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Thread: Why are martingale egies so hated

  1. #1
    I've been trading for a couple of decades and have developed a egy that has a martingale element to it with proper money management. For the months I have traded I managed to get my initial investment out and today I am trading just with the profits . My egy involves regular weekly withdrawals.

    This month I managed to get 5x profit(newbie luck?) Of my initial deposit as I did a monthly withdrawal, which made me wonder(self doubt) and make this thread since the overall consensus is very negative about martingale based egies.

    So my question to this older traders would be: why martingale is considered as a fail egy? Can't a martingale utilize regular withdrawals and proper money management? Will such egy operate in a long term?

    Reason being I am sure there are quite a few people who have tried doing this.

  2. #2
    Big risk for profit.
    No way in hell it will ever ever get the job done.

  3. #3
    Quote Originally Posted by ;
    Therefore my question to the senior traders is: why martingale is thought of as a fail egy? Cant a martingale utilize routine withdrawals and suitable money management? Will such egy work at a run? Reason being I am sure that there are many people who have tried doing so.
    //-----

    hello crusader.... Martingales, such as hedging, are vocally hated by a few.... Some reserve comment....

    I have written several hundred martingale ea's but personally never have conducted one in a true account, or demonion for this matter .... They interest me profoundly....

    There's a man here from jordan that conducted nothing but martingales and conducted his accounts up into the 100's of thousands.... Several years back a gbpcad series of transactions cost him much....

    The 'flip a coin' type martingales , like the morgan ea, will have a tough time lasting over several years.... Which may be considerably longer than the ordinary trader.... Additional more clever kind martingales could possibly last much longer....

    Why don't you make an explorer , even if it's private, and see how it works for you.... Let us know...h

  4. #4
    I did a few backtesting based on martingale, if you do 50/50 buy sell and suppose you don't understand which direction the market will go, then it will good for a long time, but because you keep doubling your volume to fix your prior loss it'll add quickly. My test went really well until I needed to cover with a volume of 5.12.

    Martingale is quite profitable as long you can forecast the market well... and yes you will have the ability to for a long time, but don't be shocked if you have to have a volume of 5.12 or even 10.24 and I am not positive whether you're able to afford that, in case you can you will find not any difficulties with this particular egy. Wikipedia has also a good article about martingale; the unfortunate player strikes 10 times black in a row and cannot afford his 11th bet and loses all.

  5. #5
    I feel some martingale must need to SL when we stop adding money for this particular circle. Mayby look for martingale from larger image : 1 martingale it is for 1 account that's part of your funding.



    Whenever you make money normal better not to use martingale, because black day can come no one know when.

  6. #6
    Reverse Martingale is much better. All or nothing.

  7. #7
    1) It lowers your profitability as you're forced to be very conservative on your position sizing (0.01 all the time). If you got a true edge, you're wasting it because of this.
    2) If you always use the same lot dimensions, it'll be hard to equalize your wins and loses due to the shing spread, pip distance (unless you use a grid).
    3) Your risk is obviously hidden, you got a illusion of security, but as soon as you begin getting many losses on a row or your own margin begins to dissapear you begin to sweat, and it sucks.
    4) It is the easiest way to dismiss any account, even if the egy is perfect, your net conection, or the broker, or the spread widening, the news, whatever else is outside to acquire YOUR RECOVERY TRADES and sunk you in the deepest DD.

  8. #8
    Mathematically, martingale increases risk of ruin, and without improving general expectancy. Given enough time, every martingale will eventually fail; it might be in many years' time, or it might be tomorrow and there's no method of accurately backtesting how soon a highly improbable event will occur.

    In the event that you already have a border from your entrances and exits, taking unnecessary risk makes no sense. Withdrawing cash from your account lowers the number of measures that your martingale can defy, or it compels you to start the progression using a decrease bet, reducing recurrence in like percentage; and there's no guarantee that you'll make the withdrawal before destroy occurs. Utilizing a benign progression than doubling impairs your recovery rate, as it takes more than one win. Capping that the martingale to a particular number of steps similarly impairs retrieval; if the number of steps is reached, you must come back to your original stake.

    No severe professional -- cash manager, institutional or prop trader -- subjects their firms', or their clients', money to the risks inherent in martingale. But if you're fooling around with a little account, whose loss would be inconsequential, then risk arguably becomes irrelevant, and you might decide that martingale is an enjoyable way to grow the account. Your money, your own choice.

    [EDIT] A couple of great articles by on martingales here and also here.

  9. #9
    Quote Originally Posted by ;
    Mathematically, martingale increases risk of ruin exponentially, and without enhancing overall expectancy.
    Exactly.

    And this also explains why Martingale standing sizing isn't universally hated.

    It is hated only by men and women who are numerate enough to understand it radically increases the risk of ruin with no enhancing expectancy.

    That group comprises all professionals and all successful traders, however it doesn't include all home amateur traders, some of whom are investing, some with actual funded accounts, with small mathematical understanding, as a sort of triumph of hope over reality otherwise known as naivet.


    Quote Originally Posted by ;
    No critical professional -- cash supervisor, institutional or prop trader -- matters their firms', or their customers', cash to the risks inherent in martingale.
    Exactly.

    And they would not last long in their occupation, if they did.

    Basically, it's mad to allow the size for any particular position to be dependent on the results of the former transaction.

    Either the way you are trading has a positive expectancy, in which case you do not require a Martingale, or it doesn't, in which case you should not be trading that way and no amount of Martingale position-sizing will ensure it is safe to exchange, even if it makes its passing take more.

    Martingale = rearranging the deckchairs on the Titanic.


    Quote Originally Posted by ;
    Why are Martingale egies so hated
    Martingales aren't actually egies Whatsoever. They're position-sizing methods based on innumeracy and lack of appreciation of truth.

  10. #10
    Quote Originally Posted by ;
    Mathematically, martingale increases risk of ruin exponentially, and without improving general expectancy. Given sufficient time, every martingale will gradually fail; it could be in several years' time, or it could be tomorrow and there's no way of accurately backtesting how soon an extremely unlikely event will happen. If you currently have a border from your entries and exits, taking unnecessary risk makes no sense. Withdrawing money from your account lowers the amount of measures that your martingale can withstand, or it compels one to start the progression...
    Clearly you do not improve the total expectancy as no mm may do so, but what you forgot to mention is that risking 100% of your equity rather than say 4% enhances compounding power. . So that it's possible to start little.

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