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Does the martingale system really work?

  • #141
  • Oct 29, 2012 7:12am Oct 29, 2012 7:12am
Quoting ybfjax
You can adjust the TP so that you take off more than 1 unit. Say you want to net 15-20 units in the basket, but only if the range exceeds a certain amount (and you have added x number of positions). It makes a lot more sense this way, especially considering that the market moves up and down in waves.
If you move the TP, you change the edge.

If you move the TP further out, you increase the chance it does not get hit.

The whole point of this conversation is to establish that the market doesn't always move the way we predict.. be it waves or otherwise.

If the market wants to, it will crash down hard (or rise fast) for days without retracing. It happens. Often.

Atop of that, any change we make to our trade plan, be it TP, stop, hold time, size, etc... shifts our trade's expected return and risk. You can't just say "adjust TP" without violating the reason you got in the trade in the first place.

The shitty thing about strategies that dance with martingale and rely on hope that the 'wave' will come back is that they do have a high percentage of winners and people get very comfortable after a while since that high hit rate gives the impression that it's working for periods of time. Heck, the periods when it seems to work can sometimes last months or years... but it's all for nothing since what truly matters in a system is what you stand to lose when you're wrong.

In martingale's case, not only are your winnings lost, but usually your initial account as well.

Don't reply saying something like "just add a stop loss" or "I use stops too" since that again just shifts the risk a bit but doesn't change much. So you won't have one big loser that takes out your account, instead you'll have a hand full of losers that do it over time. In either case, the use of martingale and hope blurs out any edge you might have had taking a trade in the first place.

Time is the ultimate killer of martingale.




Quoting ybfjax

We never think about these things when we go for a swim, or fly on an airplane. Do you really care how deep the ocean is, or how high the plane is up in the air? As long as I can maintain afloat and stay alift, I could care less. What is so different about prices in a financial market? I say you focus on the 1/2 that you have control over.

So I'm pretty much done talking about this with you. I know you mean well but my efforts so far have been for other readers who stumble on this thread, not you, since you seem quite set in your ways and kinda gloss over the points I make with your responses.

I do think you'd benefit from an approach that takes probability and risk a bit more seriously, but regardless I wish you the best of luck trading.
FXGears.com
  • #142
  • Oct 29, 2012 7:54am Oct 29, 2012 7:54am
Quoting Jack_Larkin
If you move the TP, you change the edge.

If you move the TP further out, you increase the chance it does not get hit.

The whole point of this conversation is to establish that the market doesn't always move the way we predict.. be it waves or otherwise.

If the market wants to, it will crash down hard (or rise fast) for days without retracing. It happens. Often.

Atop of that, any change we make to our trade plan, be it TP, stop, hold time, size, etc... shifts our trade's expected return and risk. You can't just say "adjust TP" without violating...
hope you are getting something out of this jack. it's a futile back and forth. Hanover made a good analogy recently with home insurance. For me, people that give any credibility to any form of martingale are lumped into the same group as no-stop users. often they are literally the same people. this is not a coincidence.

Hanover's analogy was good, but i've always likened it to people who drink and drive and/or drive without their seat belt. it is the "it hasn't happened yet" mentality which shows a gross lack of risk/reward understanding. people who are going to drink and drive and/or drive without seat belts will never change. the risk/threat of getting caught and fined is not a deterrent. the risk/threat of getting caught and losing their license is not a deterrent. the risk/threat of jail time is not a deterrent. and lastly, the risk of killing themselves or others is certainly not a deterrent.

there is just nothing that can be done except hope they take themselves out before affecting anyone else. it's the same with no-stops / martingalers. they do not care about the risks. at all. nothing will change this. c'est la vie.
Congratulations ScalaFX for coming out of the closet!
  • #143
  • Edited 10:32am Oct 29, 2012 9:36am | Edited 10:32am
Quoting nubcake
hope you are getting something out of this jack. it's a futile back and forth. Hanover made a good analogy recently with home insurance. For me, people that give any credibility to any form of martingale are lumped into the same group as no-stop users. often they are literally the same people. this is not a coincidence.

