Basic strategy I don’t see why it wouldn’t work. Blissfully unaware.

Discussion in 'Strategy Building' started by Ryanstout87, Mar 22, 2020.

  1. Let’s assume I would do a 1:1.5 loss to profit ratio. So I would always have stop loss set at .5 what I would be expecting for profit.
    Looking to get let’s say 10 cents profit and only risking 5 cents loss. Wouldn’t my ability to profit long term be realistically attached to me being able to guess the next 1 minute candle correctly only like 40% of the time?

    add on to that some form of progressive loss recovery such as. Let’s say for example my first trade went bad and I stop loss gets activated and I lose 100 shares at 5 cents or a loss of 5 bucks. So on the next trade I will increase my position size 50 shares to make up for the previous loss.

    I feel like this seems fairly fool proof and I’m not sure where I’m looking at it wrong. But surely I must be otherwise the world would be doing this.

    I did this in a casino once and they kicked me out right as I was about to make up for the previous 4 losses in a black jack game.
    I think it’s called progressive betting. But here the odds are even better because of our ability to set stop loss only losing less than you are willing to make. It’s like every singe time you beat the casino it’s with a blackjack.

    please correct my ignorance as I am blissfully unaware
     
  2. Sig

    Sig

    Google the term martingale strategy.
     
    gkishot likes this.
  3. Sekiyo

    Sekiyo

  4. Okay I’ve done that and see that it is actively used in forex according to google. But my real question is, is this some sort of holy grail or am I’m an idiot, will it work?
     
  5. Can you please elaborate? My level I understanding doesn’t allow me the ability to get what you are saying simply by the words profit factor; I mean is it too high, low did I forget about it all together please help me here.
     
  6. Bobbybax

    Bobbybax

    The casino kicked you out because they thought you were counting cards. It's a common myth that casino can spot card counters. In reality, they have no idea who's counting so they look for dramatic changes in bet sizing and just assume those players are counting.

    If they knew what you were actually doing, they would have given you a credit line.
     
    Axon, nooby_mcnoob and zdreg like this.
  7. The expected value of this strategy (given that you have a finite amount of money in the trading account) is the complete loss of capital. To see why, try this at home with paper money. Keep doubling the bet size in a coin flip game.
     
    Last edited: Mar 22, 2020
  8. Sekiyo

    Sekiyo

    It's a link actually.
    Sorry for not having taken care to mention it.

    It just leads to a post I wrote that could be helpful.
     
  9. I see it’s a link now color threw me off lol. Thanks I enjoyed the read. Also are you saying it’s possible?
     
  10. Sekiyo

    Sekiyo

    I'd advise you to try it. It's free anyway.
    There is nothing better than simulation, experimentation.

    I don't believe it's full proof.
    Because there is risk involved.
    And it adds up over time. I'll tell you :

    I done it betting on live soccer goal market.
    It was a full proof strategy and I doubled down on winners.
    My risk was 1% per bet. My percent win was pretty high like 80%.
    I turned 500€ into 5000€ in exactly 30 days. Now ... Guess what ???
    What was unlikely to happen, did happen. 99, 98, 96, 92, 84, 68, 36, 0%

    I blew up on the 31th day.

    Doubling down on winner is way to risky.
    It depends your initial stake and the P(win).
    But over infinity you will ultimately blow up.
    There is no magic. No cheating of the market.

    5 cents risk and 10 cents rewards is 1 risk against 2 rewards.
    So you theoretically you need to win (on average) 1/3 to break even.
    As I said in my previous post, without edge you're going to earn zero overall.
    You will have fluctuation up, and down, due to the variance coming from chance.

    It's doable. But you need to beat the implied odds of the payoff 1risk : 2rewards.
    Over the long run you need an element of skill that makes the difference,
    Between pure randomness and exploiting an inefficiency.

    You won't be able to be profitable,
    Just by money managing.

    You can't turn a non profitable strategy into a profitable one,
    With some sort of martingale or pyramid scheme or whatever.
     
    #10     Mar 22, 2020
    birdman likes this.