Beware of the Martingale Strategy! Here is the reason why.
You might have heard of the Martingale strategy. Most traders find it very fascinating. This is something you never want to do and I show you why. The idea is, if you lose, you simply double the amount. We made a profit in the first trade but then we lost, so we double the amount and we lost again. So we double the amount again and lost again and lost again, and doubled and doubled, and this one was a winner. Whenever a loss occured, we simply doubled the lot size and it works for a time.
The equity goes up, the balance goes up, and the lot size goes up until it immediately drops. You see this part of the curve? This is a typical sign for a Martingale system. Whenever you see an equity curve that this looking like this, it might be a Martingale system, and it’s the most dangerous kind of system you can trade. It is like playing Russian roulette with a revolver where you have to pull the trigger a thousand times. You will find the bullet that kills you.
So if the only thing you remember after this course is never to trade a Martingale trade strategy it might avoid huge losses for you. If you want to compare systems other people like, you can do it on myfxbook and you will see unbelievable gains and drawdowns here. One basic rule in trading is that you never want to win more than you would accept to lose, and in Martingale, losses can be a thousand times bigger than the profit.