Greetings to all fellow traders,
A while ago i started a thread " Is the martingale way the only way in forex?" link: https://www.forexfactory.com/showthread.php?t=683804
And as expected, I received massive bashing and warnings from FF members (I know they did it with pure good intentions) about how martingale sooner or later burns accounts mercilessly, and I totally understand and agree with their point of view, since martingale needs infinite or "enough" money to be working in theory, and that kind of money is hard or impossible to come up with at the first place.
Moreover, martingale risks the entire capital for small gains, and such gains and capital can go bust when things go wrong as they usually do. Some threads here in FF and other websites discussing martingale strategies and EA's suggest that a 'relativity safe' martingale with 5-10% monthly gains with passive settings can cut the deal, but I do not think that a 5% per month is worth risking the whole capital.
Since the vast majority of traders here agree that martingale strategies = margin, and martingale users are always stuck with huge DD and wished if things went differently, why not reverse the whole thing? Instead of gaining small tiny bits of profits per month and bust the account with profits made later, why not sustain small tiny bits of losses per month and double the account later, after recovering losses of course.
I know that the concept of anti-martingale or reverse martingale is nothing new, but I did not see any system which completely reverse actual traditional martingale EA procedure. For example, a conventional martingale EA starts with a buy or a sell based on a certain strategy or on random, then sets the TP at 10 pips, without a stop loss. If TP is hit the the EA enters a new trade on next candle. However if the market went against the initial position by more than a certain amount of pips, say 10 pips, a new position of an increased lot size by 1.2 multiplier is opened at next candle, and TP is adjusted for all positions so that the total profits = sum of lot sizes* 10 pips ( the intial TP amount) and so on till the common TP is hit, or a margin call happens. Being conservative with the settings by reducing initial lot size, TP and multiplier factor and increasing the pip step where new positions should be added, makes the system run a bit longer before the disaster eventually happens. While being aggressive in the settings accelerates bankruptcy. Bearing in mind that the more positions being added while increasing lot sizes at a certain factor, makes the TP level a bit easier to hit, but the TP becomes somehow far away and requires a big retracement to hit it.
So far so good, I believe most of traders agree with me till this point.
Now literally reverse the whole thing, open a position on random or as per a certain strategy, set SL at 10 pips without TP. If the SL is hit no problem, open another trade at next candle as per entry rules (not necessarily the same direction of last position). Now if the marker moves into our favour by a certain amount of pip step, add a new position at next candle with an increased lot size by multiplier factor and adjust the SL so that the total loss= sum of lot sizes* 10 pips ( initial SL amount). For the exit in profit, close all trades when a certain amount of $ profits is reached, you can set that into 50% of capital or 100% or what ever floats your boat. bear in mind the shared SL level now is also harder to hit when you go with many opened positions, similar to TP in original martingale. This should in theory give your trades more room to breath till the desired money target is acquired.
In conclusion, the tiny bits of monthly profits in original martingale are now the tiny monthly losses in reverse. And the margins in the original martingale are now doubling the account in reverse, or 50% DD in original martingale is now 50% profit in reverse.
In theory that sounds good, but in reality other factors may contribute to the desired outcome. For example what if the account is drained out before hitting the jackpot? What settings for lot size, multiplier factor, pip step, SL, money TP should be used? Which pairs are the best? Answers for these questions are decided by people who lost money using martingale without being able to double their initial investment, but nothing is guaranteed in forex as we all know.
This wild idea struck me while I was taking a ****, so I thought I would share it here since it makes some kind of sense, so please let me know what you guys think. And as usual, I welcome all kinds of constructive criticism and friendly bashing.
Peace.
A while ago i started a thread " Is the martingale way the only way in forex?" link: https://www.forexfactory.com/showthread.php?t=683804
And as expected, I received massive bashing and warnings from FF members (I know they did it with pure good intentions) about how martingale sooner or later burns accounts mercilessly, and I totally understand and agree with their point of view, since martingale needs infinite or "enough" money to be working in theory, and that kind of money is hard or impossible to come up with at the first place.
Moreover, martingale risks the entire capital for small gains, and such gains and capital can go bust when things go wrong as they usually do. Some threads here in FF and other websites discussing martingale strategies and EA's suggest that a 'relativity safe' martingale with 5-10% monthly gains with passive settings can cut the deal, but I do not think that a 5% per month is worth risking the whole capital.
Since the vast majority of traders here agree that martingale strategies = margin, and martingale users are always stuck with huge DD and wished if things went differently, why not reverse the whole thing? Instead of gaining small tiny bits of profits per month and bust the account with profits made later, why not sustain small tiny bits of losses per month and double the account later, after recovering losses of course.
I know that the concept of anti-martingale or reverse martingale is nothing new, but I did not see any system which completely reverse actual traditional martingale EA procedure. For example, a conventional martingale EA starts with a buy or a sell based on a certain strategy or on random, then sets the TP at 10 pips, without a stop loss. If TP is hit the the EA enters a new trade on next candle. However if the market went against the initial position by more than a certain amount of pips, say 10 pips, a new position of an increased lot size by 1.2 multiplier is opened at next candle, and TP is adjusted for all positions so that the total profits = sum of lot sizes* 10 pips ( the intial TP amount) and so on till the common TP is hit, or a margin call happens. Being conservative with the settings by reducing initial lot size, TP and multiplier factor and increasing the pip step where new positions should be added, makes the system run a bit longer before the disaster eventually happens. While being aggressive in the settings accelerates bankruptcy. Bearing in mind that the more positions being added while increasing lot sizes at a certain factor, makes the TP level a bit easier to hit, but the TP becomes somehow far away and requires a big retracement to hit it.
So far so good, I believe most of traders agree with me till this point.
Now literally reverse the whole thing, open a position on random or as per a certain strategy, set SL at 10 pips without TP. If the SL is hit no problem, open another trade at next candle as per entry rules (not necessarily the same direction of last position). Now if the marker moves into our favour by a certain amount of pip step, add a new position at next candle with an increased lot size by multiplier factor and adjust the SL so that the total loss= sum of lot sizes* 10 pips ( initial SL amount). For the exit in profit, close all trades when a certain amount of $ profits is reached, you can set that into 50% of capital or 100% or what ever floats your boat. bear in mind the shared SL level now is also harder to hit when you go with many opened positions, similar to TP in original martingale. This should in theory give your trades more room to breath till the desired money target is acquired.
In conclusion, the tiny bits of monthly profits in original martingale are now the tiny monthly losses in reverse. And the margins in the original martingale are now doubling the account in reverse, or 50% DD in original martingale is now 50% profit in reverse.
In theory that sounds good, but in reality other factors may contribute to the desired outcome. For example what if the account is drained out before hitting the jackpot? What settings for lot size, multiplier factor, pip step, SL, money TP should be used? Which pairs are the best? Answers for these questions are decided by people who lost money using martingale without being able to double their initial investment, but nothing is guaranteed in forex as we all know.
This wild idea struck me while I was taking a ****, so I thought I would share it here since it makes some kind of sense, so please let me know what you guys think. And as usual, I welcome all kinds of constructive criticism and friendly bashing.
Peace.