The Martingale system is a strategy for making a profit. What is the martingale system

Today we will look at the so-called Martingale principle, used when trading in financial markets. Many experienced traders consider the use of this technique in online trading to be a relatively dangerous activity.

The fact that this method of money management came to stock trading from the field of gambling may cause certain concerns.

Beginners, succumbing to the temptation of making a quick profit, rush headlong into the Martingale pool. Thoughtless application of the Martingale principle in trading can lead to a complete loss of capital.

Let's figure out where "Martin" came from in the field of trading in financial markets, as well as what this method of money management originally was.

Martingale principle: history of origin

The history of the Martingale method dates back to the 18th century. Now no one can say for sure where this money management system came from. It is believed that this instrument was first used in France, in gambling.

Some believe that the founder of this system was John Henry Martindale, who implemented this system in his casino, and the name of the technique itself comes from Martindale’s distorted surname.

Some researchers claim that the name comes from the slang of French gamblers, who used the word “martengalo”, denoting the inhabitants of the city of Martigues. In any case, there is no exact information about the origin of the name of the Martingale principle.

Already at the beginning of the 20th century, the famous French mathematician Paul Pierre Levy developed the “martingale” mathematical system, based on the theory of probability. The same principle was developed by another mathematician, the American Joseph Leo Doob, but it was more intended to mathematically prove the impossibility of successfully using the martingale method in betting.

Description of the Martingale principle itself

This principle can be well demonstrated in roulette. Let's say we bet on “red” one dollar. If “black” comes up, we repeat the bet on “red”, but this time doubled, that is, two dollars.

If we win this bet, we receive four dollars, three of our own and one of the winnings. This is the Martingale principle - in case of loss on the first bet, the next bet is doubled or multiplied by a certain coefficient. This can be repeated many times, in the final case the winning bet covers all losses and even brings some profit.

Currently, the Martingale method is used not only in gambling. This method of money management is also widely used in trading on financial markets. We will talk about this application below.

Varieties of the Martingale system

Martingale comes in several forms. These varieties are applicable both when betting in casinos and when trading Forex and binary options. Let us now consider in more detail the main forms of the Martingale principle.

The first and main variety is the classic or simple Martingale system. Its essence is simple - if there is a losing bet (or deal), the next bet is doubled.

The next type of method is the large Martingale. It's about about a more aggressive strategy, the basis of which is to increase the odds of the next bet if the previous one loses. That is, the amount of the second and subsequent transactions is not double, but triple or higher. The coefficient here can be different, the following principle of increase is often used - if you lose, the next bet is doubled and the amount of the first bet is added to it.

For example, your initial bet is $5. If it turns out to be unprofitable, then the next bet will be $15 = 5x2+5. If this bet also loses, the new deal will be $25 = 10x2+5. Thus, you increase the size of subsequent transactions until your next bet wins.

Anti-Martingale is another type of system. The principle of application is similar to classic options, when each subsequent bet is doubled. However, the following rule applies here - the bet increases in the event of a win, not a loss on the previous deal.

There are other varieties of the Martingale principle, but we have indicated the main ones.

Using Martingale in online trading

Let's now look at the application of the Martingale principle in the Forex market and when trading binary options.

As mentioned above, the Martingale method is not a trading strategy, it is a method of money management (Money Management). You cannot enter the market at random using this system, because If we incorrectly determine the price movement, our deposit funds may disappear in the blink of an eye.

In this article we will assume that positions are opened based on signals from the trading system.

Let's consider using a simple version of the Martingale system when trading the GBPUSD (pound sterling/US dollar) currency pair. Let's say our trading strategy shows signals to enter a BUY position. We open the first trade with a 0.1 lot at a price of 1.5480 and set a stop loss at 1.5440 (40 points) and a take profit at 1.5520 (the same 40 points).

Our first order worked, so we immediately enter the market at a price of 1.5520 with the same order of 0.1, but we already set the stop loss at 1.5480 and the take profit at 1.5560.

This time the take profit does not work and we receive a loss under the stop loss. We again open a trade at the stop loss level of the second order, but the volume of our third trade is already doubled, 0.2 lots. Next, we can see how the take profit at 1.5520 is triggered, which allows us to return to concluding transactions with a lot of 0.1.

Binary options trading will have the same pattern, with the exception of stop loss and take profit levels. Due to the fact that when opening a binary options transaction, we set the expiration date (deadline for the transaction), stop loss and take profit cannot be applied here.

