Martingale system in Trading

Discussion in 'Trading' started by osho67, Nov 26, 2008.

  1. I have read a little bit on this system. Would like to read more as well.

    Can this system work now with modern money management ,proper risk control and hedging methods. ? I would like to reduce the risk of blowing the account. I am thinking of trading NQ with this system. Would any other product be better for this system?

    Has anybody experimented recently with this system?

    All feedback and comments much appreciated. Thanks
  2. You've been around long enough to know this is complete bullshit.

    Hope that helped.
  3. 1. There many martingale systems. Explain yours.

    2. For all the systems I have seen so far, I have a mathematical proof that shows that they are equivalent to selling a put, a call, or a set of puts or calls.

    3. Signficance of 2 is that you do not need to place multiple orders at multiple times. You can do the same thing by selling options.
  4. martingale is one sure way to blow your account...
  5. it will give you consistent days of profit, months and years even, until the one day when you get a trend that goes 1 tick higher than what you can afford to keep doubling down, and then you blow your account.
  6. Thanks for all the replies.

    But can the chances of not blowing out be increased by any hedging techniques? I hope something can be done for protection.

    no offence is taken for any replies.
  7. Retief


  8. asap


    i have tested martingales in all contexts and time frames imaginable, so i can could draw personal conclusions on its viability long term.

    it is <b>losing proposition</b> that will blow up sooner or later.

    contrary to the above conclusion, an anti-martingale strategy, when properly setup, achieves results that in most cases far outpace other conventional sizing strategies.
  9. It works great! ..... as long as you don't run out of money.
  10. Adding risk control to a martingale strategy can work, but you aren't using true martingale anymore.

    Several of the market wizards talked about strategies they use to help them dodge the "big wipeout" that other posters warn about martingale trading. Here are some examples:

    * Larry Hite (Market Wizards, page 182): Monitor volatility and only trade and maintain positions when volatility conditions are favorable for your system(s).

    * Monroe Trout (New Market Wizards, page 164): Close all open trades and stop trading for the rest of the day/week/month when a pre-determined portfolio drawdown is reached.

    My personal research has shown that combining these kinds of risk control measures with mean-reversion trading systems and one or two levels of martingale betting can produce excellent results over long periods of time.

    And now for the good news... You should also be using anti-martingale trend-following systems right along-side the mean-reversion systems. Just don't cut the profits short on the trend-following systems because the mean-reversion systems have side-lined themselves using the above mentioned risk control measures.
    #10     Nov 26, 2008