Discussion in 'Forex' started by robroy69, Sep 29, 2003.
Has anyone of you used martingale strategy,and what you think about it?
By a Martingale system are you refering to the practice of doubling your position till things swing your way? If that is what you mean, then let me assure you - DON'T! It doesn't matter what market you are trading, whether it be equities or FOREX, if you need the market to go your way - it won't.
A Martingale type system can be effective over a long period of time because eventually markets reverse. However, who is to say when the reversal will occur? Probably right after your last bit of margin gets wiped out. It only takes one outlier trade to break you.
Best of Luck
A quote from Trading for a Living By Elder" A martingale system sounds like a no-lose proposition,until you realize that a long run of bad trades will wipe out every GAMBLER,no matter how rich.At the Extreme a gambler who starts betting with $1.00 and has 46 losses in a row,has to bet $70 trillion on his 47th bet-more than the net worth of the entire world(about $50 trillion)"
This book was written a few years ago do the net worth of entire world will be incorrect now but the theory about Martingale systems will be the same.
By martingale i don't mean to double up on the same position and wait till the market turn around,but when i use a system,wich has a specific pattern of loosing trades and winning trades,such as 3,4 or 5 loosing trades and then a winning trade,then i use the martingale,i double the size eachtime i have a loosing trade till i have the winning one.
I have to mention there are two ways doing this,first the geometric martingale which is to double the size after each loss.
second the arithmetic martingale which is much less dangerous,i just add one unit after each loss.
so the geometric will look like this 1,2,4,8,16,32....
while the arithmetic will look like 1,2,3,4,5,6......
(consider those number being number of lots you are trading)
the problem is if you have an unexpected high consecutive loosing trades ( 10 or 20) but as long as your consecutive loss are under control,i think the martingale is a very good idea
Consider using it the other way around (trust me, I know what I'm talking about, I've been working in casinos for years)
In stead of using the adjusted Martingale (1,2,3,4 etc) after a loss, use it after a winning trade. This way series of winners will be better and series of losers will be small (only 1 loss / trade)
This is the same as adding to a position. I only add to a winning position, never on a losing position.
Hope this helps
Great post, i did it both ways when I was playing in Baden and doubling on winners works much better .
I believe what H2O mentioned is the anti martingale strategy.
What i would like to know is if someone did try it in real trading,and what was the result?
Martingale? Isn't that like driving faster when you're lost?
Don't spread/pairs traders double up when offside?
Most do, but they all get wiped out at one point
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