In this case, time will act as a limiter on profits and losses. The rules are the same as when trading on the Forex market - in the event of a losing transaction, we immediately open the next position, directed in the same direction as the previous operation. The period before expiration is also repeated, but the value of the option doubles.

Pros and cons of the Martingale principle

We will not consider the advantages and disadvantages of the Martingale method for casinos, gambling, etc. IN this material Let's look at the pros and cons of the Martingale principle for trading on Forex and the binary options market.

The biggest mistake new traders make is using the Martine as the basis of their trading system. Some of the so-called “specialists” suggest using this method as a trading system.

It is worth remembering that the Martingale principle will never be a trading strategy - it is a trading risk management or money management system.

The main advantage of the Martingale method is the ability to get high profits in almost any market situation. The main disadvantage of this is the high risk of loss cash, especially for novice speculators who have not paid attention

In most trading houses and virtual casinos, the martingale strategy is directly or indirectly prohibited for use. The thing is that this money management approach is perhaps the only way cheat the system and win. The only area in which the Martingale system can be used without restrictions is trading in the financial market.

What is the martingale system

The Martingale strategy began to be used in the 18th century as an algorithm for increasing bets in gambling. The meaning of this tactic is simple. When a loss occurs, the player doubles the bet in the hope that the double profit will cover the previous loss.

In other words, the martingale method is an implementation system in gambling a simple principle of probability theory, namely that a player cannot constantly lose. Sooner or later there will be a win that will allow you to cover your losses and make a profit. In reality, this is the case, receiving several losses in a row and doubling the size of the bets, gambler receives a win that covers all previously received losses and allows you not only to break even, but also to win. But, at the same time, he risks losing all his capital, since he does not know exactly when he will win - in the next game or after 10 games. After all, while constantly doubling bets, if the next doubling is necessary, it may turn out that the player does not have enough money. And then this system will fail.

If you have encountered the work of on-line betting, then you probably know that the specified system works in such a way that the player cannot fully use the martingale system and double bets ad infinitum. In order to limit players in the number of doubling bets, the casino places a limit on the maximum bet (significantly lowering it, and preventing the player from doubling bets to the size he needs) or the minimum bet (significantly overestimating it, forcing players to start doubling bets from an amount that, after a certain number of doublings, can no longer be doubled due to lack of equity capital).

And such measures are taken because the martingale method really works and really allows you to never lose. And a casino that plays against its clients cannot allow the latter to constantly win.

That is why the martingale system began to be used where it cannot be prohibited or limited - in the financial market.

The only area where martingale is allowed is financial market, including where traders are not limited in the number of doublings of bets (trading lot), and can start trading with the very minimum amount. Against this background, observing certain rules and requirements for using martingale tactics, each of us can trade with maximum indicator profitability.

The advantages of Martingale are:

High profit factor of trading strategies
Relative simplicity of trading strategies
Can be used on any asset
The system is applicable to any market spread size

The disadvantages of martingale are:

Need for large size trade deposit

The Martingale method has been tested in real trading by hundreds of thousands of traders. By analyzing numerous errors, reviews and profitable results of previous generations, we will try to develop for you a profitable algorithm for using this mathematical money management system.

1. Start with the minimum lot.

Of course than smaller size lot, the lower the profit. But you must understand that when using martingale, you will have to double your bet sizes (lots) until you make a profit. And no one knows how many transactions this will require. Thus, minimum size lot will guarantee you the opportunity to double the size of the transaction comparatively more once.

2. Start with a significant deposit.

The larger the deposit, the greater the margin of safety for future doubling of transactions.

3. Trading according to strategy.

Of course, if you think logically, then when trading Forex “blindly” without a strategy, the probability of making a profit in the transaction is 50%. But for profitable martingale trading, completely different statistics are important to you, namely, the maximum number of losses received in a row. When trading blindly, you can get more than 10 losing trades in a row, and this will be a fatal moment for your trading account.

Thus, it is recommended to trade using Martingale only using a strategy in which the maximum number of losing trades is no more than 5, and ideally: 3-4. It is these statistics that will allow you to achieve maximum profitability results with minimal risks.

4. Trade with a reliable broker.

If your broker is an ordinary dealing center that does not bring clients’ transactions to the market, then it is simply impossible to trade using martingale with such a broker. Since no company will allow it to constantly win. This means that sooner or later you will have problems with non-execution of transactions, the widest possible spread or long non-market candles. Brokers have a lot of options on how to make your trade unprofitable.

