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Martingale debunked by Gary
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Author:  SpiderX [ Thu Dec 19, 2013 11:49 am ]
Post subject:  Re: Martingale debunked by Gary
Hi Martin, welcome to the forum. Jose is the man if you wish to talk grid.
Maybe you should touch base with him.
http://www.stevehopwoodforex.com/phpBB3 ... f=5&t=3267

Cheers
Author:  Thweis [ Thu Dec 19, 2013 12:44 pm ]
Post subject:  Re: Martingale debunked by Gary
Jose garcia? Actually I know him already we both employ the same free EA and got in touch at JTA's board, however he is a coder and added some nice modifications. Blessing3 is just a highly customizable tool and Jose just proves that it is much more than the usual grid EA.

Thank you SpiderX I had no idea that Jose is active here on the board as well.
Author:  bodR9 [ Sun Dec 22, 2013 6:33 pm ]
Post subject:  Re: Martingale debunked by Gary
I've highlighted this " If the system is a winner, a Martingale will increase the profits, but you have all the Martingale problems. You can achieve similar returns just by increasing your position size, and you will have fixed known risks, a more consistent and sane equity curve, and no worry of a Martingale blowup."

From First Post. and I ask about Pip Investor signal from ConnectForex that has over 1 year history with pure martingale because the system has a positive pip gain. Is the pip Gain an accurate way to determine if the strategy is in fact a Winner. By all means, I know M is Crazy at times but worth the risk when its all risk capital with ROI projections
Author:  nanningbob [ Thu Jan 02, 2014 6:09 am ]
Post subject:  Re: Martingale debunked by Gary
Thweis » Thu Dec 19, 2013 6:54 pm wrote:We also employ grid based EAs in our trading, however they all have a build-in equity protection and by combining several in a risk managed portfolio one can build a method with a favorable risk/reward ratio. In the end it doesn't matter if you have frequent small losses or rare large losses. Hower a system like ours which employs the latter must be traded automatically as it will be mentally demanding to trade it manually. So by cutting your losses short with a grid you remove the negative aspects associated with it.

Steve I am new to this forum coming from donna's page and I would love to hear your thoughts about our way to employ a grid.
http://www.thweis.com/index.php/our-mehod

v/r
Martin

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Interesting. I like grid systems, they can be very profitable if you know when to bail on a trade. I probably would play with them again if I had the time. Only have to know is when to bail ............. now if I could only predict the future. HMMMMMMMMMMMMMM.

Actually a grid system could work if you could hedge when it went out side the grid. Then undo the hedge if it came back inside the grid or you unhedged when it formed a new grid (Range area).
Author:  garyfritz [ Thu Jan 02, 2014 5:04 pm ]
Post subject:  Re: Martingale debunked by Gary
bodR9 » Sun Dec 22, 2013 11:33 am wrote:I ask about Pip Investor signal from ConnectForex that has over 1 year history with pure martingale because the system has a positive pip gain. Is the pip Gain an accurate way to determine if the strategy is in fact a Winner. By all means, I know M is Crazy at times but worth the risk when its all risk capital with ROI projections
If it's a winning strategy, then a Martingale can probably increase your profits. BUT all it's doing is increasing your position size in a really irregular/inconsistent/risky manner. You'll get similar benefits just by consistently trading increased size, and you won't have the Martingale risk. Even a long-term winning strategy can go into a nasty drawdown. An increased-size approach would just suffer the drawdown, but a Martingale could kill the profits from the winning strategy. You can find many MANY examples of this on myfxbook.

Pip gain tells you if the **strategy** is a winner. But then you have to decide on the **money management** (position sizing) you're going to apply to the strategy. Like I said above, an M approach might increase the profits on a winning system -- or it might turn it into a loser. A consistent position sizing approach (e.g. risk X% of the account on each trade) will consistently return profits from a winning strategy.
Author:  garyfritz [ Thu Jan 02, 2014 9:04 pm ]
Post subject:  Re: Martingale debunked by Gary
garyfritz » Thu Jan 02, 2014 10:04 am wrote:You'll get similar benefits just by consistently trading increased size, and you won't have the Martingale risk.
I should clarify that. Martingales give you the wonderful benefit of a steadily-increasing equity curve. It's like magic, as long as it works. You won't get that from the constant-size approach.

BUT that magic equity curve comes with a BIG risk. Sooner or later, it blows up in your face. Usually after you've been lulled into overconfidence by the "perfect" results and sized up larger than you should have, given the implicit risk.

If you regularly pull profits out of the account, and limit the damage the M can do when it blows up, you might come out ahead. But generally you'd do better by running a constant-sizing approach and NOT pulling the profits out. Let it ride with the constant-size positions and get the benefits of growing the larger account.

You can find lots of people who run M's who haven't blown up. Yet. But unless somebody demonstrates otherwise to me, I still believe:
* If you run the M like most people run it, you are exposing yourself to unacceptable risk.
* If you run the M with controlled and sane risk levels, you'll probably get less return than you'd get with fixed-risk position sizing.
Author:  garyfritz [ Wed Jan 08, 2014 5:45 pm ]
Post subject:  Re: Martingale debunked by Gary
I just saw a chart example that illustrates Martingales very well. Nassim Taleb likens systems like this to a Thanksgiving turkey. The turkey is quite content with his daily feed, and his weight and well-being increase steadily. Life is good.

Until he is invited to be the guest of honor at a Thanksgiving feast.

Image

Look familiar?
Author:  Thweis [ Wed Jan 08, 2014 7:23 pm ]
Post subject:  Re: Martingale debunked by Gary
Yes pure martingale is not a sound strategy. At least one should try to build in some sort of stop loss, diversify and making sure the growth during normal periods is high such that it can recover quickly from losses.

It is of paramount importance to always understand how the system that you intent to trade or follow works in detail. Ask the developer and don't hesitate to ask the tough questions and if you are not getting transparent answers, well you know the risk might be higher than we the creator is trying to advertise.

The picture above reminds me why I actually avoided martingale like poison. Funny that I actually ended up having a system which is based on some sort of grid EA. In the end traders should avoid to use labels such as MARTINGALE, CUP WITH HANDLE, OVERBOUGHT and so on. The market is more complex and if you use labels you run the risk of oversimplifying things.
Author:  niepce [ Fri Sep 19, 2014 9:15 am ]
Post subject:  Martingale debunked by Gary
Another Martingale entry for failblog
http://www.myfxbook.com/members/ForexEn ... ong/601387

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Author:  SteveHopwood [ Fri Sep 19, 2014 10:07 pm ]
Post subject:  Martingale debunked by Gary
That picture should be branded across the soul of anybody who even has nightmares about using M as a trading strategy. :D

:xm:
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