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How not to lose 100% using martingale?

22.10.2019 03:55:51 pm
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How not to lose 100% using martingale?

Martingale in the Forex market is the most heavily criticized strategy, however, in fact, 8 out of 10 leaders of the PAMM-managers rating of any broker attract hundreds of thousands of dollars, using grids, averaging orders and increasing lots.

Why investors on the Forex market trust millions of dollars to martingale strategies? The strategy does not bring losses and draws a "beautiful" equity curve. Instead of a stop-losses, trader adds new orders, "increasing" the deposit by hundreds of thousands of percent.

Pay attention to the profit of the permanent leader of the top-3 rating of the largest Forex broker, who've founded the PAMM-account service 20 years ago. Its six-digit value is provided by an increase in the leverage, i.e., lot or position size during the drawdowns marked on the figure below.

danger of martingale strategy is an endless set of new

The biggest danger of martingale strategy is an endless set of new orders placed against a protracted trend that does not allow to calculate money management of the overall position correctly. Advisor VR Calculate Martingale helps to eliminate the probability of draining the deposit, allows pre-planning and calculating possible options for applying the strategy of averaging or lot increasing.

VR Calculate Martingale - installation and free activation

The VR Calculate Martingale indicator is launched on the Metatrader 4 and 5 trading platforms in two clicks, without the need for long set up and reading through manuals.

The program archive contains one file, which is installed according to the usual scenario - by copying to the MQL folder opened through the "data Directory" in the "File" menu in the running Metatrader platform.

VR Calculate Martingale indicator is simply dragged

After restarting the terminal, the VR Calculate Martingale indicator is simply dragged onto the currency pair chart. In the input parameters window that opens, all settings can be left as default, they relate mainly to additional functionality (the size of the display Windows, colors, etc.). More details about each menu item can be found in the description of the indicator.

If the trader has not purchased a paid subscription

The main tool of the program is a rectangle of the information window (1), by clicking on any of the Buy/Sell buttons in it you can place any number of virtual orders placed by dragging with the mouse anywhere on the chart.

To estimate the future profit or loss of each order and the system as a whole, the price label (2) helps. It can be moved with the mouse to any place on the chart, simulating the position of the currency pair.

! Clicking the Buy/Sell buttons in the VR Calculate Martingale

Pay attention! Clicking the Buy/Sell buttons in the VR Calculate Martingale window will not open real trades.

The non-trading indicator is a calculation tool to determine future levels for grid orders and the exact size of the martingale strategy lots increase. Only "manual" and prudent opening of positions will allow the trader to trade without draining and spending the deposit on "extra levels" of the grid.

They are easily determined by the simple rules of technical analysis using simple manipulations with VR Calculate Martingale, depending on the chosen strategy or direction of the transaction. Consider the common cases of how to avoid stop-loss and bring the transaction to profit, the following examples.

How to "avoid the knife" with the VR Calculate Martingale indicator

Trading GBPUSD intraday during the Brexit negotiations is definitely a bad idea, but at the time of setting new lows on October 8 and an unsuccessful rebound up after the retest at point 1, in the next session, the trader set a pending Sell Stop order, hoping for a breakout with a further failure of the course.

After the order was triggered, there was a strong growth of the pound, due to the unexpected agreement reached on Brexit between the Prime Ministers of great Britain and Ireland.

After the order was triggered, there was a strong growth of the pound, due to the unexpected agreement reached on Brexit between the Prime Ministers of great Britain and Ireland.

If a trader was to use an automated Expert Advisor, trading on hourly candles inside, the next two days would ruin him. Usually, the robot opens orders with a standard grid, but in the case of the pound, there were several candles with an atypically large range.

VR Calculate Martingale, after the appearance of the first abnormal candle

In the case of VR Calculate Martingale, after the appearance of the first abnormal candle, the trader would look for an opportunity to close the deal at zero, counting on a pullback from the nearest resistance line. You can calculate the level at which both orders will close at zero:

  • Click the Sell button in the indicator window (1)
  • Drag the order window (2) that appears on the chart to the entry line (place the mouse behind the window as shown in the figure)
  • By clicking the Sell button again in the indicator window (1), place the order (3) at the pre-selected level resistance

order to have a future breakeven level

After setting the second Sell order, in order to have a future breakeven level, where both orders will close at zero, you need to link them together with the help of letters. Click sequentially in each window of the order sign "~", select the letter "A", after which the dotted, connecting lines and breakeven point will appear on the chart.

The news about Brexit had a strong impact on the market

The news about Brexit had a strong impact on the market, so the second candle in size exceeded 100 points (one figure) - the range that passes the pound for the day. The next nearest resistance on the hourly candles was also far enough away, which allowed the martingale to be applied, increasing the order not two, but three times.

Martingale allowed to "raise" the breakeven point, but after the opening of the third trade, the pullback force

Martingale allowed to "raise" the breakeven point, but after the opening of the third trade, the pullback force was not enough to close the grid at breakeven. Pay attention to the informer window-despite the constant "knives catching", the pre-calculated level for orders led to a loss of $84. This is quite a small amount, given that the grid and martingale use a deposit margin of $1000.

