martingale, good or bad?

[DigitalGeometry]

So you've done 64 trades? If your entries are truly random and have a 50% probability then you're getting into the realm of six successive losses 1/(0.5^6). How many are you prepared to take before you call it a day?

Position the entry on the right side of the density probability for price to return to some historically significant level and do it with the correct timing connected with enough magnitude for the return trip and the direction takes care of itself - leaving little room for a high degree of successive losses before the profit run starts.

Clearly - the key is setting up the entry level correctly in the first place (that's probability). Direction and Magnitude take care of themselves and defend against draw down. That leaves timing as being the critical factor, but even that can be parsed out with improved algorithms for determining better price density models.

My point is that it does not have to be a random walk down Lucky Avenue, just waiting for the big one to arrive only to be left at the alter holding a bouquet of flowers in one hand and some draw pills to take away the pain in the other.

Density Probabilities. The great equalizer. Pick the right time frame to calculate them, get creative about the questions you ask of the market data and a whole new day dawns in your trading. In fact, trading becomes rather easy and fun again.

Its not really hard. It just takes so darn long to figure out that its not really hard. I call it the Traders' Success Paradox. At first you think its really hard. The truth is that it is really hard right up until that moment when you realize its not really hard. That's the Paradox.

A good trader would make an excellent sniper. Both require uncommon patience. In fact, in my book trader = sniper and sniper = trader. There really is no difference in my mind. None whatsoever. Sometimes, you have to just lie and wait for things to line up correctly. When they do, pull the trigger. Forcing bad positions only means a gamblers outcome.

Create set-ups that are historically proven and empirically tested and optimized. Then be patient and wait. The market will eventually come into proper alignment. When it does, consistently take advantage of the former misalignment and wait for magnitude to fulfill its destiny to the target area. If you miss the specific target, the density probability already means that your capital is in a good position for any number of traditional repetitive price movements very near your original target, before running away in a different direction long-term. Few good trades will be missed this way.

No, lying in wait is not exciting. It is not glamorous. It is not pulling the trigger every five seconds and proclaiming HFT status. In fact, it is rather boring - but it is far more profitable in the long run.

 

[yellowfloyd]

Compared to an experienced trader, is he or she can be 100% sure which direction market will go? Definitely no.. there is no such thing as holy-grail. Therefore, professional trader will never risk more than he/she can afford to lose. However, if this is true..then there will never have ppl making huge profit from the market. So obviously, those ppl who made big money from trading is some sort of gambler, ALWAYS. Since not even professional trader can be 100% sure about the market direction, this is where martingale comes to its edge. Especially in short term trading, which is purely speculation, you only need to guess correct market direction sometimes(not everytime/every analysis) over the long period, you can make money with martingale.

No trader can be sure where markets can go. Likewise no trader will risk everything they have as it would be a full-on gamble. The best he/she can do is look for the best opportunities available, looking for charts offering good profit potential with an acceptable level of risk and a strong possibility of going the way they want. Many people consider 3x profits vs. 1x risk to be good ratio. The smart ones know they will win some and lose some. It’s about making sure that the few winners are helpful enough to at least offset the many losers and that no single loser hurts too much or takes you out of the game. The many who operate using risk vs. reward system, and put the work into identifying decent ideas, can generate handsome profits by getting just half of their calls rights. I’ll look into Martingale a bit more though. It looks interesting.

 

[cointoss]

"Which direction the market will go," is an undefined statement. Will go for "how long," is a better approximation. Will go and with "what magnitude," get you even closer to what's truly important about trading. Will go for how long, to what magnitude and with what degree of probability, is what the truly experienced trader is asking themselves.
..

i have read your post and it seems, you are emphasizing about "trade profile". fair enough.. i have never take account into timing, direction and magnitude, except probability, which is i always expect 50% chance of hitting TP. nothing more

your approach seems more suitable for longer time frame, and predicting price will hit the support/resistance, or whatever level it is. good approach in preparing trader to speculate. but you didnt mention what forex really is before speculate, perhaps in order to be safe lets just assume the market can be influenced by external circumstances/or manipulated

these happen very often, such as ppl staging a protest at capitalism, at central bank or whatever.. market definitely will react and screw up your strategy. however as the old sayings goes, win more than lose you will survive in the game. so far, i never take account into fundamental because my TP is only 50 pips, is it necessary to take account into those trade profile criteria you have mention? assuming if it does.. probably i would never get into market as often as now, but i have no time for that. i still got a day job, which indirectly took away lots of my personal energy and time.. so not everyone can achieve what you said.

if we look at what moves market in short term, it is all purely speculation and there is not enough news coming out so fast within 1 hour or so to move the market. well this is just my opinion. if you got method how short term trader should experience/perform pls share. and also it is easier for small and retail trader focus on short term trading in my opinion because, most of the successful short term trader can easily make 100% or more per month, which is most of the retail fx trader looking for lol. but i think this leads to ppl gambling away their entire capital.. no longer considered as trading as you mentioned at previous post

 

[Jack o'Clubs]

Position the entry on the right side of the density probability for price to return to some historically significant level and do it with the correct timing connected with enough magnitude for the return trip and the direction takes care of itself - leaving little room for a high degree of successive losses before the profit run starts.

Clearly - the key is setting up the entry level correctly in the first place (that's probability). Direction and Magnitude take care of themselves and defend against draw down. That leaves timing as being the critical factor, but even that can be parsed out with improved algorithms for determining better price density models.

My point is that it does not have to be a random walk down Lucky Avenue, just waiting for the big one to arrive only to be left at the alter holding a bouquet of flowers in one hand and some draw pills to take away the pain in the other.

Density Probabilities. The great equalizer. Pick the right time frame to calculate them, get creative about the questions you ask of the market data and a whole new day dawns in your trading. In fact, trading becomes rather easy and fun again.

Its not really hard. It just takes so darn long to figure out that its not really hard. I call it the Traders' Success Paradox. At first you think its really hard. The truth is that it is really hard right up until that moment when you realize its not really hard. That's the Paradox.

A good trader would make an excellent sniper. Both require uncommon patience. In fact, in my book trader = sniper and sniper = trader. There really is no difference in my mind. None whatsoever. Sometimes, you have to just lie and wait for things to line up correctly. When they do, pull the trigger. Forcing bad positions only means a gamblers outcome.

Create set-ups that are historically proven and empirically tested and optimized. Then be patient and wait. The market will eventually come into proper alignment. When it does, consistently take advantage of the former misalignment and wait for magnitude to fulfill its destiny to the target area. If you miss the specific target, the density probability already means that your capital is in a good position for any number of traditional repetitive price movements very near your original target, before running away in a different direction long-term. Few good trades will be missed this way.

No, lying in wait is not exciting. It is not glamorous. It is not pulling the trigger every five seconds and proclaiming HFT status. In fact, it is rather boring - but it is far more profitable in the long run.

Blimey, how much do you write when you really get going? I'm impressed you've any time for trading, or are you ' lying in wait' at the moment?

 

[Jack o'Clubs]

I’ll look into Martingale a bit more though. It looks interesting.

Seriously, don't bother. Especially as it's in complete contradiction to your wise(ish) words above about never taking a trade that can sink you.