Recovery system with a different twist

[Iamshakey]

Hey Gang,

I saw that you many EA's are now including the Martingale. That is the only thing that gives me the courage to show you this, since it a little outside the norm of what most people have seen. I have used this for years to play Blackjack ( . . . 2am . . . scotch rocks . . and Boo (my girlfriend) on my arm . . . Life can't be better). I will show it to you, and if you think it totally without merit, feel free to admonish. If you think it worth while, feel free to use any or all of this post, or give me a proper dressing down for such foolishness.

However, I have often thought that this might make a good EA recovery system, rather than the martingale. Also, I would add that I use this system with my manual trading, simply by keeping a spreadsheet of each of the pairs I trade, and running the cycle on them until each pair completes. You'll see what I mean in a moment.

Okay. As with any System, it works in a cycle type pattern, and uses a BASE UNIT SIZE. As with any system, it can take deep pockets (not nearly as deep as martingale).

The biggest DRAWBACK to this system is that a cycle can be long and tedious. HOWEVER, it can take several successive losses without too much account damage. The mathematicians supposedly say that only one out of 1500 cycles will blow you down. This, is of course is in Blackjack where your chances of winning any single hand is around 45% with very good strategy.
With live trading, you are usually back to BE plus Profit with 2-3 straight profit trades. With a trade system with a win/loss ratio of 60-70% it is probably unbeatable.

Here it is:

1 Trade ONE UNIT. CYCLE STARTS AT FIRST LOSS. YOUR TOTAL IS -1
2. REPEAT ONE UNIT TRADE you lost, so your total is -2
3. REPEAT ONE UNIT TRADE you won. Now your total is now -1
4. now TRADE 2 UNITS you won, your total is +1, so cycle is done.

Now a longer one:

1. LOSS you are at -1,
(repeat base bet 1)
2. LOSS you are at -2
(repeat base bet 1)
3. WIN you are at -1
(next bet base x2)
4. LOSS you are at -3
(return to base unit 1)
5. LOSS you are at -4
(repeat base bet 1)
6. WIN you are at -3
(next bet base x 3)
7. LOSS you are at -6
(next bet 1)
8. WIN you are at -5
(next bet base x 4)
9. WIN you are at -1
(now bet just enough to get BE + one base unit) base unit x2
10. Win you are at +1 and DONE.

Now, An important part is, when you get back to within range of the goal (starting balance +1 unit) and you don't need the entire next increase of another base bet, just bet enough to get ONE BASE UNIT PROFIT) This can keep you from prolonging the cycle with2 consecutive big losses sometimes. For instance, if you have just risked 5 base units, and you only need 2 base units to get your goal, DON'T increase to 6, just TRADE the 2 you need.

I don't know if anyone can find this useful, or codeable, or even sensible. I have always wondered how this would work with a good EA.
The only time i have ever lost at with this method, at least at a casino, is simply because the cycle can be long and tedious, and I finally just leave with a small loss.
I have never lost on a pair with my manual forex trades, BUT the cycle, I am trading about 12 pairs with my manual method, and since there isn't necessarly a trade on any given pair each day often extends several days or weeks. BUT, I have always come out ahead in the long run. THIS IS NOT A HUGE MONEY MAKER, UNLESS YOU WERE TO HAVE VERY DEEP POCKETS WITH VERY BIG BALLS.

Not claiming this is Holy grail of any kind. There are plenty of losses (some of them painful) on the way to recovery. If you are skeptical? I suggest trying it with one pair with any sensible system with a 60% or greater win loss. Simply keep track with simple paper and pencil. You can be a little lenient with calling the cycle ended. It's okay to settle for smaller profit from the cycle than intended, once you get the pair cycle to profit. Start small, or demo. DON'T COIN FLIP. This is the surest way to heartbreak and alcoholism for a forex trader.
In trading manually with it, the profits can come very slow . . . but they always come over time. Sometimes, a Long time.
I have included a PDF. It assumes a lot of 0.10 20 STOP and 20 TP. There may be a couple of typos, but you will get the idea.

Here is a link to a silly website that also describes this strat

http://www.blackjackforumonline.com/con ... System.htm

Thanks for reading, and I hope you all aren't too bored.

Thanks, Shake

[DragosDanescu]

Just saw your new thread and I adapted this one to work as close as possible by your strategy.
It uses as trigger inside or outside bars, tested it on H1, and opens a straddle, then uses lotstep as per strategy(almost). The only difference is that it keeps launching orders, until straddle is closed. Then the new straddle is using lots as per strategy...just take a look.
It also trails profit, if TP level is greater than Goal. TP level is Candle Range multiplier (works like Candle Range = LevelsOffset/2, so if TP Level is 2, that means 1:1 ratio).
You can also use as trigger a specific candle close(Time option).

