[.]

I actually have a scalping EA that runs on a custom chart and is fully testable. Although its trading activity could make a manual trader seasick, its testing statistics are still statistics. From those statistics, I can at least discern probabilities of profitability─even though luck is a heavy factor at the very time of order execution. As we can't quantify luck, I hang my hat on statistics. It seems to me that statistics are the best that we can hope for and use.

Thomas Olof Gardling #:
Most indicators is derived from moving average. No matter how you bend it and put your favorite colors on it, it still calculates, in some way, the average of N bars.

So true. If I examine enough indicators with the right settings, so many appear to show the same thing. What makes the difference is the custom logic that analyzes that indicator via EA code.

Thomas Olof Gardling #:
Real volume, real 10+ DOM and fundamental information will give you better odds, but you need to understand it first

So true again. Just head on over to real futures listed on a centralized exchange.