In addition to calculating the total loss for all positions, each lot displays its own minus-the

In addition to calculating the total loss for all positions, each lot displays its own minus-the function is convenient for professional use VR Calculate Martingale. The trader can:

  • Calculate multiple grids (7 kinds are supported marked by letters from A to G)
  • Iterate over several options of a virtual grid: closing at the current price (CL) by take profit, stop-loss or simply delete one of the orders of the structure (Delete)

In the current example, even the third order could not average a position

In the current example, even the third order could not average a position that moved from intraday to medium-term category. Due to the multi-day holding of the position, in order to find the next resistance, the trader must switch to daily candles.

The next order, as well as the previous one, is at a great distance from the current price of the pair, so it makes sense to increase the position to 0.05 lot. It will raise the break-even close above the last entry, as the calculation of the VR Calculate Martingale indicator shows.

The figure shows that the past rollback closes the entire structure to zero despite the fact that the trader "caught the knife" in 670 points of GBPUSD reverse.

The figure shows that the past rollback closes the entire structure to zero despite the fact that the trader "caught the knife" in 670 points of GBPUSD reverse.

The pyramid to disperse the deposit using the indicator VR Calculate Martingale

The correct tactic of dispersing the deposit is to increase the size of subsequent orders opened after the first transaction, which came out in profit. If the trend continues, it will allow the trader to increase the potential profit without risk, setting the stop loss to breakeven, at the price of averaging two, three or more orders.

The tactic is called a pyramid because of the decrease in the size of each subsequent order, with an increase - it is a reverse pyramid. Using VR Calculate Martingale optimizes profits, allowing you to keep the total breakeven position in a "safe zone" to prevent accidental triggering, quickly and in advance selecting the size of positions.

The dispersing of the deposit is based on trend strategies, the VR Donchian indicator, known by the strategy "the way of the Turtles", is ideal for determining it.

On the EURUSD pair, a long signal appeared intraday, after the indicator color changed and the quote crossed the VR Donchian midline.

According to the rules of the strategy, the dose of the trend occurs according to the rules

According to the rules of the strategy, the dose of the trend occurs according to the rules of the breakdown of the horizontal section of the upper resistance of the Donchian channel, which is predetermined. This allows the trader to calculate with VR Calculate Martingale the placing of the stop loss in the breakeven position. As you can see in the picture, it is above the middle line even with the minimum size of the future additional lot.

The middle line will appear when a bunch of orders is marked with a single letter designation, i

The middle line will appear when a bunch of orders is marked with a single letter designation, in our example - the grid "A". When dispersing the deposit, the control of the future profit of the position for each lot will help, the window of emulation of the future exchange rate of the currency pair (1) will help with this. Let's set it to 1.099 in our example. This will bring a profit of almost 100 points on EURUSD, given the entry point.

As can be seen from the figure above, triggering the second order increases the potential profit to up to 133.5 points. The total profit is indicated in the informer window (2).

As can be seen from the figure above, triggering the second order increases the potential profit to up to 133.5 points. The total profit is indicated in the informer window (2).

You can increase the lot on the third input. VR Calculate Martingale shows that the breakeven on the stop loss will remain below the middle line with a long of 0.02 lots, which allows the trader to determine in advance the size of the order for the Buy Stop breakout

The last order will increase the potential profit to 187 points, twice in contrast to the tactics of "buy and hold".

The last order will increase the potential profit to 187 points, twice in contrast to the tactics of "buy and hold".

By the same principle, all the following orders are selected - the "total stop" should be below the middle line of the channel. As can be seen from the figure below, this tactic allowed to triple the final trade size and close the entire position at 1.099, so as not to catch the correction at the "round level".

If you have any other questions about the technical settings and application of VR Calculate Martingale, you can contact support.

If the trader did not use the pyramid, the earnings on the position would be $8.5, the optimization of the order size four and a half times increased the profit, keeping the stop loss at a safe distance. The use of robots would not allow to disperse the deposit in the last stages of holding the position.

Quantitative trading on the VR Calculate Martingale indicator

Grids and martingale allow a trader to effectively close a losing position in various ways or trade with virtually no market forecast, opening both buy and sell trades. VR Calculate Martingale allows you to calculate positions simultaneously for 7 grids, implementing the strategy of quantitative trading and combining many strategies on one instrument.

If a trader will need a larger number of grids, it is possible to attach multiple copies of the same indicator to one chart. At the same time, in order to observe the correctness of the calculations, change the settings in the "Prefix" item, which will play the role of Magic Number for the difference of indicators.

Quantitative trading on the VR Calculate Martingale indicator

If you have any other questions about the technical settings and application of VR Calculate Martingale, you can contact support.

Martingale is a real way to trading without losses, but requires training to master the tactics of "pendulum", "swing", "always in the market", "safe", etc. The absence of closed transactions in the negative opens the possibility of moving to PAMM accounts and starting a career as an independent Manager in the Forex market.

Go to the indicator page and download

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