Martingale strategy

[teucha]

Hi all, been lurking forever...figure it's time to participate!

Anyone here aside from myself using a Martingale-type strategy? Most consecutive losses I've ever suffered was 9, but have not yet had a negative month since starting out in August (I admit my performance this month is not so hot, but that is entirely my fault, I tried trading against the trend on my initial order).

 

[tomorton]

Martingale is one thing, but what does 'Martingale-type' mean?

 

[natureboy]

i have a friend talking about this, it sounds like it scales in as prior positions are profitable. not sure what it does following losses..

a true Martingale double the bet size every bet, right?

 

[wackypete2]

I still dabble with martingale methods from time to time. Despite what most people say about martingale in gambling or trading, it's no better or worse than many other methods as long as you understand how to balance it with good money management and use it on pullbacks in a strong trend. Long term continual use would most likely not produce good results though. I wouldn't go more than the 4th progression and make sure that if I lost all 4 I still have not risked an inordinate amount of money. If you insist on taking the progression out to the very end to try to eek out a win you are guaranteed to lose everything at some point. YOU HAVE TO KNOW WHEN TO STOP THE PROGRESSION AND ACCEPT THE LOSS.

I personally wouldn't recommend using a martingale strategy because it's really just a grind and you end up losing sight of what's happening in the market.

Peter

 

[megamuel]

Martingale strategies have always interested me. I think they can work if you are ok with small returns and have lots of capital. But most people with enough capital wouldn't want returns so small. For example, if you were doubling up after losers and you had a run of 9 losers like the OP, providing you had fixed stops and targets, you would be trading with about 50 lots on your tenth trade if you started with 0.1 lots. Now who with enough money to trade 50 lots would risk that to return what a 0.1 lot trade could have done.

Sam.

P.S. If that doesn't make sense/is incorrect then it is because I'm tired!

 

[tomorton]

Makes sense to me. The aim of the game is to stay in it long enough to win, and doubling position size through a strict Martingale 'strategy' if it can be called that is a quick way to lose through being knocked out early.

 

[Hoggums]

Martingale = madness.

You are effectively increasing your risk at a time when your strategy isn't working.

Don't do it.

 

[Hotch]

I've not seen a martingale strategy which creates a return which justifies the increased risk, that's just my personal experience though.

 

[wackypete2]

I've not seen a martingale strategy which creates a return which justifies the increased risk, that's just my personal experience though.

That's the real issue. If you pick your spots carefully and don't go past a 4 stage progression I believe you can have limited success, but the risk to reward is definitely not favorable.

Peter

 

[alan5616]

I've used Martingale on both trending and counter trend strategies so, have very good experience of using it. That applies to trading manually and using robots as well.

The challenge is that, eventually, you will be called upon to make a large "bet" in order to win one unit. That's when the risk:reward ratio alarm bell starts to ring. Do you really want to risk $1,600 to make $25? I was very lucky in that I used to chop between live trading and demo, purely to test EA settings. In two sessions, within 7 days of each other, I would have blown my whole account if trading live.

Rather than employing full blown Martingale, some form of less aggressive negative progression could be used. On one of my EAs, I have the option to set the "multiplier" so, instead of 2 (standard martingale), I can reduce the risk by setting it to 1.5.

I think that the key to using Martingale is to decide that if it your series of "bets" reaches x, then pull the plug on it and live to fight another day. Something which I've done on numerous occasions

 

[DionysusToast]

Surely Martingale is something you try before giving up trading, no?

Isn't it the final admission that you don't know how to enter a trade and so you 'work' an entry by averaging down?

 

[alan5616]

Surely Martingale is something you try before giving up trading, no?

Isn't it the final admission that you don't know how to enter a trade and so you 'work' an entry by averaging down?

DT, judging by the above comment, you don't know much about how Martingale is used.

It has absolutely nothing to do with not knowing how to enter a trade. You have to be in the market first before you can employ Martingale. It is, purely, a staking/betting sequence, not a trading methodology. First, you have the trading strategy and then you add M'gale, if you feel that profitability can be increased by utilising it.

For example, if I was trading a grid strategy, I have several options. I can trade it as a hedged grid, trend directional, counter trend or bi-directional. I can, also set the points size of the gaps between the grid lines and my TPs & SLs. I may, at some stage, decide to employ M'gale on any of these grid strategies, if I feel that the time is right to do so. I know exactly where my entries are; it's just a case of whether I want a bit of extra gearing on the trade.

 

[flowerhorn]

Pure martingale trading based systems are definitely carry lots of risk. The losses increase geometrically while the gain only increases linearly. So the question of blowing one account is only a matter of WHEN.

Despite the above knowledge, I'm still in favour of Martingale based system with a tweak. A variation of it, a modification of the pure Martingale so that the drawdown is limited as the progression is increased as for me, it is more important to focus of capital preservation than profit in a trading system.

 

[NVP]

let me ask for a comment on this from the gang at LTCM.....

guys ?..........Hello ?

N