5. Trading with the help of a trading expert.

Mathematical money management (on which the Martingale technique is based) assumes maximum accuracy in concluding transactions and trading according to all trading signals of your strategy without exception at any time of the day or night, that is, around the clock. There is no place for the human factor here. Therefore, martingale trading, in the best case, should be carried out with the help of an automatic trading expert.

Trader mistakes

Most mistakes made by traders using martingale strategies are based on psychology:

1. Inflating the size of a trading lot.

Often, traders who use martingale, in order to obtain maximum trading results, overestimate the trading lot size. As a result, when receiving a series of 5-7 unprofitable trades in a row, the trader has no funds left to double the trading lot and the deposit is “merged”.

2. Trading with a minimum deposit.

There are no miracles in Forex. And if you started using martingale with a deposit of 100-200 USD, then there will be one outcome - failure. Since, even using the minimum size of transactions, the account size will not be enough for future doublings of the lot, which may require 5-7 pieces.

3. Trading without a strategy.

As mentioned above, counting on the fact that losses during blind doubling of trades will be covered by the martingale is always a losing outcome. Only a trading strategy can provide you with trading with a minimum number of repetitions of losing trades!

If you have such a strategy, apply a minimum lot size and use a strong trading account, then the likelihood of your trading account being drained is almost zero, and your trading results will exceed all your expectations!

Today we will look at strategy using the Martingale method: Imagine a trading system that is 100% profitable - Would you be interested in this FOREX strategy?

Almost all traders would most likely answer with a loud “Of course,” but strangely enough, such a trading strategy actually exists, and has existed since the 18th century. It is based on the theory of probability and if your Forex deposit is large enough, and at the same time you are trading a relatively small lot, then this Forex strategy gives The probability of making a profit is about 100%!

It is known in the world of financial trading, as it used to be quite often used in the gaming rooms of Las Vegas casinos, and it was this system that came into being main reason why all casinos now have minimums and maximums for gambling bets and why roulette now has 2 green fields (0 and 00).

But that's it disadvantages of this system lies precisely in the fact that to get 100% profitability you must have very deep pockets, stuffed with money.

Unfortunately, no one can have infinite wealth, and theoretically, one missed trade deal can lead to complete bankruptcy.

In addition, the risk of a transaction is sometimes much greater than the potential profit from it.

But despite these shortcomings, of course there are many ways to improve the martingale strategy. Let's look at these ways we can improve our chances when dealing with this very high-risk and difficult trading strategy.

What is the Martingale system?

The “break-even” strategy or “martingale” method was discovered by the French mathematician Paul Pierre Levy. Martingale was originally just a variation of the casino gambling style that was based on “doubling down.” It is tempting that many works on the martingale strategy were written by the American mathematician Joseph Leo Doob, who tried to disprove the likelihood of a 100% profitable betting system with this method of making a profit.

The essence of the system, of course, requires one initial bet.

However, whenever a bet loses or closes with a loss, rates are doubled so that one winning trade covers all previous losing trades.

The introduction of new numbers 0 and 00 on the roulette wheel was done precisely in order to completely break the mechanics of the martingale system, so that during the game there would be more than 2 possible options, except even-odd or red-black. This ultimately led to the fact that the expectation of making a profit when using the martingale system in roulette turned out to be negative and, thus, deprived the full meaning of its use.

To finally understand the basics of the Martingale system, let's Let's look at a simple example:

Imagine us flip a coin and make a bet for the loss of only heads or tails with starting bid at 1 $. There is a 50% chance that the coin will land either heads or tails and each throw is independent, that is, each previous throw does not in any way affect the result of the next one. As long as you stick to one path, you will still be able to eventually, but given the infinite amount of money you have, wait for the required side of the coin to appear and at the same time win back all your received losses + $1.

This strategy is based on the premise that we only need 1 trade to turn our losses into profits again.

Option No. 1 (Heads or Tails, chances - 50/50):

Your bet	Bet size	Result	Profit or Loss	Account size
Eagle	$ 1	Eagle	$ 1	$11
Eagle	$ 1	Tails	— $ 1	$10
Eagle	$ 2	Tails	— $ 2	$8
Eagle	$ 4	Eagle	$ 4	$12

Let's imagine that you only have $10 to place bets, starting with the 1st at $1. You bet that the coin will land heads, and the coin lands heads and you win $1, increasing your assets to $11. Every time you win, you continue to bet that same $1 until you lose it.

