Forex Martingale the Double Strategy

forex-automation.jpgOriginally, martingale referred to a class of betting strategies popular in 18th century France. In Forex trading, the strategy let the trader double their order lots after every loss, so that the first win would recover all previous losses plus win a profit equal to the original investment.

According to martingale system trader should double his bet after every loss and return the bet to initial amount with every winning, if traders put 1 lot on GBP/USD, if he wins he put 1 lot again, if he loses he puts 2 lot on GBP/USD, if he loses again he put 4 lot etc. If the trader is has an infinite amount of money he will be always winning, because his next trade will not only return his losses, but will guarantee a win of the initial trade (1 lot in the example).

The Martingale strategy needs a very strict money management and you must understand that in the beginning money will be coming slowly, but if you lose the patience and raise risk level up to much, you may not hang on to the end to see the turn-around.

The major problem for martingale systems in gambling is that every next result is completely independent of the previous results, so the streak of any number of losses is totally possible. In Forex the probabilities are not linear, so the streaks can have some inner logic dependent on markets. It makes martingale trading system less predictable and potentially profitable if optimized to the market conditions.

 

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