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Martingale method

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pranjali:


Martingale Method I

Assumptions:

* You are using a discretionary or mechanical trading system.
* You know your system well therefore you know how many consecutive losses your system has ever had.  For this example, we'll assume your system has had at most 10 consecutive losses.
* You trade 3 lots.

Scenario:

*  You have had 10 losses in a row trading 3 lots per trade. 

Conservative Martingale Method I Example:

1. On your very next trade after losing 10 in a row, increase the lot size to 4
2. If this 4 lot trade is a winner, go back to normalcy trading 3 lots.  Your done using Martingale for now
3. If this 4 lot trade is a loser, increase the lot size to 5
4. If this 5 lot trade is a winner, go back to normalcy trading 3 lots.  Your done using Martingale for now
5. If this 5 lot trade is a loser, increase the lot size to 6
6. etc, etc, etc

Keep increasing lot sizes by 1 until you win.  I think you get the point.


Martingale Method II

Assumptions:

* You are using a discretionary or mechanical trading system.
* You know your system well therefore you know the average number of losses your system has before turning a winner.  For example, we'll say that on average, your system has 3 losses before turning a winner.
* You trade 3 lots.

Conservative Martingale Method II Example:

1. You are currently not in a trade.  You will wait until your system has 3 consecutive losses before doing anything.  You WILL NOT trade.
2. Once your system has 3 losses in a row, start trading your system again.  Your first trade will be a 3 lot trade.
3. If you win, great.  If you lose, increase the number of lots to 4.
4. Increase the number of lots until you win.

Aggressive Martingale Method II Example:

The only change here would be to enter your first trade with a larger lot size than normal after  your system has 3 losses in a row.  So instead of just trading 3 lots, trade 4.   

rustam:
Just a question that the system described here is not following by Aeron EA.
Am I right or wrong? because aeron ea uses SL while according to this explanation there should be no SL.

machala:
Hello Rustam,
Yes, you are absolutely right, it is not exactly following the martingale system.
It uses internal SL & TP. These are working as per the market conditions.
Its working is too complex too expalin in words, just do backtest or forwards test to understand deeply.

regards, machala


--- Quote from: rustam on March 09, 2010, 11:52:11 pm ---Just a question that the system described here is not following by Aeron EA.
Am I right or wrong? because aeron ea uses SL while according to this explanation there should be no SL.

--- End quote ---

Matthewbrown:
martingale referred to a class of betting strategies that was popular in 18th century France.[1] The simplest of these strategies was designed for a game in which the gambler wins his stake if a coin comes up heads and loses it if the coin comes up tails

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