I think that the most of you know the Martingale priciple (doubling up when you are loosing). Certainly most of you have done it already (I know I have!) and know it is no good.
When using Martingale, you open to much lots in the wrong position, the more the position goes wrong, the more lots you open. This way you are overexposed on a single pair that probably will keep going in the wrong direction (mini-trend, correction on the trend) and when it finally turns around, you will already got a margin call. So I think that it is already established and proven that Martingale doesn't work!
But here is my view on the subject: If you are a trader who trades 3-4 pairs on different timeframes and achieve a winning percentage of more than 51%. What if you double up after a lost trade, assuming you won't add positions to a loosing position. You should make the lost pips on one trade back or not?
Maybe a little example will help:
Trader: 60% winning average on trades
Stoploss is 25 TP is 50
For example reasons 1 pip=1USD
1 MiniLot LONG @ EURUSD ----> Lost 25 pips
2 MiniLot SHORT@ GBPUSD----> Won 50 pips per lot (=100 pips)
1 MiniLot SHORT@ USDCHF----> Won 50 pips
1 MiniLot SHORT@ USDCHF----> Lost 25 pips
2 MiniLot LONG @ NZDJPY-----> Lost 25 pips per lot (=50 pips)
4 MiniLot LONG @ EURUSD-----> Won 50 pips per lot (=200 pips)
This works out quite well for the trader! So can we assume that when a trader has an above XX% winning average and always sets stoplosses AND NEVER TRADE THE SAME PAIR OR A CORRELATED PAIR after a previous loss, we can use Martingale as a moneymanagement system?
Just I tought! I'm really curious what you guys think....
When using Martingale, you open to much lots in the wrong position, the more the position goes wrong, the more lots you open. This way you are overexposed on a single pair that probably will keep going in the wrong direction (mini-trend, correction on the trend) and when it finally turns around, you will already got a margin call. So I think that it is already established and proven that Martingale doesn't work!
But here is my view on the subject: If you are a trader who trades 3-4 pairs on different timeframes and achieve a winning percentage of more than 51%. What if you double up after a lost trade, assuming you won't add positions to a loosing position. You should make the lost pips on one trade back or not?
Maybe a little example will help:
Trader: 60% winning average on trades
Stoploss is 25 TP is 50
For example reasons 1 pip=1USD
1 MiniLot LONG @ EURUSD ----> Lost 25 pips
2 MiniLot SHORT@ GBPUSD----> Won 50 pips per lot (=100 pips)
1 MiniLot SHORT@ USDCHF----> Won 50 pips
1 MiniLot SHORT@ USDCHF----> Lost 25 pips
2 MiniLot LONG @ NZDJPY-----> Lost 25 pips per lot (=50 pips)
4 MiniLot LONG @ EURUSD-----> Won 50 pips per lot (=200 pips)
This works out quite well for the trader! So can we assume that when a trader has an above XX% winning average and always sets stoplosses AND NEVER TRADE THE SAME PAIR OR A CORRELATED PAIR after a previous loss, we can use Martingale as a moneymanagement system?
Just I tought! I'm really curious what you guys think....