Counselor Ilan is the father of the martingale, and his children. Forex Averaging Theory and Practice
Hello dear traders! You often ask about forex advisor Ilan 1.6 Dynamic. Since then, back in 2007, this robot won the championship of advisors, it does not leave the discussion on the forums. The holy grail arrived? Or wiring for suckers? It is time to dot all the i.
Today we will analyze the principles of trading using averaging (martingale): basic concepts and little-known facts, historical roots and modern methods, as well as why it is theoretically and profitable to practically trade using the averaging method when losing. As an example, consider a trading robot that is widely known in the trading community (advisor) Ilan (Ilan), who was a "role model" for later martingale advisers.
History reference
Martingale (in its modern name) as a betting system in gambling has been known since the middle of the 18th century. There is a version that the system is named after a successful nineteenth-century gambler who was a regular at the French Riviera casino. Perhaps the name goes back to the slang of Occitan gamblers, where a la martengalo meant "play in an absurd way." In turn, the word martengalo meant residents of the city of Martigues, who served in anecdotes as images of naive simpletons.
The essence of the system
The essence of the system in general is to win back losing trades by increasing the size of a bet or series of bets.
In the simplest case (in gambling), the martingale method is as follows:
- The game begins with some pre-selected minimum bet.
- After each loss, the player must increase the bet so that in case of a win, pay off all previous losses in this series, with a small income. (For example, 1-2-4-8-16-32-64, etc.). Subject to the sequence, the player’s profit on winning will be equal to the initial bet.
- In case of winning, the player must return back to the minimum bet.
In roulette, martingale is used mainly for bets on “equal chances”: red / black, even / odd. Moreover, in case of loss, each subsequent bet is equal to twice the previous one. By the way, the network is full of sites with this "secret" technique of winning at roulette. Do not get fooled)
How to win with classic martingale?
With a long game - you can’t win in any way. Seriously, no way. Theoretically, winning is possible only with an infinite amount of money and the absence of restrictions on the maximum size of bets. In practice, the size of bets is always limited, not to mention the bottomless wallet.
The use of martingale in modern systems
- In modern interpretations, a series of bets is often used, increasing not 2 times, but more smoothly. This makes it possible to withstand a long series of unprofitable bets, and in order to get out of such a series with profit, there is no need to win as often as to lose: there are fewer winning trades than losing ones. When using a series of smoothly growing rates, there is no strict dependence on the only positive rate in the entire series, and it often happens that a large series of losing trades increases the chances of a “pullback” and closing in profit (frequent “kickbacks” from the trend are a well-known feature of foreign exchange markets );
- Forex price movements do not have levels corresponding to the normal probability distribution, which may increase the chances of success;
- Unlike classical martingale, technical indicators and statistical calculations are used, news releases are taken into account, and other tricks are used that increase the likelihood of the right choice;
- A periodic withdrawal of earned funds is used, this allows you to make a profit on a long period of the system.
Example of an adviser with martingale:
Ilan 1.6 (Ilan 1.6 Dynamic)
Features of Ilan 1.6 Dynamic Advisor
Platform: Metatrader 4
Advisor Version: 1.6
Currency pairs: GBPUSD
Timeframe: M5
Work time: round the clock
Recommended broker: Roboforex, Forex4You
Installation help
We install the adviser as usual. If this is your first time encountering Forex robots and you have a bunch of questions, download and watch the Forex course on Autopilot.
Attention! Since the adviser is potentially dangerous, be sure to read the article on the basic principles of trading robots based on averaging.
Advisor Strategy
Advisor Ilan 1.6 uses a martingale strategy. A series of orders with a proportionally increasing lot is used. With an infinite time of using the strategy, theoretical gain is impossible, however, with the periodic withdrawal of investments, the theory of probability works in our favor. After the initial investment is withdrawn, the dangerous martingale strategy immediately becomes break-even and highly profitable.
Advisor Backtest Ilan 1.6
Typical Advisor Backtest Ilan 1.6 always looks like this:
The resulting poker is typical for class advisors Ilyan and for martingale in general. In order not to be afraid of such an outcome, a periodic withdrawal of profit is required.
Description of settings
- Firstorder - option to open the first order. At false first order does not open
- Lotexponent - lot multiplication factor when setting the next knee. Example: first lot 0.1, series: 0.16, 0.26, 0.43 ...
- Dynamicpips - option to enable dynamic mode
- Defaultpips is the mesh pitch in pips
- Glubina - number of last bars for calculating volatility
- DEL - parameter for calculating the grid of orders. Used in calculations with Dynamicpips and Dynamicpips.
Calculation example.
DefaultPips = 30
First, the mode is activated (if Firstorder= true) in which the 1st knee is 1/3 of DefaultPips, i.e. 10 pips.
2nd knee is placed 2/3 of Defaultpips i.e. 20 pips.
