Since martingale burns accounts, why not do the opposite?
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Thread: Since martingale burns accounts, why not do the opposite?

  1. #1
    Greetings to all prospective traders,

    A while ago I started a thread Why is the martingale manner the only manner in forex? Connection: https://www.forexsoutheast.asia/fore...ring-pips.html

    And as expected, I received massive journaling and warnings fromforexsoutheast.asiamembers (I know they did it using pure good goals) about the way martingale earlier or burns accounts, and I totally understand and agree with their point of view, because martingale needs boundless or sufficient cash to be functioning in concept, and that sort of cash is hard or impossible to come up with at the first loion.

    Moreover, martingale risks the entire funds for small gains, and such gains and funds can go bust when things go wrong as they usually do. Some threads here inforexsoutheast.asiaand other sites discussing martingale egies and EA's imply a 'relativity secure' martingale using 5-10% monthly gains with passive preferences can cut the deal, but I do not think a 5 percent per month is well worth risking the whole capital.

    Considering that the great majority of traders here concur that martingale egies = margin, and martingale consumers are always stuck with enormous DD and wished if things went differently, why don't you undo the whole thing? Rather than gaining little tiny pieces of profits per month and bust the account together with profits made later, why don't you sustain small pieces of losses per month and twice the account after, after regaining losses of course.

    I know that the notion of anti-martingale or inverse martingale is not anything new, but I did not see any platform which completely reverse real conventional martingale EA procedure. By way of instance, a conventional martingale EA begins with a buy or a market based on a specific egy or on random, then sets the TP at 10 pips, with no stop loss. If TP is struck the EA enters a new trade on following candle. However, if the market went against the first position by over a specific amount of pips, say 10 pips, a new position of an increased lot size by 1.2 multiplier is started at second candle, and TP is corrected for all positions so the overall profits = sum of lot dimensions* 10 pips ( the intial TP amount) and so on till the common TP is struck, or a margin call happens. Becoming conservative with the settings by reducing initial lot size, TP and multiplier factor and increasing the pip stage where new positions needs to be added, makes the machine run a bit longer before the disaster eventually happens. While being aggressive in the settings accelerates bankruptcy. Bearing in mind the more positions being added while increasing lot sizes at a specific factor, makes the TP degree a bit easier to strike, but the TP gets somehow far away and demands a big retracement to strike it.

    So far so good, I think most of traders concur with me till this stage.

    Now literally undo the whole thing, open a position on random or according to a specific egy, place SL at 10 pips without TP. If the SL is struck no problem, open another transaction at next candle according to entry rules (not always the exact same direction of last position). Now if the marker moves into our favour by a particular amount of pip step, add a new place another candle with an increased lot size by multiplier factor and adjust the SL so that the entire reduction= sum of lot dimensions* 10 pips (first SL amount). For the departure in profit, close all transactions when a particular amount of $ profits is attained, you can place that into 50% of funds or 100 percent or what ever floats your boat. Bear in mind the common SL level now can also be more difficult to reach when you proceed with many opened positions, very similar to TP in original martingale. This should in theory give your transactions more room to breath till the desired money goal is acquired.

    In conclusion, the tiny pieces of yearly profits in original martingale are now the small monthly losses in inverse. And the margins in the original martingale are now doubling the account in inverse, or 50 percent DD in original martingale is now 50% profit in inverse.

    In theory that sounds good, but in fact other factors may contribute to the desired result. For instance what if the account is emptied out before hitting the jackpot? What settings for lot size, multiplier factor, pip step, SL, cash TP ought to be used? Which pairs would be the best? Answers for these questions are decided by people who lost money with martingale without being able to double their original investment, but nothing is guaranteed in forex as all of us know.

    This wild idea struck me while I was carrying out a ****, so I thought I'd share it here because it makes some kind of sense, so please let me know what you guys think. And as usual, I welcome all types of constructive criticism and friendly bashing.

    Peace.

  2. #2
    Quote Originally Posted by ;
    You have the opposite problem. Martingale does not kill your account instantly, it is possible to sometimes double or triple your account until you win. In precisely the exact same way, you could burn 2-3 accounts before getting anywhere. Without doing this on demo with 0.01 lots and viewing a mean drawdown it would not be possible, but I think that the whole Martingale, reverse or otherwise, is too luck based.
    Very accurate, there is always a risk. The only way to understand the risks and benefits would be to forward test it as you said to assess the outcomes on a demo account. Maybe there are certain occasions or trading egies in which this egy works best.

  3. #3
    I think I gonna open a new thread : ”Since 95% of traders lose money in Forex, why don't do exactly the opposite and not exchange? . Why do you think men ?

  4. #4
    I've tried it, it works sometimes. I demoed it I had been doing amazingly till NFP wiped me out (I had been doing a crazy MM to reevaluate any risks), but apart from that most of my transactions (50pip T/P and S/L) was doing OK.

