Martingale

[-oo0(GoldTrader)]

Money management tends to fall into two types of systems -- martingale and anti-martingale systems.

My understanding of "Martingale" is that you double up when you lose.

Dr. Van K. Tharp tells us that

“Anti-martingale systems, where you increase your risk when you win, .. .”

The flip side to this is that, systems that decrease in size when you win are probably called martingale.

I pyramid by taking a multiple position and clearing 50% of the contracts for a point’s target.

Anti-martingale Systems can then be said to have a Positive progression. Building the size of the position as you win. In the “points target,” example it seems to be a negative progression, decreasing the positions size as the trend strengthens.

My safest position is engineered to be my entry. Each day after that the odds against me increase enormously.

What you have developed, seems perfectly adequate to take advantage of your entry technique. You are not trying to catch those one or two big swings that come along each year, that can make 50% of our gains. By its very nature a negative progression will “cut your profits,” when one of these little trends turn out to be a big one.

I cannot add contracts to my original entry

Because you are basically trading your entry technique. You have no need to scale into a position like Jesse Livermore. Pyramiding is a positive progression meant to take advantage of long-term trends. Other traders who have developed entry techniques, use similar "cut your gains," scaling down techniques, before the trend takes off.

Why I call it martingale, is because you are risking losing on two, to gain on one. By averaging-up we might risk losing on three to win on six (3-2-1). We risk losing on half, while you risk gaining on half. What is really at issue here is, that you have developed a trading technique that works well in a consolidation area, or inside of a box. Where we are averaging-up trying to catch a huge trend.

The idea of doubling up after a loss would break me out in a cold sweat.

The flip side to that is, cutting my winning position in half and seeing the trade go on to new highs, day after day, would break me into a hot sweat.