Still working on it, but I like the ideea!

Cheers!

P.S. Modified to send single trade.

[Iamshakey]

Just saw your new thread and I adapted this one to work as close as possible by your strategy.
It uses as trigger inside or outside bars, tested it on H1, and opens a straddle, then uses lotstep as per strategy(almost). The only difference is that it keeps launching orders, until straddle is closed. Then the new straddle is using lots as per strategy...just take a look.
It also trails profit, if TP level is greater than Goal. TP level is Candle Range multiplier (works like Candle Range = LevelsOffset/2, so if TP Level is 2, that means 1:1 ratio).
You can also use as trigger a specific candle close(Time option).

Still working on it, but I like the ideea!

Cheers!

P.S. Modified to send single trade.

Hey, Thanks a million Dragos

I will anxiously give a look, and respond.

I have been MANUALLY trading a sort of variation of sort of variation of Ribelo's Supply and Demand EA which is found over on the EA "Here's the EAs Section." Naturally, I have been using a Martingale approach and have had excellent results, adding about 30% to my little live account over the last 3 weeks.

I wondered all along about the possiblility of adding this method to that to decrease drawdown and to make it less nail biting. Last week, (wednesday and thursday) after some thought, successfully did this manually. Pretty tedious, and requires keeping pretty close tabs on the screen. This turned out the be a sort of "always in" method through the entire length of each trade series. Two successful trades with this, and gaining actually more than the "base bet times X". Added an additional 2% to account balance.

Later today I will put together some charts and diagrams, which may give us some more ideas. I am not a coder (after many attempts to learn), so I can't be much help there. If additional interest is stirred up, we can move over to the EA forum, or you can open one. I have always thought this would make a good recovery system to any EA or system.

If nothing else, it ought to be fun to play around with.

Shake

[Iamshakey]

Something on Blair Hull, successful both at blackjack and trading, would perhaps be pertinent here.

In The New Market Wizards, Jack Schwager introduces Hull:

Blair Hull came to trading by way of the blackjack tables. This is not as strange as it may sound, since there are actually very strong parallels between the two . . . .

And towards the end after Hull's interview:

Once you have a method, you still need money management to prevent an adverse streak from taking you out of the game. It is critical to keep in mind that even if you have the edge, you can still lose all your money. Therefore, the bet or trade size must be small enough to keep the probability of such an event very low. So the appropriate quote is, "Even a good system can lose money with poor money management," . . . .

Whether you're playing blackjack or trading, your profitability depends on your edge and how many times you get to apply that edge.

All you need is a mathematical advantage and the money management controls to assure that you stay in the game. Everything else takes care of itself.

Khalid

Thanks for input, Khalid. Very interesting stuff, and no doubt true. All points well taken.

As a side note, I have attempted card counting. It is not that hard, and I can do it privately, BUT the distractions around a casino, plus the excitement of the play make it unbelievably challenging. I don't have the powers of concentration to do it "live."

This is very nice Forum, by the way. Thanks for starting it.

[Iamshakey]

All points well taken.

Market Wizard Larry Hite made his million respecting risk:

Because we know that we don't know. . . . I heard that he had blown $100 million in the coffee market. He obviously didn't get the message. And you want to know something? He does know more about coffee than I do. But the point is, he didn't look at the risk.

Khalid

More great stuff. Too bad the magic men at Bear Sterns, Merrill, Lehman, BOA, and many others, didn't heed this kind of advice before they crashed the global economy with the housing derivatives a few years ago.

YOU KNOW THAT THEY KNOW THIS STUFF. (don't get me started...)

[Iamshakey]

Just saw your new thread and I adapted this one to work as close as possible by your strategy.
It uses as trigger inside or outside bars, tested it on H1, and opens a ...

Still working on it, but I like the ideea!

Cheers!

P.S. Modified to send single trade.

Thanks Drago,

Ran this on strat test just to see what it would do with the "betting strategy" Of Course strategy tester is mostly crap.

However, I did not see it follow this management strategy at all. I know you are still working on it, so this wasn't unexpected. It'll get there. Let me know if I can help at all, or if any questions.

I have attached another PDF to additionally show how the system management works (by the way, I have always called it "Boo's Cycle System". Boo is my girlfriend). This is just in case anyone has any additional questions. Maybe it can give an additional insight as to what it looks like with trading. It is very difficult to explain, and am having trouble putting it into words and diagrams that can be understandable. I don't know if it will make it any clearer. (though I think you probably understand it anyway).