You lose the next throw and your asset becomes $10. Now, on the next toss, you bet $2 in the hope that if the tossed coin lands heads, you will be able to recoup past losses and bring net profit and the loss goes back to zero.

It’s a pity, but the coin comes up heads again and you lose those $2, reducing your account to $8. So, according to this martingale system, your next bet should be equal to double the previous bet - $4.

And so you won and received $4, bringing your total asset to $12. Now you see what you need to win back all your past losses - just one single win.

But let's see what happens if you suddenly find yourself on a losing streak , as possible scenario #2:

Your bet	Bet size	Result	Profit or Loss	Account size
Eagle	$1	Tails	— $ 1	$9
Eagle	$2	Tails	— $ 2	$7
Eagle	$4	Tails	— $ 4	$3
Eagle	$3	Tails	— $ 3	ZERO

And so, you have 10 $. In this scenario, you immediately lose on your first bet and reduce your asset to $9. Now you double your bet on the next roll, lose again and are left with $7. On the 3rd roll, your current bet became $4, and after losing you only had $3 left. And now you absolutely do not have enough funds to double your bet, and now the best thing you can do is to bet everything you have. If you suddenly lose, you are completely bankrupt, but even if you suddenly win, then initial capital at 10$ it will still be a long way off.

Application of the Martingale method (strategy) in Forex trading:

You might assume that a long string of losses, as in the example above, is very rare bad luck, but once you trade currencies, they tend to trend, and trends can last a very long time. for a long time, and this is more noticeable if you took a trade in the wrong direction (against the trend).

However, important property The Martingale strategy as applied to Forex trading is that by “doubling down” you significantly reduce your average price of entry into the market.

In the example below, for 2 lots, in order to break even when concluding a transaction, you need the EUR/USD currency pair to increase in price from 1.2630 to 1.2640. Because the price moves lower, and you add 4 lots, to achieve break-even you now need to increase the price value to only 1.2625 instead of 1.2640.

The more lots you add when trading, the lower your average entry price. And even though you could easily lose 100 pips on the first EUR/USD lot, if the price then reaches 1.2550, you will only need the currency to rise to the 1.2569 level for the total capital to enter the zone breakeven.

This is also a good example of why deep pockets are necessary. And if you only had $5,000 in your trading account, you would be bankrupt before the EUR/USD currency pair reached the 1.2550 level. A currency pair may eventually reverse, but when using the martingale system, it often happens that you may not have enough funds to stay in the foreign exchange market for as long as necessary.

Therefore, if you trade Martingale on Forex, then start with small lots!

Currency pair EURUSD	Lot size	Average entry price or break-even level	Accumulated trading loss	Distance to break-even level
1.2650	1	1.2650	$0	0 pips
1.2630	2	1.2640	-$200	+10 pips
1.2610	4	1.2625	-$600	+15 pips
1.2590	8	1.2605	-$1,400	+17 pips
1.2570	16	1.2588	-$3,000	+18 pips
1.2550	32	1.2569	-$6,200	+19 pips

Why does the method still work better in the Forex market (FOREX):

One of the main reasons why martingale trading strategy is so popular in the market, is that, unlike stocks, currency pairs quite rarely go to zero. Trading companies can easily go bankrupt, and States cannot. There are periods when a currency pair devalues, but even in the event of a sharp fall, currency value NEVER reaches zero. This is not only impossible, but for this to happen, something very terrible needs to happen that you don’t even want to consider this option.

The main point Forex trading strategies using the martingale method is that the price cannot remain in the same range indefinitely and sooner or later there will definitely be a way out from this range. And if you qualitatively calculate using all kinds of Forex indicators in the trading terminal, for example, when this exit will occur, then you can feel free to place pending orders to enter the market and wait for profit.

And even if one or two transactions are closed with a loss, it’s still a series of orders when trading on Forex will close with a profit and the main thing is that the size of your deposit is enough for you:

IN at the moment, there are many forex companies offering advanced trading signals and Mechanical trading systems, which are based on the Martingale method. Developer companies make a huge number of improvements and additions, and also send all kinds of instructions for Forex trading signals. existing method, which allow you to take fewer risks when trading on the Forex market .

