Perfect Money Management System for a high percentage strategy

Trading Systems Free Forex Trading Systems
1

I’ve taken this MM cancellation system from a roulette/even bet system and adapted it for the trading world.

This is to be used along side whatever your current/favourite entry system is. Free feel to suggest ones you think may work the best.

Anyway, first we need to turn the trades into sort of even bets (equal profit/loss levels)…I’m ignoring the spread here and it wont really make much difference once the sequence is complete (but using a broker with the lowest spread is best).

I trade the FTSE, if I’m using M15 then my target is 25 points, if 1H then target is 40, 4H target is 80 points.

We’re going to work towards a target of 5 times our trade target level, so on a piece of paper write down a sequence like this 1, 1, 1, 2. (this is £’s per point / contract size)

When we have an entry signal from whatever system you like, enter the trade with the amount of the 1st number in the sequence. If the trade is successful then cross the number you just bet off then add the next number along and the last number in the sequence together and bet that amount. If that loses write the amount you lost at the end of the sequence and start at the beginning of the line just betting the single amount.

So example, I’m trading the FTSE on M15 chart.

I get a signal so enter using the first line in the sequence (£’s per point) 1 . Set my stop to -25 points and limit to +25 points. It makes my target.

I now cross 1 of the sequence and ad the next number along and the last number together = 3. Set my limit and stop the same 25 points again. This time is loses.

I now write 3 at the end of the sequence and go back to just the 1st number at the start of the line, which is 1. Set my limit and stop at 25 points. It makes the target.

I now cross the 1 off and move on to the next number along and the last number added together = 4. I set my target and stop the same. It makes the target.

I cross of the 2 number and go the next number at the start (this occasion its the last number) which is 2. I set my limit and stop the same. It makes the target.

The sequence is complete and I am now up +125 points. Obviously as I’ve mentioned I’m ignoring the spread here.

Obviously this will take time, if you’re doing it on high time frames it might even takes a month to complete one sequence…maybe more

This was a great roulette system but because it’s impossible to predict the sequence builds up, somtimes to very high. With trading, especially with a high win rate percentage system there shouldn’t be many times the sequence will build up. BUT ONLY TRY THIS IF YOU’RE SYSTEM IS MOST OF THE TIME CORRECT.
Also, if you sequence builds up and it’s getting slightly on the high side per trade size, remember you can half it and write the two halves in place of the number in the sequence.

There you go. As long as you have a good system - as in the majority of the time you win your trades…then I don’t see how this MM can not work. IF YOUR SYSTEM GENERATES HIT AND MISS SIGNALS, PROBABLY SHOULD AVOID IT UNTIL YOU FIND A BETTER SYSTEM.

2

If your system has a high enough win rate at a minimum of 1:1 then why bother with a Martingale variation that will eventually wipe out an account? Compounding alone will achieve superior gains without the risk of inevitable ruin that any grid system inherently has.

3

any martingale variation won’t work, go back to math class.:47:

4

I’ve read the money management system twice over and it still doesn’t make sense to me.
I agree that simple compounding will do.

5

This system isnt martingale or even slightly martingale. It’s a cancellation system which keeps the loses to a minimum on a losing streak and quickly gets the losses back on a winning streak. If used with a system where very few losses in a row is likely then it’s got real potential.

There’s no need to knock it until you tried it guys. Yes we all know that the safest way to trade is 2% of account value with a good PA system or MACD or MA system. But if that’s the case noone would ever need to post on a trading forum again. Just trying to generate a new idea.

Yes it’s a lot more risky than just flat betting 2% everytime, but used with a system with a high win rate and as long as you don’t over trade, and you are prepared to complete the cycle despite drawdowns…then I don’t see how it can’t work.

6

Your post is a post of contradictions. It is a grid system which, unlike your statement about generating a new idea, has been around since at least the 16th century and was based upon… the Martingale. The fact that grids can also be anti-Martingale doesn’t make them any less risky.

The number one rule of learning how to trade, one rule that remains inviolate, is learning risk management. You agree that the safest way to trade is to risk a small percentage of capital using a solid method but then you throw that entire concept out the window and advocate a system that is all risk and no management.

Your first post stated your method is based upon a roulette system. Your last post says you can’t see how it can’t work. Put those two statements together!!! There is no system that can beat the house at roulette over the long run. It is not mathematically possible. That should be obvious to you otherwise casinos would have a rather difficult time of staying in business, wouldn’t they? Now you are applying a losing roulette grid system to forex. That is compounding folly with folly and is very bad advice for novice traders who may happen to stumble upon your post.

Again, if you have a system with a high win rate (assuming 1:1), which you state is a must to use this system, then why on earth would you jeopordize consistent and ever-increasing returns with a high risk get-rich-quick scheme?

7

There are a lot of these pergressive, Martingale type betting stratigies out there. They all suffer the same flaw, they require a limitless amount of money to work. The casinos know this that is why they have tabel limits, If you use this in a casino you will at some point reach the table limit. The Forex market may not have a table limit but most likely your bank account does, and at some point you will hit that limit. I perfer systems where my betting only increases when I am winning, Same applies to my trading, I will start with a small lot size and increase it as the trade moves in my direction. This way any loss is going to be small, but when I catch a big move my profits can be huge

8

Thank you for the response JohnLeonard.

When I said generate a new idea, I meant using this method in trading, not that I invented the method. I haven’t seen anyone using this particular system in trading, not even that many people in casinos. I know you’ll probably now say ‘that’s because it isn’t very good’ but wait, people use Marty in a lot and lot of systems and that’s just completely crazy., especially in trading.

Yes I agree there is no way to beat the house at roulette in the long run with this or any system…this is due to the fact it’s impossible to predict what is going to happen, meaning in certain cases the losses will mount up either wiping you out or making you throw in the towel with a giant loss to your account. However in trading this isn’t the case, even with just an average system it’s possible to predict the market, ideally more often than not meaning with can control this system much much more so that the sequence wont mount up too high at all.

Using this method with a 10,000 account means that even if the sequence builds up it should rarely go over that ever important 2%…and as I mentioned this could take up to a month to make 125 units so hardly a get rich quick scheme.

9

Bro, if you have a system (and all the best if you have) that delivers 25 pips a trade at a success rate better than 50% then why muck around with it. The rest of us could become VERY rich VERY quickly if we had the same. Like it or not if it looks like a duck, quacks like a duck, walks like a duck then its a duck. This is martingale just cleverly reversed and will break down. And if your so confident in your system why not apply martigale to your losses. I think you be better off.

10

I think don’t hole R:R 1:3 in short tem :frowning:

Max