So if Martin Gale strategy will eventually blow your account, wouldnt doing the opposite give you insane gains? I hear people say Martin Gale strategy (where you keep averaging down until the stock goes up) will eventually always blow you up. So i wonder if there is anyone that has ever tried the reverse. When a stock goes up, add more and more. Seems like a good way to lose money consistantly, but have one absolutely huge score every now and then. Seems a little crazy to me though, but maybe some of you have tried it before.
I'm not a math guy but I understand good money management cannot turn a losing strategy into a winning one. X
congrats... you have just described anti-martingale (bigger positions the more your equity grows, smaller positions when your equity decreases) and pyramiding positions...
Thats the whole point of turtle style trend following. Look for a guide on the net called turtlerules.pdf It will show this process. However, using generic backtesting software, scaling in and out of your trades is very hard to implement IMO. There are companies that offer software that does that but its big money.... The thing is you have to determine what your scale in / out criteria is - is it 1 standard deviation +- .... some price event (i.e C> Prev 5 day High, etc..) , or what.
Adding to winners works great on trend days. Next question is, can you identify a trend day before it's over?
In my experience, and this is a limited one, trends have a better chance of holding in larger time frames. Intraday, trends are not the norm, therefore it would make sense to add to winners on trends based on charts spawning multiple days perhaps weeks of data, rather than risking immediate reversal in an intraday trend that can hardly be trusted. X
ask Jesse Livermore's ghost how the system works-sounds like how he tried to manage his positions. I think it worked great in the crashes of '07 and '29, but not so much in choppy markets.