How much money would you need to Martingale your way to profits?

It makes a small move against you potentially turn into a loss.

I never understood averaging into a position. It raises your average cost. Sure, you can potentially pyramid your way to a huge gain, BUT a small move against you changes it into a loss.

 

You do understand the two main issues here right? One, having enough margin to last all the way down. And two, not having enough shares on if the market just rallies. Then you don't make any money. You need to understand these issues.

 

One: not an issue with a big enough account size and/or proper position sizing.

Two: that's a potential risk. You could buy your smallest first position and then the market goes up 50 points = you only get a small gain.

 

Seems like there could be a lot of "float" (is that what it's called?) using this method.

For example, during the year of 2004 the entire yearly range of SPY was $10. So you probably would've sat on your money and done nothing the entire time, potentially in the money or out of the money, waiting for something... to break out of the boring $10 yearly range.

I'm not really concerned with making instant profits, though. I've sat through years of drawdown (or float or whatever it's called) before. It's not really a big deal to me.

 

Yes, and you end up making .5% a year. Just buy a bond.

The account size doesn't matter because you will adjust your purchases for the account. The margin on SPY is terribly unattractive. Run some numbers and you'll see what I mean.

 

I don't think you understand the issue if the market lost 66% of its value you'd be in over a trillion dollars forget having no shares its not possible because the theory says you must keep doubling down but even if you started with a dollar there aren't enough shares in the world to keep the theory plausible even if you had the money

 

If I had a trillion dollars I wouldn't even care about trading

 

Please explain what you mean by this.

 

Well, that is why I brought up the margin issue. I don't think he understands how much margin one needs. In theory he could set really wide brackets. Say buy 100 shares of SPY every 5 pts down but then we get to the other problem of having no shares.

 

Like the other poster said, with Reg T margin and doubling all the way down you are going to need potentially billions of dollars. The margin for 100 puny shares of SPY is 6500. That is insane.