This technique worth testing. Risk management is a huge course on its own. A lot of details. But I can understand what you trying to say about the compounding strategy. I hope it works out.
Quote Originally Posted by Jalapenofan View Post
After winning 2000$ in the example, why are you losing just 20$ instead of 2000$?
That’s the same question i have…Read more: 301 Moved Permanently
In what has been presented every time you win, you risk ALL YOUR WINNINGS until you lose. This means you will never make any money with this system because at some point your winning streak will end removing all your profits and only letting you keep your losses. You would have to modify the system so that somehow when you get a loss you keep some of your profits.
If you stop after 4hits and start again with your initial risk i think This moneystrategy might be profitable.
What happens if you lose everything after 3 hits?
You will lose your initial risk… i will make some calculations later to show what i mein.
I would be more interested in seeing results that prove this works
with one strike from 100 Trades we will lose money in but if we get some additional 2 or 3 strike now an then will make some money.
dont know how to calculate it but i hope the spreed chart explains it enough
we only need 1 strike of 4 hits and we see some ca$h
Pretty chart.
Hi this is the sort of thing I have been looking for since I started trading demo accounts
I was looking at a trending market (the trend is your friend) and scalping between the
support and resistance of the day taking 5 pip profits only taking possibly two trades
a day starting at 1.0 lot per trade and then compounding making that 10 trades per week
making 50 pips a week and if it works i should make my last trade 512.0 and then rinse
and repeat. I just calculated it and the results look a little like this on a 2 pip spread.
1st: trade 1.0=4.0 2nd: 2.0=8.0 3rd:4.0=16.0 4th:8.0=32.0 5th:16.0=64
6th:32=128 7th:64=256 8th:128=512 9th:256=1024 10th:512=2048
Now the next week you do the same again is this a viable trading strategy or am i
spitting into the wind expecting nothing to land directly on my face?
Hi eddieb, this is not a trading system. This is just a money management strategy. In order for this to be used effectively, it is to be used in conjunction with an already winning trading system. As it has already been said many times over, no money management can turn a losing trading system into a profitable one. That is why many trade who trade the martingale way will eventually lose.
As for how you can utilize this system, it is really based on your trading system. For example based on your trade log, you find that your system has many 3 in a row wins that has a risk-t-reward ratio of 1:2, you can utilize this method to maximize your wins. If you win 1:2 three times in a row and you compound your wins, you will win a total of 26R compared to just the 6R wins you would have made if you hadn’t compounded them.
Now of course, it is not possible to determine exactly the win and loss distribution as it is totally random. However its just something for your to experiment with. And also it is not meant for you to blindly compound forever until you lose. That totally defeats the purpose. However by employing that method can probably in theory make lots of profits if you think of how the Martingalers trade.
The reason why many traders lose their shirt when they trade the Martingale Grid Systems is because their only form of money management is to keep increasing their size of their risk on each trade until their capital gets wiped out from a super long losing streak. This method in theory is the opposite of what Martingalers lose. Basically the capital they lose will be transferred to you, less commissions of course. But that is only if you’re willing to go through a long period of drawdown 
It’s possible, but whether it works or not solely depends on your trading system. If you have a system that has high win rate and does not have a risk to reward ratio of less than 1:1, then it could probably help enhance your profits. Money management methods rarely, if ever, turn a losing trading system into a profitable one. For your calculations to work, your
entries have to be pretty darn accurate!
Wow awesome excel table you have there! Looks way nicer than the one I constructed lol.
This is a ridiculous approach to compounding in my opinion and closer to gambling than it is trading.
Gambling away previous profit in hope of having a ‘winning streak’. An experienced trader should know that any one trade can lose at any time no matter how good the trade setup is.
Not to mention how it would affect your emotions/psychology when that losing trade comes along and wipes out (for example) 3 previous winning trades and sends you back to break even for the month.
Like I previously mentioned, this is only my opinion.
yeah. this is great anaylysis. i think it is helpfull for us. trade will be win if they control their risky. we always want more profit this is a way for you/
i was looking and noticed that it is only two trades per day these taken in the morning
on a good trend only taking 5-10 pips per trade with the right indicators in place
should work perfectly but being a newbie and trust me i know i am lol i am looking
for help and direction as to a system that could implement this effectively this is not like
the martingale approach where by you lose one you trade two this idea would win one then trade two
and as is shown with a two pip spread you will be creating a profit of x4 but only compound x2
You are exactly right. This is the total opposite of a Martingale construct. Martingale risks new capital to win 1 unit. This money management method risks no new capital but rather just rolls any profit you made into the next trade. And you define how many times you want to roll based on your trade history. If your trade log shows lots of 3 consecutive winners in a row, try limiting your rolls to 3 consecutive wins and compare it to if you hadn’t rolled your winners to the next trade. See whether this would have increased your profits. Also this method, if after hitting a loss after a number of consecutive trades, all you lose is just your initial Risk you alotted on the very first trade. Btw, rolling your wins for 3 consecutive wins give you a total of 27R, and you are just risking 1R to get that. Pretty awesome Risk-toReward if you ask me.
[B]Unfortunately many people after just skimping through this method, fall into the ignorant trap of just seeing increasing lots for the next trade and immediately assume it is Martingale without thinking about it when this is completely the opposite.[/B]
complete true…