We make losing trades profitable. Martingale + Position Trading.

COINBASE:BTCUSD   Биткоин / Доллар США
The graph shows, by the example of BTC / USD, the combined 2 money management strategies for taking high profits with minimal risk. And for all the trading time, only 4 transactions were made, including the loss-making one, almost 2 times more expensive than the minimum price!
I showed a specially bad option when a person could not or did not want to exit Stop Loss and suffered tremendous losses. The price of the first purchase is almost two times more expensive than the minimum values! This is in order to show the high efficiency of this symbiosis of work. And how to pull even the most hopeless unprofitable transaction into profit.

There is a similar work on altcoins, but there are some peculiarities. On the one hand, they are easier to work and many times faster, but there are nuances. There will be free time I will make an article.

Let's say the first purchase of BTC was at a price of $ 6400 per coin at the bottom, which turned out to be not a bottom at all. Let's say that you didn’t get out on Stop Loos, or you had a coin in a cold wallet. And of course, during the dump, the input / output on the top exchanges was closed and you could not transfer coins to sell. When the exchange opened coin input, you no longer wanted to sell at a loss of -30% or so. What to do in such a situation? If you are still a bad trader and can not cover the losses due to the skill of work within the day.

In such a sad situation, the Martingale money management method will help you.
Martingale with proper operation will take out losses and help to gain a position at averaged reasonable prices.
A straightforward positional trading, about which I have already made a teaching idea, will help you get profit at average high prices when the trend changes to an upward one.
The main thing in this matter is understanding of work and patience. Also, you don’t have to stare at the charts every day.

Due to the entry with a volume 2 times larger than the losing trade, we get profit. The most important purchase of even 2 BTC was at a potential price bottom, from which a trend reversal could take place. It is important to buy not on support, but when it is confirmed.

As a rule, 2-3 purchases are made before a trend reversal. In no case should there be more.

Note that in the purchases and sales that I showed on the chart there are no lows and highs. The position was exited by breaking the uptrend line and fixing the price below it at a bitcoin price of $ 10,000, and the maximum price in this trend was $ 13,888! Coin purchases were also far from the minimum values. And the first is almost 2 times more expensive than the minimum price of a downtrend! Minimum prices and maximum prices let us leave the hamsters. We need to get real profit in real money with minimal risk.
To summarize the example of work in numbers:

1 losing trade purchase of 1 BTC ($ 6400)
Spent $ 6400

2 purchase 2 BTC ($ 3900)
Spent $ 7800

3 purchase 3 BTC ($ 3,500)
Spent $ 10500

Total Average Position 6 BTC
No loss comes at a price of $ 4100 for 1 BTC
Spent $ 24,700

Work - Position Trading.
We have 6 BTC with an average average purchase of $ 4100 for a total of $ 24,700

A long sideways movement begins.
We are waiting for its change to an uptrend.
We hold a position in an uptrend.
Stop Loss under the uptrend line if there is no way to control the position every day.

We exit the Stop Loss or market position when an uptrend line breaks through and the price fixes below it.
The important thing is not breaking through itself, as there may be a false breakthrough, namely, fixing the price below the trend line .

In this example, the position was exited when the uptrend line was broken and the price fixed below it at a price of $ 10,000. Once again, I recall that the maximum price in this trend was $ 13888! The sale was very far from the highs, but for that with a confirmed trend change. And even with these values, the profit was:

6 BTC at a price of $ 10,000 = $ 60,000 - $ 24,700 = $ 35,300 net profit, with the initial loss-making transaction, it is almost 2 times more expensive from the lows of the trend!
And the most paradoxical, for all this time only 4 transactions were completed along with the first unprofitable !!!

I will describe in more detail these 2 methods of money management. Let's start with MARTINGALE.

Martingale - is a bet management system discovered by French mathematician Paul Pierre Levy in the 18th century.
According to the Martingale money management method, the new entry point should be exactly two times larger in volume than the previous losing trade. This is done so that the minimum price movement in your favor covers previously unprofitable transactions due to the accumulated large volume at lower prices. This is all achieved through math and volume increase when the price moves against you. But not everything is so smooth, we will consider all the shortcomings and dangers of this method in this article.