I also included an additional explanation of a sort of "ALL IN" method. I wouldn't trade this way with money that I expected to keep. This would be very risky, and I am afraid nearly impossible to describe. Basically, with the "ALL IN" the next moves of the Management System are set in the form of LIMIT orders, and Pending Stop orders. Very convaluted. I doubt that would be any good, but it would be fun to look at on demo, in case someone wants to tackle coding it.

THE ATTACHMENTS

I have also included another PDF which is a picture of my Spreadsheet, should anyone be interested. With this spreadsheet, I keep track of all the pairs that I trade, and a running tote so that I know when the cycle is over.

As you can see, I am currently in recovery of the EG and also the CfJ. The EG started middle of last week, and should resolve the next day or two. You can see that I am due an escalation for my next trade on this pair.

On the CfJ, it is about a month old. This is because I don't trade this pair very often. The spreadsheet reminds me that I am also due an escalation on this one as well. Since I trade this one fairly rarely, it might be awhile before this one is done.

Also, I included the actual Spreadsheet itself. This is in Open Office format. In case you haven't heard of it, Open Office is a free office program that can be downloaded from the internet. Just Google it, and you will find it. For my money, it is Better than Excel. The sheet has many cells protected. This way only the profits and losses can be changed, and the formulas are not disturbed. The unlock password is 12 (one two) in case you wish to alter anything.

I included the same spreadsheet converted to Excel format. I don't use Excel, so I have no Idea if it will be functional. It might just open in a sort of a jumble.

Hope someone finds these helpful or useful. Let me know if help is needed. You may have to save these spreadsheets to another folder to open them. Microsoft sometimes tries to take over Open Office Files.

Thanks for reading,

Shake

[ROBST3R]

Hey i like your system!

Ìt`s alot safer then margingale!

I`m trying it out today on GBP/USD Got 2 loss now, i`m on my 3th bet now


What does Steve thinks about this kind of margingale?

Greetings

[Iamshakey]

Hey i like your system!

Ìt`s alot safer then margingale!

I`m trying it out today on GBP/USD Got 2 loss now, i`m on my 3th bet now


What does Steve thinks about this kind of margingale?

Greetings

Great, glad you see the sense of it, Rob.

Carry the system through on the cycle you are on, and see what you think. Wait until your first win, then follow the escalation of one base unit.

HERE IS A REFRESHER

1. EVERY TIME YOU WIN, YOU ESCALATE BY ONE (AND ONLY ONE) BASE UNIT.
2. WHEN YOU LOSE, ALWAYS (AND THAT MEANS ALWAYS) RETURN TO THE BASE UNIT.
3. COMMON SENSE PREVAILS: Okay, this is something that I really didn't address before. Let's say you are in your 2nd Escalation, and you are looking for a take profit of 20 pips. Let's say the trade only goes for 5 or 10 pips, and you are convinced that the trade is not going to make the 20pip target. For heaven's sake, keep the winner, even if small. Your next trade can escalate, or you can trade the same size again. I promise, it will still come out in the wash. Remember. . . never let a winner turn to a loser.
4. WHEN YOU GET WITHIN STRIKING DISTANCE (CLOSE TO YOUR GOAL), (YOU WILL BE COMING OFF A WIN) ONLY TRADE BIG ENOUGH TO ACHIEVE THE GOAL. IF YOU GET A CHANCE TO LET IT RUN PAST THE GOAL . . . LET IT! IF YOU GET CLOSE, BUT NOT QUITE THERE, TAKE IT!
5. DON'T BE AFRAID TO SETTLE FOR LESS THAN THE GOAL, AS LONG AS IT IS IN PROFIT.
6. IF YOU HAVE A CYCLE THAT HAS GONE DEEP, AND HAS GONE ON FOREVER, AND YOU GET CLOSE TO BREAKEVEN, FOR HEAVENS SAKE, IT IS OKAY TO END IT AND TAKE A MINOR LOSS.

I highly recommend that you not stray from the pattern, even if it seems you are on a hot streak. (I am not perfect either), and I have made this mistake many times,
Just remember, traditional common sense trading rules still apply. Even though it doesn't double like the martingale, it can still require deep pockets. Your system still has to be sound, and a winner most of the time. A trader must still use as much caution with trading, and good risk management.

