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Martingales; Good, Bad, or just Misunderstood.

Apr 06, 2014 at 23:19
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71 Replies
Členem od Jun 28, 2011   465 příspěvků
Apr 11, 2014 at 10:18 (Upravené Apr 11, 2014 at 10:21)
togr wrote back on the previous page, 'The thing is it is special XE Market account on which all trades are divided by 100.'

And, just where did you find such a beast? this 'XE Market Account' thing.

Bob

My friend, you are a constant source of amazement.
where research touches lives.
Členem od Feb 22, 2011   4862 příspěvků
Apr 11, 2014 at 13:33
Členem od Jun 28, 2011   465 příspěvků
Apr 17, 2014 at 11:03
Thanks again togr;

We had a pretty good round of discussions on the various martingale strategies, but the recovery system that I like is the Fibonacci. It works like the traditional martingale in that however many iterations it takes to win, you still only profit by the base amount. Here's were it differs, the size of the trade after a set number of iterations. For example, the trade multiplier size of the 8th iteration for a martingale is 128 (1,2,4,8,16,32,64,128) The trade size for the Fibonacci is just 89 at the 10th iteration. (1,2,3,5,8,13,21,34,55,89) Two more iterations, smaller trade size.

Of course the trade will not compensate for losses with the same number of pips in the take profit as is the the number of pips in the stop-loss. If we have our trade size as 10 pips, which means we set the stop-loss to 10 pips our take profit will grow from 10 pips to 16.2 for full recovery. 1.62 times the base size. If the base was 20 pips, the TP would be anywhere from 20 pips to 32.4. !.62 has an actual name in the math world, we call it PHI (Pronounced Fee). PHI is actually 1.618.... for our purposes rounding to 1.618 is close enough.

Fun with PHI 1/PHI +1 = PHI (1 / 1.618 = .618 + 1 = 1.618). PHI shows up over and over again in nature, such as the rings of a sea shell. Not perfectly but constantly getting closer, just like the Fibonacci sequence does. If you like the promise of the Martingale, you will love the results from the Fibonacci.

Started out with a decision maker (BUY/Sell) that was right only 37% of the time, and I had a tough time making the thing lose so I could test out a secondary recovery system however, like any recovery system you still need a better than 50% win ratio.

Bob

PS If you didn't read the article on the Martingale from the first page, here it is again.
https://forex-assistant.com/articles/Martingale.pdf

where research touches lives.
Členem od Feb 22, 2011   4862 příspěvků
Apr 17, 2014 at 11:07
ForexAssistant posted:
Thanks again togr;

We had a pretty good round of discussions on the various martingale strategies, but the recovery system that I like is the Fibonacci. It works like the traditional martingale in that however many iterations it takes to win, you still only profit by the base amount. Here's were it differs, the size of the trade after a set number of iterations. For example, the trade multiplier size of the 8th iteration for a martingale is 128 (1,2,4,8,16,32,64,128) The trade size for the Fibonacci is just 89 at the 10th iteration. (1,2,3,5,8,13,21,34,55,89) Two more iterations, smaller trade size.

Of course the trade will not compensate for losses with the same number of pips in the take profit as is the the number of pips in the stop-loss. If we have our trade size as 10 pips, which means we set the stop-loss to 10 pips our take profit will grow from 10 pips to 16.2 for full recovery. 1.62 times the base size. If the base was 20 pips, the TP would be anywhere from 20 pips to 32.4. !.62 has an actual name in the math world, we call it PHI (Pronounced Fee). PHI is actually 1.618.... for our purposes rounding to 1.618 is close enough.

Fun with PHI 1/PHI +1 = PHI (1 / 1.618 = .618 + 1 = 1.618). PHI shows up over and over again in nature, such as the rings of a sea shell. Not perfectly but constantly getting closer, just like the Fibonacci sequence does. If you like the promise of the Martingale, you will love the results from the Fibonacci.

Started out with a decision maker (BUY/Sell) that was right only 37% of the time, and I had a tough time making the thing lose so I could test out a secondary recovery system however, like any recovery system you still need a better than 50% win ratio.

Bob

PS If you didn't read the article on the Martingale from the first page, here it is again.
https://forex-assistant.com/articles/Martingale.pdf


Fibonacci is very good. But your expectations that martingale is just multiplier 2 is not correct.
You can use martingale like this and it is pretty close to Fib.
But anyway it does make sense to use multiplier based on defined SL and TP for one trade
other wise you can loose more money with FB or MT
0.01 1.66
0.02
0.03
0.05
0.08
0.13
0.21
0.35
0.58
0.96
1.59
Členem od Jun 28, 2011   465 příspěvků
Apr 19, 2014 at 20:59
'But your expectations that martingale is just multiplier 2 is not correct.'

