What Is Martingale?

[jane trader]

If you write "martingale" in a search engine box, it will return a large number of pages with the description of this system. It is interesting that among others you will meet web-sites of online casinos, which assure that this system works, all you need is entering your credit card number to start scooping up money. What is strange - are the casinos ready to give their money such easily? If the Martingale really works so good, then why have not all the casinos turned bankrupt yet?

So, what is Martingale? Here is the definition from Wikipedia:

The Martingale is a betting system in gambling. The meaning is the following:

• A game starts with a certain minimal bet;
• After each each loss the bet should be increased so, that the win would recover all previous losses plus a small profit;
• In case of win a gambler returns to the minimal bet.
• Where Is Martingale Used?
  The simplest gamble for analyzing the Martingale is chuck-farthing. The chances to win and to lose are equal - the gambler wins if a coin comes up heads and loses if the coin comes up tails. The Martingale system for this game works in such a way:
  • Start the game with a small bet;
  • After each loss double the bet;
  • In case of win return to the minimal bet.
  The Martingale can also be used in playing the roulette, betting on red or black. The chances are less than 50/50, because there is also Zero, still very close to it.
  
  As applied to trading, the following variant of the game can be used. Analogous to tossing a coin we open a position in any direction (short or long) with stop-loss and take-profit equally distant from the trade price. As we open the position in a random direction, the probability of profit and loss is analogous - 50/50. So in this article I will describe only the classical problem of tossing a coin with doubling the bet at a loss.
  
  
  Mathematical Part
  Let us conduct a mathematical calculation of the dependence of the loss probability on the possible profit at the game with a coin using the Martingale system. Let us introduce the following symbols:
  • Set – a set of tosses, ending by a winning one. I.e. all tosses except the last one are losing. At the first toss the bet is minimal, at each next toss in the set the bet is doubled;
  • Q – initial deposit;
  • q – price of the starting bet;
  • k – maximal number of tosses (losing) in the set, leading to bankruptcy (suppose after k toss the deposit is equal to zero).
  As we double the bet after each losing toss, we can derive the following equation:
  
  
  
  
  

 

[Lee Mark]

This is one of the most popular trading strategy, but I never used this strategy in my live account! For me, only news trading is real! Yes I believe in logic, so I am comfortable with only news analysis! Interestingly, news trading brings quick result!

 

[Faal]

It looks very complicated, there have more than thousands of trading system in Forex industry! I prefer Price Action trading strategy because of its simplicity! Right now, I am making 30% monthly return regularly by using PA only.

 

[alextrader79]

Too risky for me, people who use that strategy fully rely on luck, I don't assume it a nice attitude

 

[Svetlana Loboda]

Too risky for me, people who use that strategy fully rely on luck, I don't assume it a nice attitude

Same opinion; successful Forex traders with this trading strategy is very rare! In my early stage, I tried for only few weeks, and I didn’t find any interested point in there!

 

[Eduardo Lucchese]

Traders mostly fail in trading just because they don’t make the best use of their interest. They are not passionate about skill development that tumbles them ultimately.

 

[Oscar Shumack]

The broker offers you different types of accounts so you can choose any of them according to your preference.

 

[Alexander Hudson]

Staying with the market for a long time will help you catch the actual market environment.

 

[LouBega88]

Without building such qualities, achieving trading success is a far-fetching target for traders.

 

[SaadBinToha]

It takes away traders’ motivation and traders mostly leave the market for so. Proper money management helps a trader derive average profit from the market.

 

[Gito Dinev]

Small investors should trade very carefully. Those who have small capital shouldn’t apply any EA.

 

[Nayek Pichai]

Big capital holders use increased lot size to earn more but small investors don’t have this opportunity.

 

[Bahiya Shinam]

If traders have a professional EA, then things are different for them. But don’t use others EA!