Not everything is so smooth, it is very important that there are a limited number of unprofitable transactions. After all, all losing trades in order to get profit must be covered with double volume or at least a large percentage of entry. It all depends on the consistent number of losing trades. The longer this sequence, the higher the likelihood that the deposit will not withstand the load and the remaining funds may not be enough to maintain another position in the market. The whole effectiveness of this method lies in the correct entry points and the right tool selection.

Using Martingale can increase your chances of making a profit. But if you do not own dimensionless capital, then you will certainly encounter a situation where a series of losing trades at an accelerated pace will take its lion's share. Therefore, in order to protect yourself, determine for yourself the share of your trading capital that you can use for each next series and the limit of losses that you may incur. If you reach this threshold, then trading should be stopped. In this case, you will have to admit defeat, but in the alternative you will only lose the previously set amount and protect the rest of the funds.

Initially, you need to choose the right tool, weak tools that forever in a downtrend without kickbacks are not suitable here. The tool chart can tell you whether this depot management method is suitable for this tool or not. The use of Martingale on trading instruments in an eternal downtrend is a direct way to zero the deposit. Coins are candidates for delisting, or abandoned without active developers in the social. networks and without the presence of a major player similarly - the way to drain the deposit. You can use this method to control an unmeasured amount of unnecessary program code. The delist of the coin is from the exchange, and you will have unnecessary program code for anyone that will always remind you of your stupidity.

It matters a lot where you enter the deal. Do not catch falling knives, do not try to buy at the lowest possible price, it is important to buy at those levels where the price stops, where there is a reversal potential. A doubled position or tripled when the price moves is much lower than the initial entry will make a big profit. At the same time, chaotic entrances to the transaction when the price goes against you, without understanding what is happening and why the bistro will empty your deposit.

It is also very important to have an initially large deposit that would withstand a drawdown and a double purchase volume .
Benefits of money management using the Martingale method.

1) It is possible with the right choice of instrument to significantly disperse the deposit.

2) Very often, you make a purchase at the lowest prices or close to the minimum values. This is achieved due to the fact that when the price goes against you, you should buy lower, and with a high degree of probability one of the purchases will be the minimum value of the trend. The main thing is that the deposit does not run dry until this moment.

3) With the help of Martingale, sometimes you can pull out at a loss, or even in a plus, it would seem a hopeless position with the help of an additional asset with an increased volume from the first entry. And when the price moves in our favor, we can exit with the entire volume of one transaction and thereby close the losing trade. By other methods, we had to wait a long time for a certain price, or to make a lot of positive transactions in order to cover losses.
Disadvantages of money management using the Martingale method.

1) Martingale's capital management method, especially its classic version, assumes a sufficiently large deposit that will be able to withstand a large minus in open positions and will allow opening new positions with an increased volume .

2) The effectiveness of the Martingale method directly depends on your trading strategy in which it is applied. If the strategy has low efficiency or is completely unprofitable, then this method will only aggravate it.

3) A high proportion of the probability of a deposit being leaked if the trading instruments are chosen incorrectly. The Martingale method has an increased level of risk. If the classical rules of money management allow a risk of 3-5% of the deposit, then the riskiness of strategies with Martingale is about 60%.
I would like to add that martingale is often used (almost always) on viola when recruiting a large position, only in a modified form. This is still more of a “market maker” strategy, but one of the components of the work is martingale. With each new entrance, loading a glass with a dialed position.
Position trading.

Position Trading Rules:
1) A signal to enter a position is the beginning of a trend on a large timeframe (with a timeframe of 1 day or 1 week).
2) Exit from the transaction is carried out only if there are sufficient grounds for the end of the trend (trend change).

Positional trading is suitable for those who have already traded an impressive depot and are already tired of staring at the monitor and burning their time, spoiling their eyesight. For those who no longer get high from the excitement of management and so on. Because a large depot can in most cases be dispersed only by such methods. A person must have iron patience and an understanding of the market cycles. Because profits need to wait a long time. As you can see from the graph, for example, only one trend can last up to a year.

Positional trading is the work on the trend on a long-term basis, on charts covering a large time scale. For its implementation, fundamental and technical analysis is often used. Position trading is suitable for all types of markets: cryptocurrencies, stocks, goods, Forex.

