The $100 Martingale technique: 14 stocks I just bought

for swingtrading, I'm testing a new approach:

1) find stocks taking out new highs/small gaps premarket
2) buy roughly just $100 of each (eg 5 shares of a $20 stock)
3) double the position size on subsequent days for ones that take out 2-day highs, during next couple of weeks using martingale progression: 1:1:2:4:8 etc. (so scaling would be 5 shares, 5 more, 10, 20, 40, 80,160,320 etc)
4) stop out of positions that take out 2-day lows

goal is minimum stop loss cost for initial trades that go bad, plus scaling into winners conservatively

interesting test, lmk if any thoughts, thx

 

Seems manually complicated, unless you can automate it and/or backtest it.

 

I would go in it with 1:2:8:4:1. Reason: not putting the highest commitment on the top of your scale in. If after 3 scale in you still have a loss possible because of added size, I would wait after the second scale in for a move that would set you up to engage a larger scale in and set the stop at a break even point.

 

isn't this reverse martingale?

 

I had PLUG at $5 back in early 2020, sold it after a 10% gain.....haaaaa

Would have been up many hundreds of percent

 

Smart idea, thx. Part of it is also figuring out how long to wait before scaling in. The bigger the new position, the more unrealized profit you need before adding size

 

I had PLUG at $0.81 a few years back and sold it out from $15-16 within 100 days or so.

Earlier this year bought FCEL instead now only have 50 shares left. No regrets, right?

 

I bought FCEL around the time I bought PLUG...bought around 4 something and sold it at $10.50 weeks ago. I see its up over $11 after hours. I'm sure in this insane market FCEL doubles to $20+ in January and doubles to $40 by February. Im seeing this happen to many stocks. They gain momentum and take off moving hundreds of percent in only weeks.

 

I often trade too small and sell too soon, welcome to the club sigh. Eg I bought MGM near 7 and sold near breakeven. Today I bought RIOT near the open and sold too soon. Too impatient we are : o

 

Martingale is a strategy with positive expected value - BUT only if you have infinite capital. Standard deviation of returns stream is enormous and gory.

Some post I wrote couple of years ago,
https://jironghuang.github.io/post/martingale-strategy/