Hanover's analogy was good, but i've always likened it to people who drink and drive and/or drive without their seat belt. it is the "it hasn't happened yet" mentality which shows a gross lack of risk/reward understanding....
Yeah, as I mentioned in my last post that I was mostly writing for people who stumble upon the thread, not him (who seemed very set in his ways and willfully choosing to believe what he wants and dismiss anything else.)

Twas my last post about it to him.

I hear you though. And I noticed the same how the two types tend to be in the same camp. Interesting eh?
FXGears.com
  • #144
  • Oct 29, 2012 10:29am Oct 29, 2012 10:29am
Quoting Jack_Larkin
Yeah, as I mentioned in my last post that I was mostly writing for people who stumble upon the thread, not him (who seemed very set in his ways and willfully choosing to believe what he wants and dismiss anything else.)

Twas my last post about it to him.

I hear you thought. And I noticed the same how the two types tend to be in the same camp. Interesting eh?
i'm reminded of those rare kids who are born without the ability to process pain. no-matter what anyone does to protect them they will still find ways to destroy themselves... poking their own eyes / scratching the cornea's, burning their palms off on hot stoves, making themselves deathly sick from running-around too much and overheating and dehydrating, breaking bones without knowing, getting exhausted in a pool and drowning, chewing fingers off, etc. the kids just don't "get" it like the rest of us, and so it is their nature to destroy themselves. it is evolution at work.

martingale needs a crystal ball. some people think they have one. "you'll never see n losses in a row with x% win rate" etc. i say, let them play with that fire. they don't "get" it. streaks of one kind or another are not the rarity, they are the norm!

those who can get it, will. those who can't, won't. they are the little fires in this world that keep the rest of us warm at night. it's just a shame they sometimes manage to burn some of us as well on occasion.
Congratulations ScalaFX for coming out of the closet!
  • #145
  • Oct 29, 2012 11:11am Oct 29, 2012 11:11am
Quoting nubcake
i'm reminded of those rare kids who are born without the ability to process pain. no-matter what anyone does to protect them they will still find ways to destroy themselves... poking their own eyes / scratching the cornea's, burning their palms off on hot stoves, making themselves deathly sick from running-around too much and overheating and dehydrating, breaking bones without knowing, getting exhausted in a pool and drowning, chewing fingers off, etc. the kids just don't "get" it like the rest of us, and so it is their nature to destroy themselves....
Jack and nubcake,

I do agree on your both explaination on normal martingale. When loser trades keep doubling and only go to one direction, when the range is over, risk of blow account is there. That is the standard martingale, avoid that!I play with this kind of martingale many times and understood well the consequences.

But I do think with the modify martingale, can have a better chance of profitability. Trade or investment itself is about taking risk. I do test many system without the martingale, most also prone to loss money at the end or having small profitability on the long run.

When the first time I found the martingale EA, I dont just listen to people opinion, I test them. Then I will understood what are the martingale about. And I think I like innovation idea, tweaking the idea, and I think I found one with better risk reward and can be profitable with less risk.
  • #146
  • Oct 29, 2012 11:12pm Oct 29, 2012 11:12pm
Quoting akukaya
When the first time I found the martingale EA, I dont just listen to people opinion, I test them. Then I will understood what are the martingale about. And I think I like innovation idea, tweaking the idea, and I think I found one with better risk reward and can be profitable with less risk.
I like that, this is how it suppose to be with testing I think. I also pick the system only after reading information and testing it. The only problem is, you must have enough time for great tests, but the market continues to move on and you should move with it in the same time. So picking the system is quite tricky thing.
  • #147
  • Oct 30, 2012 12:25am Oct 30, 2012 12:25am
martingale can be applied wisely, if the wrong trades get killed [ cut losers short ]

For example, you don't make collapsed trading, if u have a short in red, ur not going to keep adding on new grid and higher to trade back.