But the main essence of these strategies is still the Martingale method. And I don’t argue that these improvements allow traders to earn decent amounts at the same time, and I personally know several traders who successfully trade using these signals and MTS (mechanical trading systems), but at the same time, we should not forget that the deposit size should still allow you to withstand several market reversals. So that one of the transactions is still closed with a profit and you receive your increase in the deposit. And for this you need, first of all, not to be greedy and open with a fairly small lot...

Forex is also a market provides one-of-a-kind benefit, which makes it even more attractive for traders who have enough assets to work using the Martingale system. Opportunity to earn on interest rate differences, allows trading traders to compensate for part of their losses with income in the form of interest. This means that a trader can trade the Martingale strategy only on currency pairs in the direction of receiving a positive swap in his trading account. This means that he must buy a currency with a high interest rate, while earning on interest, and sell a currency with a fairly low level interest rate. At large number traded lots, income in the form of interest can be very significant and, at the same time, will work to reduce your average price entering the market.

ALWAYS be aware of the risk when trading this method:

The strategy discussed above may seem very attractive to some traders, but I want to caution those traders who try to diligently practice this method of forex trading. Remember that main problem This system is that sometimes a single trade transaction can completely wipe out your trading account before you make any profit or even be able to cover your losses.

A trading trader should always be prepared for this option that he could lose most of the assets in his trading account on just one trade. Taking this into account, it is necessary to accept the fact that that you should not chase big profits when trading using the Martingale method. Therefore, the Forex trading strategy using the considered method is not suitable for all traders.

Many people have heard about the use of these two methods in trading, but not everyone knows what exactly they are. Meanwhile, every trader should have an idea of what the Martingale method and the anti-Martingale method are. Both of these methods are described below with casting specific examples their use.

The Martingale method originated as a betting system for playing roulette. The essence of the method is to always end up winning by raising the bet in case of a loss. Let's take a closer look at the betting system using the Martingale method.

For ease of calculation, we will take the size base rate equal to one ruble. When playing using this method, you first bet one ruble, then if you lose, you double the bet, and if you win, you return to the base bet size - one ruble.

Let's say you bet one ruble on red and lost, then your next bet is two rubles. If you lost two rubles, bet four and so on until the first win, after which you again bet one ruble.

Thus, for each win, your capital will increase by the size of the base bet (in our case, by one ruble). This can be easily verified by simple arithmetic calculations:

Let's say we have a chain of two losses and one win.

2nd bet – 2 rubles – loss

3rd bet – 4 rubles – win

Loss: 1+2=3 rubles

Winning: 4 rubles

Profit: 4-3=1 ruble

You can make similar calculations for any sequence of losses and wins and make sure that the final profit after each next win will be equal to the size of the base bet (in our case, one ruble).

But the size of the bet after each successive loss, on the contrary, will increase. Moreover, it will grow exponentially.

There is an old parable about a cunning mathematician and a greedy ruler. The essence of this parable is that the ruler urgently needed the help of a mathematician, but he absolutely did not want to pay him. They bargained for a long time until the mathematician offered the following diagram calculation. He went to the chess table that stood nearby, removed all the pieces from it and placed one grain of rice on the first square. Then he invited the ruler to fill the entire board with rice in such a way that he had to put two grains on the second square, four on the third, and so on, constantly doubling the number of grains on each new cell. The mathematician called this amount of rice the price for his service, but the ruler, without thinking twice, hastened to agree to such a meager price, from his point of view. However, when the time came for the calculation, it became clear that the amount of rice that would fill the chessboard according to the above scheme is unlikely to be found in the whole world*.

I don’t know how the heroes of the parable ultimately solved their problem, however, in the context of this article something else is important. It is important to understand how small numbers reach astronomical values through a simple geometric progression.

So, what do we have when we apply the Martingale method in practice? The probability of winning is many times higher than the probability of losing. But the size of this winning is tiny compared to the size that bets reach after several losses in a row. When placing bets using the Martingale method, sooner or later you will encounter a situation where a chain of continuous losses will lead to the size of the bet growing to the size of your entire capital (and all this for the sake of winning 1 ruble). Thus, you will inevitably lose everything, provided that you are psychologically able to withstand the process of raising bets on a long chain of losses (and the likelihood of such a chain occurring is greater, the more more bets you do).

Antimartingale method

In contrast to the Martingale method, there is the Anti-Martingale method. Its essence is to increase bets after each win and return to the base bet in case of loss.

Let’s say we have a chain of two losses and three wins with a cutoff of profit after three wins in a row.

