ActFX Algorithmic Trading » ActFX » Technical Analysis Theory » Martingale success.

Martingale success.

black — Tue, 26 Oct 2010 17:15:34 GMT

One way to succeed with Forex investing is to use the Martingale with the right Strategy (or indicator set if you are doing it manually).

Nobody can predict 100% what is going to happen in the Forex next. Some Strategies, however, never lose more than 3 or 4 trades in a row. If you have such a Strategy, you are just right for Martingale.

A couple of points about using the Martingale:

1. Since the Martingale doubles the Lot size of your trades after every losing Close, but sets it back to 1 Lot after a win, the trade that opens after the 5th-in-a-row losing trade will have 32 lots in it (1, 2, 4, 8, 16, 32 = loss, loss, loss, loss, loss, newly opened trade). Can your account stand opening 32 Lots in 1 trade? This is why your Strategy must [b][color="red"][highlight="yellow"]NEVER[/highlight][/color][/b] lose more than 3 or 4 trades in a row.

2. All the closing trades must have an approximate equal Lot $$$ value to be profitable with Martingale. It does no good to have a $20 per Lot loss on 4 Martingale trades in a row, and then, on the winning Martingale trade, to have only a $10 per Lot win: Losing trades = $-20, $-40, $-80, $-160 = total loss $-300; Winning trade = only $160. If your winning trade had been $20 per Lot, your total winnings would have been $320. Because of this, your winners really need to be higher than your losers per Lot, but never lower.

3. Mistakes happen. You should have a protection setup in place with your broker, that your account can never lose more than a maximum of 1/2 or 1/3 of its total value at the start of any new trade. If you lose this amount for any reason, you are "stopped out" until your broker receives further direct instructions from you. This safety should be in place so that you do not lose your entire account balance in the event of a losing streak that is nigher than 4-in-a-row, or in the event of Strategy shutdown, or any major reason that the Internet might become inactive.

If you can manage the above, Martingale will grow your account.

RE: Martingale success.

black — Tue, 26 Oct 2010 17:15:34 GMT

[quote][b]Mihai (10/26/2010)[/b][hr]Now thats what Im talking about, black. 2x or 4x a month!:D[/quote]

There are all kinds of Strategy operations that produce wonderful results in trending situations, or wonderful results when the market isn't trending, but what works with both markets virtually all the time?

:)

RE: Martingale success.

Mihai — Tue, 26 Oct 2010 15:55:01 GMT

Now thats what Im talking about, black. 2x or 4x a month!:D

RE: Martingale success.

black — Sun, 03 Oct 2010 17:20:09 GMT

[quote][b]Jil12 (10/2/2010)[/b][hr]Thank you very much Black for your information, yours ideas and for your help.

Best Regards

A++[/quote]

Do you ever see those EAs that claim they never have had a losing month? There are a couple new ones out right now. And usually they don't increase the size of your account very fast. I think we should be able to do better than that. We should be able to at least double the size of our accounts every month... maybe 4x.

Thank you for the acknowledgment.

:)

RE: Martingale success.

Jil12 — Sat, 02 Oct 2010 11:36:14 GMT

Thank you very much Black for your information, yours ideas and for your help.

Best Regards

A++

RE: Martingale success.

black — Thu, 02 Sep 2010 07:18:43 GMT

Thanks, eMoe. I enjoy your posts and replies.

RE: Martingale success.

eMoe — Thu, 02 Sep 2010 05:32:58 GMT

Hi, Black!
Thank you for the information!