In this article, we will cover the Martingale System, which is my favorite way to trade but is very dangerous. Please understand that if you wish to try this forex strategy, you are risking a lot. The idea of Martingale is not a trading logic, but a math logic. It is derived from the idea that when flipping a coin if you choose heads over and over, you will eventually be right. Though the coin may land on tails 2 or 3 or 10 times in a row, it MUST eventually land on heads.
In a Martingale system , you take advantage of this truth by increasing the size of your bet. From the table, we see that with the Martingale system, no matter how long the bad streak is when you finally win it is profitable overall. Well, that is a fair question, and there is a number of ways to answer it.
The first is this: My goal is to make money. If that requires a lot of risks, then I am willing to do it. I would rather handle the risk to win, then have a small risk and be virtually sure to lose. A lot of people say that Martingaling is foolish, and believe me, I understand where they are coming from.
However, I do beg to differ. In my opinion, a 20 loss losing streak in Forex is impossible if you are smart about where you enter the market. So, purely mathematically, there is a 1 in a million chance that you would lose 20 times in a row. Now, that is if you are flipping a coin; in my opinion, the chances in Forex would be even more ridiculous. In the Martingale forex system, YOU have an advantage. If you are choosing to begin a Martingale, you will be Buying low and Selling high.
Let me give you a little fact: The reason I pointed that out was simply to help you understand that when people say that a Martingale system is always doomed to failure, they are wrong. The examples I was giving were suggesting that you would be able to double your position 20 times; however, that is VERY unlikely.
To be more reasonable, let us say that you can double the trade 9 times, using this array The reason for 9 is because it is easily achievable with a 10 thousand dollar account: Assuming we are making good entries, not buying too high or selling too low, this array should leave VERY little room for failure. Purely mathematically the odds are about 1 in that you would lose 9 in a row; however, with good entries and a large grid, I think the chances of losing go WAY down.
For instance, using the pip grid and doubling 9 times, the pair would have to travel about 2 thousand pips in the opposite direction without a pip bounce AFTER we bought low or sold high. The hard thing about Martingaling is patience and ability to handle risk. This, for some people, will be too difficult to handle. Hope you learned something about the Martingale System today, be sure to follow me on Twitter to get all my trading and forex strategy thoughts!
Nathan Tucci is a young trader. His trading techniques are based on Mathematics above all else. Though he understands technical analysis and fundamentals; his personal belief is that all trading success comes down to the Mathematical principles integrated into all trading. He loves to develop and improve strategies and is constantly looking for ways to take advantage of the Forex Markets.
Nathan loves to share his latest ideas, successes, failures, and thoughts so that other people can benefit from his scientific approach to the market. Follow his latest thoughts on Twitter. Any idea what happened to Nathan? I agree that adding to trades can be a profitable way to trade, and that many traders do that. This is not merely adding to trades, with a defined risk, it is doubling them to infinity.
Martingaling will always blow out accounts, whereas adding to trades in a defined way can be successful. If you manage your risk, and maximize your entries there are many successful traders that add to trades. Martingaling always takes your entire trading account. There are those who have lost it all, and those who will. The fact that Nathan is no longer responding proves this point. Thank you for the explanation.
I want to say for the people who telling that Forex is same like Gambling. It is Just a matter of time and they will suck your account. To be winner who knows where big account locate their TP ans SL location and when they will change trend direction and fortunately this is so hard for small Trader accounts. You will be winner if you use this strategy for long term as you life investment and use risk management.
It will be so great. For example if you have 10, with a lot of calculation. Some body will say 10 years so long. Really I think seriously to go back using this way. By using big Time money ,and Risk Management at this time I will recover my lose.
Firstly, it can easily be demonstrated mathematically that staking systems do not alter expectancy. None of them cite the use of progressive staking as a means of recovering loss, as part of their trading strategy. Hay Nathan Many traders do similar and as an example can be done on brokers like Oanda for even less risk like starting at 0.
It does work, because mathematics does not lie.. The problem for many is emotions to many cause bad decisions when in draw down.. Probably because they are risking too much to begin with.. That is more than pips.. It will not go further than that without one pips retrace, it never has done a move further than that in all pairs in history ever without one retrace of some type and that is including the volatile pairs like GBPNZD..
I mean once we got the direction wrong, we will only manage to break even instead of coming out at the end with a WIN. I for one believe in mathematical trading instead of predicting currency movements. Could you also throw light on the system of doubling in the opposite direction after the pip stop loss.
Which method do you think is more logical in the realm of forex movements. Hi , im programing the martingale, works nice with trailing stop. Hi , i have 2 robots with martingale, and work nice. That depends on how you structure your Martingale. The most profitable way to Martingale is actually to keep two positions open at once.. In other words, when the first position goes down you keep it open and add the next position, and when it goes down; you cut the first position and add your 3rd..
This way, you get the second to last position at break-even instead of a pip loss. Thanks for the comment, James. I am sorry to hear what happened with you…. But yes, if you keep it safe, it can definitely produce profit over the long term. Thanks for the article Nathan. I have been trying forex trading for about 2 years now. The only time I made consistent money was martingaling. My strategy was somewhat different. I did know the risks of blowing the account and knew I had to maintain strict disclipline.
One day the perfect storm occurred chartwise and I was in a bad mood that day and took on too much risk and boom. I have not tried it since but beleive it could have cntinued to work had I tweeked it some and maintained discipline. Your strategy is a much safer and conservative strategy. The mathmatical odds are on your side. Believe me, if the casinos banned martingaling or made adjustsments to negate it, then you know good and well there is something to it.
I beg to differ. For that to happen, you would have to lose all 18 holes in a row. If you have ever watched match play: That is a great point.. I understand this, and still believe the strategy functions well if you stick to the rules. Thanks so much for the comment! You are a smart trader and your mathematical notation gives you credit. You are VERY right.
My only objection is that in trading, there is some interference. Hey Gary, thanks for reading! Hello Wayne, thanks for the comment. I certainly understand where you are coming from.. And I believe that your unit method could work; however, Martingaling is one of the oldest strategies in trading history, so there is a reason it has withstood the test of time. I believe that I will stick to the Martingale system because it has proven to be successful for a long time. Perhaps I will adjust it over time, but I do believe—mathematically speaking—that it has complete capability to retain profits in all market conditions.More...