1st bet – 1 ruble – loss

2nd bet – 1 ruble – loss

3rd bet – 1 ruble – win

4th bet – 2 rubles – win

5th bet – 4 rubles – win

Loss: 1+1=2 rubles

Winning: 1+2+4=7 rubles

Profit: 7-2=5 rubles

When using this method it is necessary to set a limit for increasing the size of the bet (the so-called profit cut-off). For example, return the bet size to the base size after every three or, for example, five wins in a row. Without these cut-offs, the method will not make sense, since there are no endless chains of winnings, and the very first loss will reset all earned profit, and you will constantly return to the “broken trough”.

Conclusions

In principle, it is possible to use the Anti-Martingale method or its modifications when playing on the stock exchange, at least it will not allow you to quickly lose to smithereens**. But using the Martingale method when playing on the stock exchange or Forex market is strictly not recommended.

*For fun, you can play around with a calculator and calculate the number of grains of rice needed by the ruler to pay the mathematician.

**However, of course, you can make money, the main thing is to approach the creation of your own system based on the Anti-Martingale method correctly and wisely.

My warm greetings, dear visitors of the WebMasterMaxim.ru blog. IN this review I want to introduce you in more detail to such a topic as the Martingale system.

I would like to note that when using this system, the trader does not have any clear advantage in mathematical terms.

IN in this case, he just hopes that the next deal will be a winner. If you delve into the essence of the system, it turns out that the trader will not lose so often, but the losses will be significant. But, along with this, frequent profits are obtained, but they are small.

We implement on binary options

Of course, I want to point out that the Martingale system is really good took root in the field of binary options. Probably 8 out of 10 traders, one way or another, use this system in their trading. Why is this happening?

It’s all because of simplicity, because in this case we focus exclusively on the theory of probability, and at the same time we do not need to conduct a complex and in-depth analysis of the market.

To make it a little clearer, let's try to look at a couple of examples.

Let's take for example that minimum rate the broker has 10 dollars, while the percentage on profitable transactions is 80%. Let's say you opened a deal and it closed with a profit, then in this case we do not take any action and move in the same spirit.

But if you lose in a trade, then in this case you will have to increase the lot so that the profit covers the previous loss and gives additional profit.

But, do not forget that the payout percentage for transactions is 80%, accordingly, the lot will need to be increased not 2 times, but a little more.

Let's say you bet 10 dollars in a transaction and lost, then, in this case, you need to bet somewhere around 22 dollars in a new deal. Accordingly, if the transaction turns out to be profitable, we will earn $17.6. Thus, we will work off the previously received loss of 10 dollars, and at the same time we will be in the black by 7.6 dollars.

But what to do if the next transaction brought a loss?? In this case, you will need to continue to increase the volume of the transaction until you make a profit. After the transaction turns out to be profitable, you will need to return to the original lot and continue trading.

As you can see for yourself, the theory of probability and no fraud.))) That is, we do not conduct any in-depth analysis of the market, but simply try to justify our advantage in mathematical terms.

Roughly speaking, in this case everything happens 50/50, that is, in each individual transaction we will receive either a profit or a loss - we are not given a third option. As we all know very well, market movement has a certain wave character, that is, the price cannot constantly move in one direction or another, even without minimal pullbacks.

Even if we hit a series of failures, we can wait for a correction, thereby working off the initial losses and making a profit. There is one very interesting question here: when will this correction come? If you look at the price chart of any asset, you will notice that the price can move in one direction quite sharply and aggressively.

In this case, you will need a huge deposit in order to be able to open the next leg after a loss. We will, as it were, try to sit out the unlucky streak, everything seems to be quite simple, but there are also moments when the Martingale system can actually cause damage serious blow according to your deposit.

Naturally, the market will never move clearly in one direction or the other; the impulse will certainly be followed by a correction. But, pay attention to the picture above! We see how strong and aggressive the price movement was in an upward direction.

In fact, if before the start of this very movement you had purchased a put option and worked on the Martingale, you would have had to sit out 13 knees in a row. Let's do a basic mathematical calculation of how much we would have to spend to get out of this situation with our heads held high. Let's say the broker's minimum transaction volume is $10. We count:

10 – first knee
20 – second knee
40 - third knee
80 – fourth knee
160 – fifth knee
320 – sixth knee
440 – seventh knee
880 – eighth knee
1760 – ninth generation
3520 – tenth knee
7040 – eleventh knee
14080 – twelfth knee
28160 – thirteenth knee

In short, this progression is given without taking into account the fact that payments on profitable transactions are far from 100%. Accordingly, it will be necessary to increase the lot not by 2 times, but somewhat more, and this will lead to additional expenses.