What u can do is this for example

SNIPE ALL TRADES without any biasness for bull or bear.

an example;
1st trade 1.0 lot, stop loss 20 pips , u lose $200. kill it and enter again after u find a good area to load your position.

Next trade, 1.4 lot stop loss 20 pip as well. If you win 20 pip. ur $280. u earned 80 dollar already without any married trade and your account is safe.

then restart back to initial lot size at 1.0 lot again for instance.

COmpared with.

1st trade 1.0 lot, 100 pips negative = 1000 negative floats
added 1.4 lot. on 100 pips away from 1st trade but goes to 150 pip negative in total = 50x1.4

1000+ 700= 1700
and u keep adding it.

the 2nd method is very painful and emotional compared to the first method.
  • #148
  • Oct 30, 2012 8:22pm Oct 30, 2012 8:22pm
I agree with most, that martingale in it's simplest form of just doubling up when a trade turns against you, can and probably will eventually wipe you out. But having said that, I am a fan of the martingale method and have dabbled in it with my own EAs. But there are a few rules that have to be followed.

As a non US resident, I can have easy access to leverage of much greater than 50:1, which is a must for martingale. I can also hedge, which is highly desirable, as this way I can offset some losses by also trading the reverse trend. These are two very important factors for me. It is also advantageous if you can trade micro accounts where you can get your min lot size down to $0.001 per pip. I appreciate at $0.001 per pip, you aren't going to make much of a profit, but it gives you a starting point where you can increase the position size from, instead of starting at $0.10 per pip like most accounts. The problem here is that a lot of the micro accounts then limit your max position size.

If you do decide to use martingale as a part of your strategy, and you can handle your account just about being in permanent drawdown, then you have to have a Plan B, or else you will always be at risk of blowing your account. Plan B may be a hard stop, or an indicator giving a reverse signal, or even a hedge that will more than cover your losses, where you could close out everything and reset. There are plenty of options available, but make sure you do use something to protect your account. Cheers. Jim
JAGfx
  • #149
  • Edited 10:27pm Oct 31, 2012 9:12pm | Edited 10:27pm
It all comes down to what are you expecting on price? If the current price is near the 200 MA then you have no plan.You don't know where the price is going. Martingale is a top or bottom picking method IMO.

When you see the Swiss Franc explode in 2011, or you see the Euro explode in 2008, you are in a martingale setup, assuming you have the funds to deal with it. You are looking for parabolic situations. When they occur, you can win. In all other situations you are looking at disaster. You need considerable funds, but when the charts align, you are looking at big profits. It takes experience and balls to follow through. It's easy to start a martingale, but it takes funds and fortitude to complete it. You need to expect the worst and have confidence with your price expectations.
  • #150
  • Nov 3, 2012 12:48am Nov 3, 2012 12:48am
I am sure martingale will suffer once the new trading rules are implemented. There will be only 50:1 leverage like the same they have in the USA
And this is to help us to protect us poor traders they say stupid burocrats
So from 1000:1 to 50:1....

Totally wasted rules, if you like martingale goodluck with that one. maybe immigrating to thailand is an option couse there living life and everything else is also 10 times cheaper.

misses merkel came up with the new rules last time few weeks ago
  • #151
  • Nov 4, 2012 4:11am Nov 4, 2012 4:11am
Quoting zarathustra1
I am sure martingale will suffer once the new trading rules are implemented. There will be only 50:1 leverage like the same they have in the USA
And this is to help us to protect us poor traders they say stupid burocrats
So from 1000:1 to 50:1....
.......
Which country is doing this?
Measure trends automatically with zero lag
  • #152
  • Nov 5, 2012 10:18pm Nov 5, 2012 10:18pm
Quoting zarathustra1
maybe immigrating to thailand is an option couse there living life and everything else is also 10 times cheaper.
I really think that's kinda of option for a trader. I mean currently in Thai conditions for trading are better, inclusive martingale strategy. So as soon trading doesn't need office and clients meets up, why not?)

