Why are people still using Martingale/Grid systems when its 90% chance of blowing your account? - page 3

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Multi Lot trading is popular due to it making very consistent profits over time, before a large loss happens.

Some withdraw most of their profits as a protection mechanism to make sure the first 100% of earnings is banked.

Some risk their entire account$ while others risk only a percentage of their account size.   

I used to be in that risky group, though have since learned taking much smaller risks can also build an account.   

An account should be something you want to keep going for as long as possible to make progress and avoid devestation.


 
I think it is the hope that from a small account, one can totally gain massive returns in short period of time using these risky strategies of Martingale. So if one knows how to get out before the music stops, they bag a lot... but of course there is no way, specially for retail traders to know when the Martingale/Grid strategy just bursts out, wiping all the profit and their capital. Plus these strategies have high WR, so every time the user sees the blue profit close in mt5, dopamine kicks in, and once in a while negative red losses is prolly ignored. 
 
Andrew's point about the dopamine loop nails it — the high win rate is exactly what keeps the small red losses invisible until it's too late. The tell isn't the win rate, it's the deposit load: how much margin a full losing sequence eats at the worst moment. Under ~20% is one-position-at-a-time; over 50% is a stack of open losers "recovering." Worth also checking every layer carries a hard stop, and that the backtest reproduces on 99% real-tick data, not just a smooth stretch.
 
Daniel-gheorghe Muresan #:
The majority of those who start trading don't want to learn. Many switch from gambling to trading but the gambler mentality remains. In one of the hardest things someone can do over 90% come thinking that they just have to find the right printing money robot. Fun fact but also expected is the most sold ea's in the end will blow your account. 
Exactly, I get so many dm's "Why is the EA not trading today, why it only trades 2-3 times a week etc etc, they are so used to the aggresive scaling of a grid system but they really underestimate the risk that comes with a grid system. Sooner or later indeed it will turn and all your locked in profits are gone in 1 day.
 
Andrew Pun Magar #:
I think it is the hope that from a small account, one can totally gain massive returns in short period of time using these risky strategies of Martingale. So if one knows how to get out before the music stops, they bag a lot... but of course there is no way, specially for retail traders to know when the Martingale/Grid strategy just bursts out, wiping all the profit and their capital. Plus these strategies have high WR, so every time the user sees the blue profit close in mt5, dopamine kicks in, and once in a while negative red losses is prolly ignored. 
Well said! Couldn't explain it better as this.
 

To say that martingale doesnt work is kind of flawed, it all depends on the strategy itself and what kind of martingale is used.

Not all trading styles work with grid or martingale, same goes for different markets too.

This said people in general here on MQL5 think that a daily gain by atleast 1% is normal, so they tend to overtrade by a mile.

(The best hedge fonds will gain 60% a year, like Jim Simons Renaissance Technologies did during the 80s and 90s)

If a strategy on MQL5 doesn't gain a couple of thousand percent a year its considered bad, or atleast its not copied or bought. How crazy isnt that.


There are different martingale versions too.

Regular martingale is doubling the lotsize after a loss to cover for the previous loss.

Anti martingale is halving the lotsize after every win and doubling the lotsize after every loss.

Grid/martingale is adding larger trade for every step in the grid, this way averaging the outcome if the market reverses in to the expected direction,

(There are more versions of martingale than I have mentioned here like hedge or dynamic lotsizing and so on.)


Using a scalping trading style will probably not work since it opens to many trades in a short time. Scalping is often used on lower timeframes and expects smaller gains from the scalp.


Using trend following or mean reversing trading style with grid or martingale can work, it all depends on how aggressive the strategy is to begin with.


Using a swingtrading style can absolutely work since you build up several positions on both buy and sell side to gain from trends from both ways.


Position trading will work since its duration is months and years. Not that many trades will be opened either, but they can be doubled is size as per martingale if the first trade goes negative.

 
Thomas Olof Gardling #:
Using a scalping trading style will probably not work since it opens to many trades in a short time.

Not necessarily. Scalping should not be conflated with high frequency trading (HFT). There are plenty of scalpers who only trade at the daily market open. This means that they can place one trade per day and if their trading conditions aren't met, zero trades in that day. Any such trade is typically closed within minutes of entry, but there are not "many trades in a short time."

Thomas Olof Gardling #:
Anti martingale is halving the lotsize after every win and doubling the lotsize after every loss.

Again, not necessarily. A true anti-Martingale is simply pyramiding. Position sizes decrease as a trade runs in floating profit. When the initial trade fails, that initial position (the largest) is stopped out. If anti-Martingale were half Martingale, it would be self-defeating.

At the end of the day, any strategy/logic that refuses to accept a loss is Martingarbage. That is the most defining "feature" of it.

 
Ryan L Johnson #:
Not necessarily. Scalping should not be conflated with high frequency trading (HFT). There are plenty of scalpers who only trade at the daily market open. This means that they can place one trade per day and if their trading conditions aren't met, zero trades in that day. Any such trade is typically closed within minutes of entry, but there are not "many trades in a short time."

You are both right and wrong: Scalping is trade duration based, I give you that.

But regular scalping strategies trade several times a minute after say London or New York open.

One trade a day will not be affected by martingale anyway in the example you give.


A grid/martin will accept a loss, not just all trades. Hence averaging.

 
Thomas Olof Gardling #:
One trade a day will not be affected by martingale anyway.

Ah, I see. Then a revised version of what you meant would be:

"Using a scalping trading style [with Martingale] will probably not work since it opens to[o] many trades in a short time."

 
Ryan L Johnson #:

Ah, I see. Then a revised version of what you meant would be:

"Using a scalping trading style [with Martingale] will probably not work since it opens to[o] many trades in a short time."

Ah, didn't know I was in the company of a word police. I clearly missed adding martingale in the sentence, but I thought that was clear to begin with since I was talking about adding martingale to different strategies.

I'm so sorry, but my native language isn't English as you probably already know.

I bow to your corrections of my faulty language and explanations.


Anyway, its ok to have different opinions about different trading styles. Some like trading with fixed TP/SL and some likes martingale/grid with dynamic settings, or something completely different.

What it all comes down to in the end is how much you made in the process.

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