Q: Why be so safe? After all, the maximum movement may not arise at all anymore?
A: Imagine that we are calculating from a movement that is less than the maximum (for example, the average value of the impulse), and we have it equal to 90 p. Imagine how you will feel if you 2 times CONTRACT lose your ALL deposit on the move in 100 points. And if we were initially reinsured, then in both of these cases, the loss would not have occurred.
Q: So, after all, the profit is very small, and the risk is to lose everything! Does that make sense?
A: In my opinion, yes and no. This makes no sense if you are an established trader with your own trading system. But that makes sense if you want to try yourself in automated trading. Of all the options for using the “martingale” system, I suggest choosing the MOST (as far as possible) safe, reinsurance and cowardly =) Because in this case we reduce the risk of getting a margin call to a minimum and calculate exactly from the risk, and not from arrived. In the 2 trading rules, the first reason is “saving the deposit” and only the second is its “increase”.
Q: Everything is possible on the market, so there is no guarantee that during the trade there will be an even greater recoilless movement than before. And there is no guarantee that kickbacks will suddenly become smaller than what was previously considered minimal. It is so?
A: Absolutely. No one knows what will happen in the future. Maybe the movements will become more. Or maybe less. Or maybe they will not change much. Therefore, the only thing we can do is assess and take risks into account based on what is “characteristic” of the selected instrument.
If you have any other questions – write them in the comments under the article.
No one knows what will happen in the future. Therefore, the only thing we can do is assess and take risks into account based on what is “characteristic” of the selected instrument.
When we know what kind of deposit we need, what kind of “price step” we will set, we need to understand how we still have to play it safe.
The fact is that, if exaggerated, then in each series of transactions we risk losing the entire deposit. Therefore, you and I need to have the minimum amount possible for trading on the account (attention).
Why? Because it is too dreary to manually stop the adviser from opening new orders if suddenly there really happens a movement that will be greater than the previously calculated maximum value. And if you give an adviser in this case, open another order, then this is almost a guaranteed margin call.
At this point, your greed may begin to offer you such a miracle option as “if you open another order, then a reversal may occur and then there will be no loss at all,” but this is a bad option, so tell her. Because, as already mentioned earlier, in trading you cannot know in advance, but you can only assess the risks.
If you and I initially decided that we were ready to lose $ 450, then so be it. If we decided not exactly, then, of course, we will want to hope that “is about to turn around,” but it may not turn around and then you lose, for example, $ 600 or $ 700. And if you continue, you can lose $ 1000 -1200 $, etc., i.e. the amount that you probably were not at all ready to lose initially. Therefore, it was written that to earn money will require iron discipline.
In order to always keep the minimum possible amount on the account, you need to periodically withdraw profit from it. Because Since we are very safe, it is most likely that gradually the profit will accumulate due to small profitable transactions. When the profit margin is, for example, 1/4 of the size of the deposit – it can be withdrawn to another trading account, and let them lie there for now. From now on, you will know that in a bad scenario you are losing not $ 450, but $ 335 because $ 115 is already in your other account and will not go anywhere.
In order to always keep the minimum possible amount on the account, you need to periodically withdraw profit from it.
Then, when you accumulate profits in the amount of your deposit (i.e., in our case $ 450) – you can withdraw it all together and thus continue trading without risking losing anything, well, from now on, you can probably relax a bit 🙂
If nevertheless, something went wrong, and we lost our $ 450, we should not be upset, because we were ready to lose them and initially knew what we were going to. Martingale is no joke, after all. Here, our comprehensive reinsurance comes to the rescue, telling us that such a scenario is extremely unlikely (as far as it is generally possible to talk about financial markets). Therefore, its repetition in the near future is again extremely unlikely. And therefore, you can make another deposit in the amount of $ 450 (just in case – I do not agitate for this, but offer it as an option that is derived from the above arguments).
Further, in order to plunge lovers of fast money into the gloom, but at the same time minimize the likelihood of a negative development of events, I recommend taking the largest possible sample when evaluating the magnitude of maximum recoilless movement and minimal recoil. The use of the timeframe, in this case, depends on the deposit: if you are ready to wait out movements of 1000 points and catch kickbacks of 150, then you can watch wide timeframes, like H1-H4. If your deposit is approximately equal to the amount that we considered in the example, then time frames M5-M15 or even M1 is better suited. I recommend this case to evaluate the interval at least during the last month. The larger the gap, the more situations you will be prepared for and the more comfortable it will be for you to entrust your deposit to such an adviser. Plus, I remind you – we are watching exactly that trading session.
It is recommended to take the largest possible sample when evaluating the maximum recoilless movement and the minimum recoil. The larger the gap, the more situations you will be prepared for and the more comfortable it will be for you to entrust your deposit to such an adviser.
In using this kind of advisers, there is another small trick that the least greedy traders can apply. As we recall, the weak point of such advisers is the presence of recoilless movements in the market.
“Undesirable situation No. 1” is a recoilless movement, forcing the adviser to open more and newer and new and new orders more and more … well, you understand, with more and more substantial volumes, and there simply may not be enough deposit for us “ Margarine Callates. ”
“Unwanted situation # 2” is to choose a currency pair or a timeframe where the price movements themselves (even though they give frequent kickbacks) are so long that an advisor needs an impressive deposit to complete the drawdown to wait.
When trading with the Martingale Advisor, there may be 2 undesirable situations:
- Recoilless movement (after all, on the rollback we close deals with profit)
- The duration of any price movements – both impulses and pullbacks (for these conditions, a significant deposit amount will be required)
We see seemingly good impulses, but tiny pullbacks that are unlikely to recoup our trade.