From my point of view this system is as close to the Holy Grail as the nose is close to the mouth. I therefore request your comments and contributions to make this system better for us all. Thanks, and here we go Do you know that when a Currency pair begins to move, it will not continue moving in one direction? It will move move 20, 35, 78, or even pips but somewhere somehow it has to retrace in the opposite direction. Let's say, I wake up What I do, without asking, I short the pair expecting 25 pips as profit.
I risk 25 pips for the trade, meaning SL at 25 pips away assuming zero spread. I also put a pending order, double the size of the first one, at the point of the SL. This pending order is also a Sell, expecting a 25 pip profit and having 25 pip SL as above. Let us see the outcome: So, close all the other trades, pending, whatever.
Assuming a Micro account, with a starting balance of USD, 1: This was 10 Microlots. That is a cool 2. By the time you finished bathing, you find the Pound has moved against you. You watch, and the stop loss is hit. Well, you have just lost 2. It has TP at 25 pips and SL at 25 pips.
You watch, and the pair continues to go against you. When it is about to hit the new stop loss, you mutter something like "Jesus".
You are twice richer your initial loss. In other words, your A miracle, not so? This trade is a sell. This assumes the pair will retrace at a certain point. Please read and review. Let me give you one of my reviews: At this point I would go in with successive buys. Hi Busingy, I don't think I have a come across a system like this before though I am fairly new to this. So basically what you are doing is constantly adding to a losing position until it retraces 25 pips in your direction?
How far would you be willing to go before you cut your losses? I also agree, markets trend all the time. I'm not liking this fixed idea of 25 pips, how have you come up with this fictitious number?
Doubling bets each time is know as gambling. You would be better off doing this idea on roulette. Each time you loose, repeat your bet on the same colour without changing. Eventually the colour will change to the one you are backing. This is a really dumb idea of trading if you want to blow your account when a bad run occurs.
You cant afford to go wrong more than 4 times before the leverage starts rocketing. This is pure and outright gambling. No strategy, just hoping the markets will work in your favour Try it on demo for 3 months and see your account wiped clean You can win with it. If you have enough money. But if you have enough money, why would you risk to lose it? I have been using this system today. My 1st trade was entered whenever a candle closes out of the Bollinger on the 5 min chart; a Buy if on Lower Bollinger; and Vice-versa.
My TP was This way I have to make sure I win before Trade 6. In otherwords, Trade 5 has to win or else When I backtested, it worked well for many months. Since the title of this mentions mathematical which it isn't. It's Martingale which is a killer eventually, but here is some real math. On averge you can expect to loose 10 trades in a row one time in trades and it only takes that one time to more than wipe you out.
You have to cut your losses somwhere. Just out of interest, how have you calculated that the odds of loosing 10 trades in a row is almost 1: To me that seems rather high, almost to high at first glance. Im not disagreeing, just interested in how you calculated this. You will also have to take the spread into consideration on winning trades.
IOW, the probability density function will be skewed by the Spread. This is why Martingale systems are deemed losers. If drawdown was not a consideration i.
He'd be better off if he had some type of edge that would increase his win rate. Maybe only trading with the trend or something similar. Still, martingale and a blown account eventually. Any string of losses will give you some draw down but martingale can magnify that draw down exponentially to the point where you can't recover from it.
I'm tempted to share my winning roulette system now Nah I'll resist the temptation. That's very helpful analysis. Thanks to all the other members who have endeavored to comment on my system. The premise for this strategy is valid because markets do not move in a straight line, and a rational market retraces after a directional move. The problem is, markets will ultimately have periods where they act irrationally. As others have stated above, this basis of this strategy is known as the Martingale Technique.
Personally, I have experimented with it extensively on 3 different practice accounts on a daily basis for over a year. However, there inevitably came a time when the market moved irrationally in the wrong direction just enough to crash the account. The only way I can imagine the Martingale system would be truly reliable is if you had some way to borrow unlimited funds from an investment bank or something like that.
As for the person who is trading forex with their own money, forget about it. If it were a "holy grail" everyone would already be doing it because it is not a new idea. There are easier strategies that require much less effort anyway. Markets can remain irrational longer than you can remain solvent. Gary Shilling, Forbes v. Nice commentary, but you do know that the last time someone contributed to this thread, was 2 years ago There are better ways to use Martingale system.
The market can really move against rapidly and extensively without giving you the 25 pip retracement. One way to avoid the sudden big moves is to avoid the news. Zone recovery trading might be useful if used properly. Mathematical Trading System Trading Systems. Free Forex Trading Systems. I think this is a surefire way to get an account wiped out. There is sort of a name for that gambling style: Thanks for your comments.
Hey TalonD, Just out of interest, how have you calculated that the odds of loosing 10 trades in a row is almost 1: I may even use this formula on my own trading strategy.More...