Developing a system #9 (Grids, martingale and hedging)

So far good. I've been using this system last 3 months along with price action & support resistance. By my margin I've designed to sustain 6 bounces (3,9,18,36,72,144). So can anyone tell me trading long time that what could be the highest number of bounces faced during his trading period??

Try this. At the start of the day, set a buy pending order 25 pips above price and a sell pending order 25 pips below price with a 25 pip stop loss and profit level. If the buy order is triggered, close the sell pending order and vice versa. Close the trade if you reach 25 pips profit and resume at the start of next day. If you get stopped out, open another trade in that direction doubling up the number of lots. Keep Martingaling till you reach profit. Use EURUSD for low spread and start with 0.01 lot. Very steady profitable strategy. Backtest it with the last two year data, you'll see. You could also chose to stop trading when the risk gets over 10% of the capital.

how about reverse condition OP?

This strategy DOES work, i've researched & traded it many years now. you need VERY small lots, trust me it does work but the lots have to be EXTREMELY small, to the point of being ridiculous. I use 1 nano lot (0.0001SL!!!!) for each $1000 in the acct. I trade this with an EA on 5 pairs & gives me a steady 5% monthly. DD can go to 30%, but it's ALWAYS settled & the risk is under control. I turn it off in periods of EXTREME volatility & trade manually after the EA doubled the lot size 6 times. Good luck!

go to H1 chart eur/usd or usd/chf, wait for london open... when an open and close price of the canle more than 25pips above, then look to where its heading if downward then open sell and viceversa.. sl is 30pip but make it pending order use sequence 1,3,6,12,24......... try it at demo first.. from my observation its only bounce three times in a row...

Hi Dachel,

Thanks for this system. I used this system for a week, so far it works. However, for me i use

Lot Sequence : 1, 3, 6, 12, 24...
TP : 100
SL : 50
TP after PO : 50

This system work for me as counter measure method when i made mistake when entering the market. Yes, i use pending order replacing SL and only risk 2% equity for all trade. If my calculation correct, it hold 5 bounces only.

Huhu... thats all, looking forward for the development of this system... :P

Sorry but your strategy is basic hedging 101 with a slight gambling addiction tacked on. You should never play around with your risk %. The amount of lots your trading should always be whatever you decide your risk is (typically 5% or less). After lossing a trade your lots should go down. Why? do you ask, because the percentage of your account that you willing to risk is now lower seeing how you just lost money. Raising your lots when you loose is a sure way to drain your account fast. Lower when you loose, Raise when you win. I would suggest that you buy a book on hedging and see what they have to say about money management.

I've been trading for 6 months a Martingale strategy using 25 pips stop and profit levels on a demo account with EURUSD and GBPUSD and it worked out well. I would enter buy or sell every time price reached a 0, 25, 50 or 75 number, cashing in when reaching the next number. On a profit, I reentered with 1 lot in the same direction. On a loss, I entered with 2 lots in the direction of the loss.

I've never had more than 8 reverses in a row during this time although I was not trading full time. I started with a 100 000$ demo account and I am up to over 117 000$ right now. I know we have to be cautious with such a system. Starting with 0.1 lot should be advisable. I am sure there can be other strategies that can contribute to avoid blowing out your account like cashiong in small amounts along the way to keep the capital low ( but increasing) and changing the pip gaps following the market conditions.

I've been looking in many forums for someone to program the strategy, but nobody showed up. An EA allowing to setup the range for stop and profit levels would be useful for backtesting and find out the biggest drawdowns that occured in the past few years for all currency pairs. I wouldn't fix the range under 25 pips because of the spread.

Good day Dachel and all,

I wouldn't say if this strategy of trading is wrong or correct. After all we take hundred of decision every day in our life. It is just the magnitude of importance of each decision is different. Now, if I may add an input to your strategy. Try deploying PERCENTAGE (%) of significance fall or up. What I mean here is that consider that during any given day you have a movement over 2% increase in AUD/USD, then you may want to trade short 1.2 mini contract. If your position yields a return of any $ value, immediately open 1 mini contract for buy. This way you can ride the downward retracement while also hedging your position at the same time. How to pick the best time to enter? Well, you make your own call on that. Hope this helps. Note, if the 1 particular currency moves above 3% in a day, this method works even better as if you take 3% fall for 10 straight days, this means a crisis is coming and remember it is better to buy than sell as selling a currency the most it could fall is to $0 against another currency but the upside is the sky.

Main disadvantage of this strategy is money management.
I think if we will start risking no more than half of the earned money we should survive and may be get in profit.
Instance - We start with 1000$, (if we go for oanda we can use even less than micro lot).
In few days we earn 100$ (example) that will let us risk no more than 50$ on folding.
If you reach loosing 50$ stop folding lot size and start to trade from the scratch.
Thanks and sorry for my english.

I only do one or two trades a day at London opening and sometimes USA opening. So, maybe if automated and with proper money management it can be useful at least during the busiest hours 7am to maybe 3pm GMT.
The range I use is only 18 pips so basically, when London opens if price moves 18 pips up or 36 pips down (if I enter buying or vice versa if I enter selling...) I have a profit. If price bounces 18 pips up and down in the opposite direction that I entered the market, FOR 9 OR 10 CONSECUTIVE TIMES (never happened, my max was 7 bounces...) I loose about 10% my equity (not the end of the world...)
Take your time try some entries on eurusd, 18 pips range, London opening , and you will see I'm telling the truth. Whoever likes martingale setups will have some fun...

If we use this strategy with a broker that allows hedged margin (like alpari) I believe the risks involved would be minimum since this specific martingale works out with buy positions against sell positions, therefore allowing for hedged positions and lower margin requirements.

I've been trading this system manually over the last 8 months successfully. I only trade breakouts with it, mostly opening London and opening USA, low volatility pairs and small TP/range.
I believe that with an EA and proper money management (using micro lots) it would be possible to get close to 4% ROI monthly (bouncing up to the 9th level as a cushion), or 2% ROI (if bouncing up to the 10th level). Personally, the max # of bounces that I experienced in these past 8 months was 7 bounces and the loss in the worst case scenario would be anything around 10% of your investment.

Lets say 10k to start, 0.01 lot you would get 400/month, in the event of a worst case happening (lets say your cushion was 9 levels and the 10th level is reached) you would lose close to 1K (or approximately the equivalent of 2.5 months of profit).

Just remember that 4% ROI per month is a lot (more than 48% a year...) and that I've just been using it manually ( with an EA it would be possible to check for better parameters and win/loss ratios backtesting the strategy.

Just check the link in the previous post and see if this strategy suits you.

Hi, I've just found a similar system in forex tsd forum:

http://www.forex-tsd.com/martingale-average-cost-hedging/16912-martingaling-self-defined-breakout-ea-needed.html

One suggestion would be to use a less volatile pair and a smaller range for take profit...