REMEMBER: This system doesn't happen quickly, and takes a lot of patience. Nothing is better than winning outright.
When I first decided to try this method with trading, I couldn't quite figure out how to organize it.
Naturally, if you approach it in terms of your total account balance, you have to make just one trade at a time. Otherwise, you will get confused with what trades to put in which "betting line". This is why I look at this in terms of keeping track of making each pair an EVENTUAL winner. Overall profits are then assured. KEEP TO THE BIG PICTURE
I prefer to trade a little on the small side, like 1-2% of account balance, and trade more pairs, more often. This way, no one "betting" line will be deep enough to damage your account. Sometimes if you get a three or four cycles going, your account balance can be down for a while, but it will come back as the pairs become eventual winners. I actually try to ignore the account balance for the most part. But that's not easily done. (Which leads me to my last money management trick, which I will put in the next post).

So please Rob, Follow the cycle through, and I would be interested in any "organization" ideas or input you may have. Don't let the 2 losses bother you. Just keep track and it will come out.


Thanks, Shake

[ROBST3R]

Hey i like your system!

Ìt`s alot safer then margingale!

I`m trying it out today on GBP/USD Got 2 loss now, i`m on my 3th bet now


What does Steve thinks about this kind of margingale?

Greetings

Great, glad you see the sense of it, Rob.

Carry the system through on the cycle you are on, and see what you think. Wait until your first win, then follow the escalation of one base unit.

HERE IS A REFRESHER

1. EVERY TIME YOU WIN, YOU ESCALATE BY ONE (AND ONLY ONE) BASE UNIT.
2. WHEN YOU LOSE, ALWAYS (AND THAT MEANS ALWAYS) RETURN TO THE BASE UNIT.
3. COMMON SENSE PREVAILS: Okay, this is something that I really didn't address before. Let's say you are in your 2nd Escalation, and you are looking for a take profit of 20 pips. Let's say the trade only goes for 5 or 10 pips, and you are convinced that the trade is not going to make the 20pip target. For heaven's sake, keep the winner, even if small. Your next trade can escalate, or you can trade the same size again. I promise, it will still come out in the wash. Remember. . . never let a winner turn to a loser.
4. WHEN YOU GET WITHIN STRIKING DISTANCE (CLOSE TO YOUR GOAL), (YOU WILL BE COMING OFF A WIN) ONLY TRADE BIG ENOUGH TO ACHIEVE THE GOAL. IF YOU GET A CHANCE TO LET IT RUN PAST THE GOAL . . . LET IT! IF YOU GET CLOSE, BUT NOT QUITE THERE, TAKE IT!
5. DON'T BE AFRAID TO SETTLE FOR LESS THAN THE GOAL, AS LONG AS IT IS IN PROFIT.
6. IF YOU HAVE A CYCLE THAT HAS GONE DEEP, AND HAS GONE ON FOREVER, AND YOU GET CLOSE TO BREAKEVEN, FOR HEAVENS SAKE, IT IS OKAY TO END IT AND TAKE A MINOR LOSS.

I highly recommend that you not stray from the pattern, even if it seems you are on a hot streak. (I am not perfect either), and I have made this mistake many times,
Just remember, traditional common sense trading rules still apply. Even though it doesn't double like the martingale, it can still require deep pockets. Your system still has to be sound, and a winner most of the time. A trader must still use as much caution with trading, and good risk management.

REMEMBER: This system doesn't happen quickly, and takes a lot of patience. Nothing is better than winning outright.
When I first decided to try this method with trading, I couldn't quite figure out how to organize it.
Naturally, if you approach it in terms of your total account balance, you have to make just one trade at a time. Otherwise, you will get confused with what trades to put in which "betting line". This is why I look at this in terms of keeping track of making each pair an EVENTUAL winner. Overall profits are then assured. KEEP TO THE BIG PICTURE
I prefer to trade a little on the small side, like 1-2% of account balance, and trade more pairs, more often. This way, no one "betting" line will be deep enough to damage your account. Sometimes if you get a three or four cycles going, your account balance can be down for a while, but it will come back as the pairs become eventual winners. I actually try to ignore the account balance for the most part. But that's not easily done. (Which leads me to my last money management trick, which I will put in the next post).

So please Rob, Follow the cycle through, and I would be interested in any "organization" ideas or input you may have. Don't let the 2 losses bother you. Just keep track and it will come out.


Thanks, Shake

Hi Shake,

Thnx for your long awnser

I got 2 losers and after that ik played same base lot and got a winner, after that i played another baselot and got to be, so i went on with another baselot and got another 4 winners all +20pips. So it was a good day! just take a trade what looks good to take and see how it run out!

Today i started baselot and i won 6X baselot +20 pips! So i didn`t get any losses.
I still need a few to see how i will react emotionaly, but it is easier for me to step in a trade to know that i will come back to be eventually!

I trade 2% of my account each trade! 0.02 lots

Sorry for my bad english.

I really like this aproach

Blessings
Rob

[DragosDanescu]

Rob, may I ask, what kind of signal as trigger you using?