Of course, you can increase the lot by 1.5 times, but then you mainly you'll be stuck in one place, what is the point of risking such huge sums then? And let’s be honest, few traders will have such a large deposit at their disposal, and what kind of beginner trades with a minimum lot?

As a rule, they “chop the whole cutlet”; accordingly, a couple of incorrect transactions kill their deposit. A very common situation is when traders run into a recoilless market movement, their deposit size simply does not give them the opportunity to open another leg, and accordingly, the trader will no longer be able to cover the loss of part of the deposit.

I want to point out one more thing important point– You should first consider whether your broker is suitable for this system. Now they set a limit on the maximum deal, which may limit the presented system when working with large sums. Let’s say if there is a limit of $5,000 on the maximum lot, then in our example the trader would no longer be able to open the eleventh leg. In this case, he would have said goodbye to most of his deposit.

From all this we can draw a simple conclusion - even if you have a million dollars in your account, then if there is a limit on the maximum bet, the Martingale system does not make any sense at all. If you are really ready to invest a large amount in options trading, then you need to use Martingale carefully, or give it up altogether, and place a bet on the accuracy of your transactions.

I can’t ignore the psychological aspects either. In fact, using this approach is very difficult psychologically, especially if trading is carried out in large amounts.

In this case, you really need to have balls of steel to sit through the next knee and understand what can you lose now? most of deposit. At the same time, I do not recommend everyone to use Martingale on its own; it is better to try to combine it with some strategy to try to somehow gain an advantage.

What do I mean? You trade clearly according to your system, if the transaction turns out to be a profit, then great, and you continue trading. But if you have received a loss, then you can already use the increase. That is, in this case we have some kind of consistency, and we are not just placing bets out of the blue.

Be sure to compare the size of the minimum transaction volume and your deposit. For example, if your deposit is $50, and the broker’s minimum lot is $10, then what kind of Martingale are we talking about?
Do not try to use multiple underlying assets at the same time. Choose the asset that is most suitable for you, and concentrate your attention on it, don’t get scattered.
Don't chase short-term profits, be patient and selective. Many novice traders often open and start using the Martingale. This approach is extremely risky and aggressive; few experienced traders will be able to earn money this way consistently; I’m not talking about beginners at all. As a novice trader, it is better to choose for yourself.
It would be very nice to find a broker who would return you the full amount of the investment when the opening and closing prices of the transaction match. Many brokers equate to when a transaction closes at the same price at which it opened.
No need to go against a strong trend! If you see a strong price movement, then you do not need to try to go against it; on the contrary, find an opportunity to competently join the trend. Trading against the trend can only create problems for you, and very serious ones at that.
Be sure to try to cooperate Martingale with other systems, be flexible in your actions!
Toughen up emotionally! It is worth understanding that trading in general involves a whole range of different emotions. In just one transaction, a trader can experience joy, sorrow, euphoria and other bouquet of goodies))) As for Martingale, this approach is realistic requires from the trader nerves of steel . When a trader starts actively using Martingale, I involuntarily begin to think how the planet does not leave orbit under the weight of his steel balls)))

A little about the advantages and disadvantages

Of course, any trading system has its advantages and disadvantages. At the same time, the Martingale system was no exception to this principle. I'll start with the advantages. Theoretically, this system can become a win-win if the trader has a really large deposit.

Now let's look specifically at the shortcomings. Let's judge logically, and Martingale are two incompatible concepts. You need to understand that Martingale system – this is a really aggressive approach, which often involves high risks.

And where there are high risks, there are often large losses. Roughly speaking, you will have to risk a large amount in order to make a small profit, which in itself shifts the mathematical expectation far away from the trader himself.

In addition, payouts on profitable trades are clearly less than 100% - this further worsens mathematical expectation. Well, naturally, in order to feel more or less comfortable using this approach, you need to have a lot of capital, which is beyond the power of many beginners.

Drawing conclusions

Of course, the Martingale system is a subject of debate for many traders. Naturally there is large number admirers of this method who use it in practice (including myself, who actively use it). But you can also find many opponents of this approach, who will throw mud at it at every opportunity.