No, it isn't. However, there has grown a general description of a martingale as just the classical argument using a multiplier of 2. And that description was only for a fair coin toss. Mathematical concepts are precise and you lose much of the idea when the concept is adapted to something other than the parameters for which it was developed.

Poor Martingale, working his fingers to the bone, trying to understand a distribution algorithm and used the flip of a coin to describe his distribution concept. Now, his name has become synonymous with disaster and charlatans. However, I agree that the multiplier of 2 is a special case where the recovery is made within the same range size as the losses are.

I stand corrected.

Bob
where research touches lives.
Členem od Jun 09, 2011   186 příspěvků
Jun 19, 2014 at 12:12
Some martingales are pretty good, modified ilan
http://www.freeforexrebates .info
Členem od Apr 14, 2013   402 příspěvků
Jun 19, 2014 at 16:55
Martingale is a very good tool to use while trading. Reason being is because it takes less pips to recover your previous loss. Yet, simple using Martingale isn't good enough as the system you use is what will determine entries. So say you have a system where you don't lose more then 4 times in a row.... You can use martingale with that system and bank big time if your system keeps trading as it does.
Focus on pip-drawdown
Členem od Jun 03, 2010   696 příspěvků
Jun 19, 2014 at 18:12
tigpips posted:
Some martingales are pretty good, modified ilan

Preoblem begins when market isnt like roulette when everything starts from beginning on next round. Here we have still 'working' market and emotions. These have nothing to martingale. In my opinion Martingale is good but there is need to have very, very good Moneymanagement.
PAMM MANAGER // Professional Fund Manager
Členem od Nov 21, 2011   1718 příspěvků
Mar 26, 2015 at 13:27
adrian8891 posted:
tigpips posted:
Some martingales are pretty good, modified ilan

Preoblem begins when market isnt like roulette when everything starts from beginning on next round. Here we have still 'working' market and emotions. These have nothing to martingale. In my opinion Martingale is good but there is need to have very, very good Moneymanagement.

I do aggree... I have proven myself that martingale can be very profitable if MM is well used.
I know there are other topics on martingale which at that time, I have posted a excell screen shot to show how to use martingale (at least the way I think about it) because I don't know how you guys use it...some of you may mix it with hedging, averaging....
I can't find this other topic at the moment so I take this one.

I know I have been tested it only for 2 month (since february) but, it is almost not possible to fail. Simply because the sheet showed that I should be really unlucky and I would have lost more than 15 times in a row. From this point... the martingal woud recover the previous total loss and start to lose money. before that, the martingale makes very good profit.

So far I have lost 8 times in a row, so it's fine... A bit of luck and it's all right.

Purple arrow show performance when it works... We can't even noticed previous loss from martingale : )




Přílohy :

Členem od Mar 30, 2015   1 příspěvků
Apr 01, 2015 at 08:44
New here.. but have been developing and still searching for the lowest risk possible for martingale EA.
Martingale is like double edged sword. you can keep winning or get busted just in one day. BUT As CrazyTrader said, you should keep monitor your trades and plan how much risk you can tolerate.

Martingale is good one. Other factors that you should think, are:

- If you're using EA, how much is your win/lose ratio?
- how many lot size are you using at beggining?
- which broker?(you have to know the leverage, max order size, s/o level)

the key here is you must know when to stop and reset, your risk tolerance and your budget. Also, I don't recommend using martingale if you have low deposit.
Členem od Jan 22, 2015   67 příspěvků
Apr 02, 2015 at 19:49
Never tried a martingale myself, was always on the fence about it. Anyone else ever had luck?
Členem od Nov 21, 2011   1718 příspěvků
Apr 03, 2015 at 20:29 (Upravené Apr 03, 2015 at 20:32)
allfxsignals posted:
New here.. but have been developing and still searching for the lowest risk possible for martingale EA.
Martingale is like double edged sword. you can keep winning or get busted just in one day. BUT As CrazyTrader said, you should keep monitor your trades and plan how much risk you can tolerate.

Hi,

Maybe this model can help you to figure out your martingale way.

I have backtested my martingale on this EA from 2015 untill now.

Even if martingale seems dangerous, I don't think it is if SL is very tight:


Average winning is below 10% over the last 3 months test but average winning + Martingale impact makes the ride:


The account would have been tripple:


Ps; this isn't 14 losers trades in a row... that's 14 sessions in a row... it's even worst!... but we will get lucky at some point.