3rd knee equals DefaultPips.
From the 4th knee, the “Dynamic” mode is activated in which the “DefaultPips” works in conjunction with the “DEL” parameter (usually it has a value of 3) and calculates the distance between the knees like this:
depending on the market volatility over the past, for example, 30 (“Glubina” parameter) pipstep bars can be set in the range:
from DefaultPips / DEL is the minimum pipstep (in this case 10),
and before DefaultPips * DEL is the maximum pipstep (in this case 90).
That is, in flat flat pipstep is less, and in the volatile market more.
- slip - value of allowable slippage in points
- Lots - lot size for the start of trading
- lotdecimal - how many decimal places in the lot to calculate 0 - normal lots (1), 1 - minilots (0.1), 2 - micro (0.01)
- TakeProfit - upon reaching how many profit points to close the deal
- Drop - determines the value of the CCI indicator embedded in Ilan 1.6 dynamic with a period of 55. When the “CCI” indicator exceeds the numerical value of the parameter, the robot closes all open orders to avoid large losses.
- Rsiminimum - the lower boundary of the RSI.Relative Strength Index is a technical indicator, the readings of which are taken into account when opening Ilan 1.6 dynamic orders. You can read more about RSI in the help of the Meta Trader terminal. The robot opens orders within the specified numerical values.
- Rsi maximum - upper bound of RSI
- Magicnumber - magic number (helps the adviser to distinguish his bets from strangers)
- Maxtrades -maximum number of knees of open orders in a series
- UseEquityStop - this option enables the function of limiting loss at a value true
- TotalEquityRisk - the percentage of the account to limit the loss. Upon reaching the specified value, all transactions are closed.
- UseTrailingStop - use ybt trailing stop. If = true, sets a floating stop-loss for orders located in the breakeven zone.
- UseTimeOut - use a timeout (close deals if they "hang" too long)
- MaxTradeOpenHours - after how many hours to close the frozen series of transactions
Recommended Money Management
At least 1000 currency units per lot 0.01 for each pair used.
Download Advisor Ilan 1.6 Dynamic
Important! Nuances of installation in the new Metatrader 4 builds
Martingale advisors on our forum
The forum of the TradeLikeaPro.ru website presents several proven practice advisers based on martingale and their promising modifications:
- Forex Setka Trader (improved Ilan 1.4) with a review, as well as its ForexSetka Trader Mod, developed by ApMSoft forum member
- Forex cracker with a review and his "big brother" Forex cracker Pro with a review
- Zerg with a review, as well as its mod Zerg EA MOD, developed by the forum member Shmuma
- FE_MOD and its "older brother" ApMGriD, developed by ApMSoft forum member
These advisors outperform most “monkey” advisers distributed for money, not to mention free ones.
Attention! Since advisers are potentially dangerous, be sure to read the article on the basic principles of trading robots based on averaging.
A scheme of risk-free strategy for working with dangerous financial instruments, which is successfully applied by serious traders and investors, will also be useful. It looks like this:
So, you are an investor. You have a significant amount for your investments, and you want to use it reasonably. Your attention is attracted by investments with a consistently high profit and small amounts of costs.
What is the purpose of investing? There are two of them: 1) preservation of capital; 2) capital increase. Moreover, the first task is more priority (otherwise capital will be lost). Therefore, a balance must be struck between reliability and profitability.
What does this mean in the context of high-risk investing? Increased profitability almost always also has a downside - increased risk, and the risk is the probability of getting damages. In order to neutralize the probability of losses, it is necessary to reduce or remove them at all, if possible. Since profitability is high, you should adhere to risk-free strategy, which consists in the fact that you need to return the invested in the asset, leaving the amount of accumulated profit “spinning” in it. There are several ways to do this:
1) You invest money, and after the deposit grows by 100% (doubles), withdraw the initial investment amount. Thus, you will not have any losses from any cataclysms at all. The advantage of this method is a psychologically calm transfer to breakeven, the disadvantage is the need to wait for doubling.
2) You invest money, obviously more than you plan to leave on the account, for example, you plan to leave $ 500 in the asset, so enter $ 1,000 there, and when the balance is $ 1,500, withdraw your $ 1,000, leaving $ 500. The advantage of this method is a faster breakeven, the disadvantage is an increased risk.
3) You invest money and regularly (for example, once a week or two weeks) withdraw the accumulated profit. The advantage of this method is that you will always have some amount of free trade funds, the disadvantage is a slower way to achieve a risk-free state.
Conclusion
Martingale based advisers are profitable averaging robots that work successfully on real accounts of traders. However, the observance of the rules for working with dangerous advisers is of utmost importance.
Important !!!
For the advisers to work correctly, the trading terminal must be switched on from the market opening on Sunday evening until its closing on Friday evening. If you are unable to keep the computer operational 24/5, it is recommended to use the VPS server service.