Handling Draw Down in Martingale Systems
Hello Guys,
Draw down in Martingale/ Grid system is the main problem. I would like to hear your opinion/ experience in handling draw down in such situations. (Ex: Using hedging with opening rule and closing out rules etc).
Drawdown is an inherent risk with Martingale. The only way to handle it is by knowing when to say enough is enough and get out, accepting your loss.
The majority of people hedge by opening an opposite order in the same symbol. This is totally pointless as it incurs additional costs. It makes much more sense to simply close the position.
The best way to handle Draw-down for Martingale and Grid Systems, is not to use them at all in the first place!
It seems that no matter how many times experienced traders warn of its dangers and no matter how many times it has been proven mathematically that it will ALWAYS blow your account sooner or later, newbie traders insist on using them!
STOP USING MARTINGALE AND GRID SYSTEMS!
The best way to handle Draw-down for Martingale and Grid Systems, is not to use them at all in the first place!
It seems that no matter how many times experienced traders warn of its dangers and no matter how many times it has been proven mathematically that it will ALWAYS blow your account sooner or later, newbie traders insist on using them!
STOP USING MARTINGALE AND GRID SYSTEMS!
When it is a loss, it is a loss. Take the loss - plain and simple!
The way to make sure you trade well and long is to:
- have a Trading Plan (that is realistic and practical)
- have a Strategy that works (that has an edge)
- apply standard Money Management practices (explained all over the Internet).
Topic is not to blame martingales, it is about ways to avoid loss explosion.
I don't like martingaling more than once, and this isn't done to hope for a winner, I just expect the position to close flat.
I'm working on a strategy that when a position loses, a new position opens with 4x the size. Position is closed when actual profit - previous loss - spreads - commissions=0. I expect this to work because it is not greedy, but unfortunately it can have huge drawdown, like 30% or more, altough most trades close very quickly.
The solution should be by better filtering the entries.
I'm working on a strategy that when a position loses, a new position opens with 4x the size. Position is closed when actual profit - previous loss - spreads - commissions=0. I expect this to work because it is not greedy, but unfortunately it can have huge drawdown, like 30% or more, altough most trades close very quickly. The solution should be by better filtering the entries.
Like I stated - No matter how many times experience traders warn about the dangers of Martingale and/or Grid Systems, there will always be someone who believes to know better.
It is almost like the 5 stages of grief. So far on this thread we have had - Denial (Stage 1) and Bargaining (Stage 3). I guess we will just have to wait until they reach Stage 5 (Acceptance) before they learn and move on.
Like I stated - No matter how many times experience traders warn about the dangers of Martingale and/or Grid Systems, there will always be someone who believes to know better.
It is almost like the 5 stages of grief. So far on this thread we have had - Denial (Stage 1) and Bargaining (Stage 3). I guess we will just have to wait until they reach Stage 5 (Acceptance) before they learn and move on.
I am afraid Fernando, we are all acting the same way at some point, you (and me) included.
I have never used them. My uncle was a gambler and he used Martingale on Roulette, so I learned from a very young age, what the dangers are.
But yes, I have experienced all the stages of grief more than a few times in real life, so can spot when they occur elsewhere.
I have never used them. My uncle was a gambler and he used Martingale on Roulette, so I learned from a very young age, what the dangers are.
But yes, I have experienced all the stages of grief more than a few times in real life, so can spot when they occur elsewhere.
Yes that is correct! I understand and I agree, but it is a also about a balance between the two. Unfortunately that "balance" is subjective and sometimes also very emotional (as what happened between the two of us in our own heated discussions).
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Hello Guys,
Draw down in Martingale/ Grid system is the main problem. I would like to hear your opinion/ experience in handling draw down in such situations. (Ex: Using hedging with opening rule and closing out rules etc).