In Thai leverages can be really different and all the broker's conditions are better than for US, UK, Canada etc. I don't know why..
  • #153
  • Nov 12, 2012 11:25am Nov 12, 2012 11:25am
Quoting ronald_fsm
hello guys , i just want to know is that martingale works?
is that system could be use for long time?
-could anyone who already use this system give comment?
-which pair is the best for trading this system?

thanks for your attention.
I have started from today with this new system and have see only 50% success. Means, no loss no profits! I am seriouly testing with 1,2,,4,8,16,32,256. This was the highest and closed when i got all the loss. I will post more tomorrow. Good luck
  • #154
  • Nov 17, 2012 4:06am Nov 17, 2012 4:06am
Quoting palani
I have started from today with this new system and have see only 50% success. Means, no loss no profits! I am seriouly testing with 1,2,,4,8,16,32,256. This was the highest and closed when i got all the loss. I will post more tomorrow. Good luck
I use this martingale system and it's work. ( Off course by using other TA and FA) also.
  • #155
  • Nov 17, 2012 3:05pm Nov 17, 2012 3:05pm
Quoting ronald_fsm
I use this martingale system and it's work. ( Off course by using other TA and FA) also.
http://www.pipinvestment.com/forex/martingale
http://trading-gurus.com/ray-the-ran...mes-a-cropper/
http://trading-gurus.com/buru-trader-blows-up/

Look at the equity curves in these links. Sure, martingale works — perfectly, in fact — until........
You're somewhere along the positive curve; you just haven't reached the "until" point yet.

Using TA and/or FA does not make a system foolproof. Analysis can't guarantee anything, the best it can do is provide you with an edge. Eventually the market will provide a scenario that defeats your best analysis, and then everything depends on your risk management.
  • #156
  • Nov 24, 2012 6:05am Nov 24, 2012 6:05am
Heard lot abt it bt never used it..
  • #157
  • Nov 24, 2012 9:28am Nov 24, 2012 9:28am
Why would a trader need to use martingale system if he or she has a good trading system/strategy that is earning him or her profits consistently? Using martingale here would decrease profits unnecessarily, because it starts off with small position size. Every win means one has to start at the selected small position size. A consistent decent position size would yield better profits in the long run.

If his or her system is mediocre or has low success rate, then he or she should not be trading or risk losing substantial amount of money!

Martingale system is really suitable for pure gamblers who dabble in bad probability endeavors (gambling or very bad trading). If a trader/gambler loses 8 or 9 out of 10 times, and his or her risk reward ratio is pathetic, martingale might help alleviate the potential losses incurred, but I wouldn't expect these people to make much money in the long run.
'For the market to work, it needs people who think that they can beat it.'
  • #158
  • Nov 24, 2012 9:35am Nov 24, 2012 9:35am
Martingale is a necessary component of forex.

It aids Darwin's theory of natural selection.

It quickly weeds out those who should not be trading.
  • #159
  • Nov 30, 2012 2:39am Nov 30, 2012 2:39am
Quoting billbss
Martingale is a necessary component of forex.

It aids Darwin's theory of natural selection.

It quickly weeds out those who should not be trading.
^^This
  • #160
  • Aug 27, 2013 11:36pm Aug 27, 2013 11:36pm
all I can say to newcomers looking for advice is just the fact that you are receiving thousands of replies that Martingale doesn't work should give you the epiphany that it might actually be working very well (with some improvements as has been suggested above). I would be extremely suspicious of any strategy when there is a consensus that it works...

for any strategy, if it's so popularly known that it has become public knowledge, it's really bad for trading. So be very careful of mathematical / risk / statistical models that are in wide circulation that would tell you with 110 % certainty why an idea is so good or so bad but haven't been able to prevent epic financial disasters for the last millenium or so...
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