    You have to understand the open orders. The more the trend has been happening, the more receptive orders are in the negative, because people do not shut their transactions when they have to. Additionally, there are people who are attempting to guess the best, and you have to keep track of the movement of retail traders from buy to market. Oandas is most likely the best, because those on forexsoutheast.asia are slightly better traders than most.

  5. #5
    Quote Originally Posted by ;
    I believe I gonna open a new thread : ”Since 95% of traders get rid of money in Forex, why not do exactly the reverse and not exchange? . Why do you think men ?
    That is announcement makes great sense, I have been introduced to Forex since 2008, until today my net loss is 30k $ (of course just additional money which didn't effect my entire life style what so ever, but I'd like if I did not lose it in the first loion) . I don't assert I have 9 years experience, because the only things I learnt so much would be the mt4 standard indiors and how they function. Now for how to use them, just browse different threads and you will discover infinite settings and mixes along with theories in that respect. Other than that I feel like I am still in day one. So yeah, better to not trade based on data, particularly with money you cannot afford to lose.

  6. #6
    Quote Originally Posted by ;
    I have attempted it, it works occasionally. I demoed it I had been doing incredibly till NFP wiped me out (I had been doing a mad MM to reevaluate some risks), but besides that most of my transactions (50pip T/P and S/L) was doing OK. You have to understand the open orders. The more the trend has been going on, the more open orders are in the negative, since people do not shut their transactions when they have to. There are also people who are attempting to guess the top, and you have to keep track of the motion of retail traders from buy to sell. Oandas is likely...
    I attempted a similar egy of the famous principle of 'Buy low, Sell high', for me I observe several pairs, then wait for a massive constant trend of 1500 pips, and then do my move anticipating a retracement following such a massive trend. Till now it worked every time, but I am doing it by such MM my DD was never more than 1% and my profits are 4 percent in the previous 2 months. This technique is long term and very boring, but just needs minimal observation and energy. I really don't consider it a system yet, just trying it out.

  7. #7
    Thank you. It has interesting aspects, but not quite the way you planned in your first article.
    My current thread (https://www.forexsoutheast.asia/gene...term-goal.html) deals with a counter trend egy, which uses a stop-loss-secured grid, once the positions are moving against the first entry. So why don't you turn this notion and use a profit grid as an add-on to the initial egy ?
    I shall give it a try in my next versions / backtests.

    Regards, Oliver

  8. #8
    Quote Originally Posted by ;
    Thanks, , for bringing this idea. It has interesting aspects, although not really the way you planned in your very first post. My current thread (https://www.forexsoutheast.asia/fore...rex-forex.html) deals with a counter trend egy, which uses a stop-loss-secured grid, when the positions are going against the first entrance. So why don't you turn this notion and use a profit grid at least as an add-on to the initial egy ? I will give it a go in my next versions / backtests. Regards, Oliver
    No difficulty Oliver, this egy should work best while applied to suitable trading egies, not as a stand alone trading style, hope it works out for you. I've had a quick look at your thread and it seems interesting, especially it is a counter trend egy where you expect a decent change, so in my own estimation this egy must emphasise your profits if done correctly. Fantastic luck and all the best.

  9. #9
    Position sizing is all about finding the right balance between preserving optimizing and capital profits.

    Preserving capital is all about keeping sizes small, making it much easier to recover from drawdown. Larger dimensions raise general risk, and there has to be the suitable kind of justifiion in order to do so.

    Maximizing profits is all about getting the biggest pos sizes coinciding with the largest pip winners (and/or smaller dimensions coinciding with any losses). If there's absolutely no reason, concerning market probabilities/behavior, to raise pos size -- for example, if you raise size to recoup recent losses in your P/L -- then you're only playing a game of hit or miss. The market takes no cognizance of the P/L of a immaterial retail trader.

    Therefore I don't see either martingale or undo martingale, in itself, as providing any kind of edge. You would need to loe potential biases in market behavior first, and then size your rankings commensurate with the degree of the prejudice. By way of example, if there's independent (e.g. inherent fundamental) vindiion backing the potency of a movement, then you may be justified in pyramiding farther into the move, ideally on appropriate pullbacks.

    Just my 2c FWIW.

  10. #10
    Quote Originally Posted by ;
    Position sizing is all about finding the right balance between preserving capital and maximizing profits. Preserving funds is all about keeping sizes small, which makes it easier to recover from drawdown. Larger dimensions increase general risk, and there has to be the correct kind of justifiion in order to achieve that. Maximizing profits is all about having the biggest pos sizes coinciding with the largest pip winners (or smaller sizes coinciding with any losses). If there is no reason, in terms of market probabilities/behavior, to increase pos dimensions -- for example,...
    Well said, and could not agree more.

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