In other words, position trading refers to a relatively long-term holding of a position in the direction of a global trend.

Thus, position trading is an independent style, significantly different from others. Market participants can use this approach to hold short-term and long-term positions.

Maintaining a position in the trend, and not work on small weekly fluctuations. This is the main difference from swing, which involves working on the basis of market cycles of several days. In positional trading, you can hold a trade for months or even a year or more (Dow Jones index), it all depends on the trend.

Coins for positional trading are selected very carefully, they must be reliable, be closer to TOP or be this top as an example of Litecoin. There should be a real development of the project in the long term, with a strong team that really does something, and not only has a promise legend. It is very important that the coin you choose for positional trading be highly liquid.

You can work (or rather need) as in long and short. In any direction the price you earn.

Only the large time frame is important, we do not pay attention to small price fluctuations.
The purchase / sale of an asset is made only upon confirmation of a change in trend.
No hai and loy! Minimum prices and maximums will be left for hamsters.
The advantages of positional trading.

1) Does not take into account small price changes, that is, does not require constant monitoring of the situation.
2) There is no need to be near the computer all the time. In positional strategy, the most important thing is a deep and thorough analysis, on the basis of which a further decision is made.
3) An open position simply needs to be monitored if there is a situation that can change the position or price.

Positional trading strategy is an analysis of daily, weekly and monthly timeframes; holding an open position for at least a few days to several months.

In simple terms, positional trading is a meaningful and balanced entry into a transaction based on holding a position in a trend.
The disadvantages of positional trading.

1) a long expectation of results that can actually be measured only after months or years;
2) high responsibility for each forecast and analysis, since it can take many days and weeks to hold the wrong position;
3) slow progress in trading (holding positions is good if the trader already has experience, but you won’t be able to gain it quickly by opening deals once a year);
4) the need for significant investment (you can get a tangible income from position trading only if you have a decent amount of money in the account).

As a result, holding a position in certain cases is a significant advantage for an experienced trader, but fatal for beginner speculators.
Also in positional trading, I made a training idea on examples of the LTC / BTC pair. bidding and everything described there is relevant for working now on a coin.

EDUCATION LTC / BTC Positional trend trading in the channel with a step of 190%.

Also in the fixed ideas under the description of this, all my teaching ideas are published here on Tradingview.
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Связанные идеи


Very nice write-up.
This is however a very advanced method of "investing"
And by advanced I don't mean you need any special skill for it but you do need very advanced emotional discipline to pull it off and not second-guess your plan along the way.

Overlooked piece of advice you give is:
- buy at a good confirmed level, with more favourable probability to go in your direction -
Look for your odds.
Don't buy blindly catching knives, which I'm sure most do
+1 Ответить
SpartaBTC Trendbeat
@Trendbeat, You are right, in most people there is no discipline and patience.
I wrote in educational ideas that you should buy only at the level of support that has been confirmed. And from which a trend reversal may happen. No need to buy at minimum prices - this is a very dangerous job. This is a game in the casino, the trend will unfold or not.
SpartaBTC Trendbeat
@Trendbeat, According to the martingale method, I have 2-3 market entries no more, and as a rule, after the last purchase, the trend reverses. Often, I additionally enter the market when there is confirmation of a trend reversal.
SpartaBTC Trendbeat
@Trendbeat, Who buys, as you put it, “falling knives” so that to buy at the lowest possible price usually devastates your deposit. This is no longer a martingale; it is a casino game.
SpartaBTC Trendbeat
@Trendbeat, According to the martingale method, I work on altcoins, but a bit in a modified form - this is a set of positions with pushing the price of the accumulated volume to the next entry point. Then I reverse the trend if possible. If the trend is early to reverse, I simply keep the price of the level of my purchase until the reversal. I do not give the price drops below. But this can only be done on coins with medium liquidity.
thank you
UnknownUnicorn3511625 UnknownUnicorn3511625
Not all people can do this tactics.
I recommend to all beginners should not do this!
SpartaBTC Bulldragon
@Bulldragon, Yes, I wrote that this is not for beginners.