What is a martingale trading strategy
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 systemyou 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 what is a martingale trading strategy 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 what is a martingale trading strategy 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 what is a martingale trading strategy, 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 what is a martingale trading strategy, 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. What is a martingale trading strategy, 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.
You may ask, how could you justify risking a thousand dollars to make a sixty dollar profit? The following two tabs change content below. Winners Edge Trading was founded in and is working to create the most current and useful Forex information and training available on the internet.
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