Přílohy :

Členem od Dec 15, 2010   795 příspěvků
Apr 04, 2015 at 05:23
Looks like a grid martigal on the chart.
Click on my Name to see My Live Charts and Bio.
Členem od Nov 21, 2011   1718 příspěvků
Apr 04, 2015 at 06:57
Professor53 posted:
Looks like a grid martigal on the chart.

No it isn't.... but why not using a grid mixed wih martingale? I know you are keen on grid strategy. : )
Členem od May 04, 2014   6 příspěvků
Apr 04, 2015 at 20:36
Martingale is definitely misunderstood in my opinion...!!! I always shunned it until I learned to use it properly. You dont necessarily have to have the biggest account to use as long as the system keeps margin available. That means not opening too big of a lot size for the account as it has the possibility of opening another.

I use a combination of strategies while running my account. I know my EA is good! I will stop it before a MAJOR news event that has a risk of more than 250 pip spike. For example the upcoming FMP next week. The EA can handle it but why risk. Another thing I do after opening a new account is withdraw the profits after it doubles. Then I can continue and take on more risk as the account is now risk free!

I know you might be saying well how long until it doubles? Maybe you have never had an account double.... in my case I am doubling within a month. I use a hybrid martingale on all my successful accounts. You can have a look...

I am available for account management.

RaVonFX
Let's take it to the MOON...!!! I NOW OFFER ACCOUNT MANAGEMENT...
Členem od Sep 16, 2009   190 příspěvků
Apr 05, 2015 at 08:25
I used martingale in my codes since 4 years ago. I believe, it is most of time is risky if you miss use it. But finally, I got a combination of Martingale is contentiously work in the 2 directions with Stop-loss and trailing stop. The EA works very well.
This is the link to the account to investigate and analyse the account in details ...
https://www.myfxbook.com/members/oshaban/forex-black-hole-v42/1171847
... oshaban ... skype: oshaban27 ...
Členem od Nov 21, 2011   1718 příspěvků
Apr 05, 2015 at 13:27
oshaban posted:
I used martingale in my codes since 4 years ago. I believe, it is most of time is risky if you miss use it. But finally, I got a combination of Martingale is contentiously work in the 2 directions with Stop-loss and trailing stop. The EA works very well.
This is the link to the account to investigate and analyse the account in details ...
https://www.myfxbook.com/members/oshaban/forex-black-hole-v42/1171847

Nice performance, however It is more like a Hedged and Compounded Averaging System rather than a Martingale System*.

*To me, the difference between Compounded Averaging vs Martingale is that to make a pure martingale, the previous ordered must be closed. (lost trade)
Členem od Nov 21, 2011   1718 příspěvků
Apr 05, 2015 at 13:32
I added an auto-lot depending on Account Balance once martingale has been successful to reset the lotsize for the first order.
I implemented trailing Stop:



Přílohy :

Členem od Sep 16, 2009   190 příspěvků
Apr 05, 2015 at 22:47
CrazyTrader posted:
oshaban posted:
I used martingale in my codes since 4 years ago. I believe, it is most of time is risky if you miss use it. But finally, I got a combination of Martingale is contentiously work in the 2 directions with Stop-loss and trailing stop. The EA works very well.
This is the link to the account to investigate and analyse the account in details ...
https://www.myfxbook.com/members/oshaban/forex-black-hole-v42/1171847

Nice performance, however It is more like a Hedged and Compounded Averaging System rather than a Martingale System*.

*To me, the difference between Compounded Averaging vs Martingale is that to make a pure martingale, the previous ordered must be closed. (lost trade)

You are right to think it is averaging, but, in fact, it is not. It is partially hedged orders ... once trailing stop starts to move, the chance of the higher lot size is increased to close on profit (low or high profit, it depends on the volatility), this lead to open that order again if the price reversed again ... so, all the time, bigger lot size orders got higher chance to close and open again till the whole profit reach a % of predefined equity to start over everything again.
... oshaban ... skype: oshaban27 ...
Členem od Nov 21, 2011   1718 příspěvků
Apr 05, 2015 at 23:30
Ok, I start to understand... so you guys call a Martingale system an Averaging system... so what is the name for an Averaging system then?

Because it is really obvious that if you have at least 2 trades is the same direction on the same pair... you have an average.

And I would say that if you add a position to a loser trade it's an Averaging down.

In the same time if you add more lotsize to the following trades... then it's what i call a compounded Averaging Down. or ('Martingale' Averaging down)

As you do both direction is the same time, you add the hedged system to the combo name.
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