Martingale Trading System
Martingale trading system is based on the
popular betting (gambling) system of the 18th century France. The main principle
of this system is to double the bet each time you lose so that if you win
(considering a 100% bet win/loss each time) you recover a previous loss and will
also gain the first bet amount. If one had an infinite amount of money, this
strategy would be a sure-fire thing as with the infinite amount of bets the
necessary result will with probability 1 eventually come. The problem is that no
trader possesses an infinite wealth and thus utilizing this strategy eventually
leads to a wiped account. Although it's a very popular Forex trading system and
is used in many paid
Forex expert advisors, I strongly
don't recommend trading with it.
- Theoretically bullet-proof system.
- Practically unsound.
- Reward/risk ratio can reach extremely low values.
How to Trade?
- Any currency pair and timeframe will work.
- Determine your basic position size.
- Place an order in a random direction (Buy or Sell) with some fixed
stop-loss and the same take-profit.
- After the SL or TP is triggered you either win or lose.
- If you win, set the position size to the initial and go the step 3.
- If you lose, double the position size and go to step 3.
- If you have infinite trading account balance, eventually you'll win a lot.
If your account balance is limited you'll lose it eventually.
No example chart is present for this trading system as there is nothing
important to be shown on the chart. Let's view the following example.
- You start with $10,000 account and can trade with mini Forex lots (0.1 of
the standard lot) and decide to trade on EUR/USD.
- You define your basic position size as 0.1 lots.
- You decide to go Long setting stop-loss at 40 pips (or $4). The take-profit
is set to the same value.
- You lose the position. Now your account balance is $9,996.
- You double your next position size to 0.2 lots, so that using the same
stop-loss and take-profit levels you risk $8 and also have a chance to win $8.
You decide to change the position's direction and go Short.
- You win and now you've recovered lost $4 and also won $4. Your account
balance is $10,004.
- You return your position to initial 0.1 lots and start over.
- With $10,000 account balance and $4 basic risk value you'll have to lose 11
positions in a row to wipe your account. You'll have to win 250 positions to
double your balance.
Use this strategy at your own risk. EarnForex.com can't be responsible for
any losses associated with using any strategy presented on the site. It's not
recommended to use this strategy on the real account without testing it on demo
Do you have any suggestions or questions regarding this strategy? You
Martingale Trading System with the fellow Forex traders
on the Trading
Systems and Strategies forum.