FOREX method Martingale
Forex Strategy - Martingale method.
Imagine forex strategy, which is 100% profitable - would you be interested this strategy FOREX? Almost all Forex traders, most quickly, would answer with a loud " course ", but not strange, but this strategy trade and although there is , and there is still the 18th century. This strategy is based on trade probability theory and if your deposit in forex is large enough, and you are trading with a relatively small lot, this forex strategy gives the probability of making a profit - about 100% !
This forex strategy , known in the world of financial trading, as Martingale , before davolno often used in gambling halls of Las Vegas casino and that the strategy and was the main reason why in all the casinos now have minimums and maximums for gambling bets roulette and why now has 2 green field (0 and 00). But all disadvantages of this system is exactly that for 100% of return you need to have very large pockets , filled with cash. Tragically, no one can have infinite wealth, and theoretically, one missed a bargain can lead to complete bankruptcy. In addition, the risk of the transaction much garazdo sometimes greater than the potential profit on it is . But despite these shortcomings, course there are many ways to improve the strategy of "Martingale". Let's look at ways we can improve your chances when dealing with this very high-risk and difficult trading strategy.
What is it like to Martingale Strategy?
Strategy "martingale" was opened by the French mathematician Paul Pierre Levy. Initially, the martingale was just kind of style gambling bets, which was based on "doubling down". Alluring is that many papers on the martingale strategy, were written by American mathematician Joseph Leo Doob, who tried to refute a 100% profitable betting system.
essence of the system, of course, requires one of the initial rate, but each time, once bet is lost or closed with a loss, the stakes are doubled so that a winning deal blocked all previous losing trades < / strong>. The introduction of new numbers 0 and 00 on the roulette wheel was made precisely in order to completely break down the mechanics of the martingale, to playing the game, the roulette was more than 2 options, but even-odd or red-black. This eventually led to the expectation that a profit by using the Martingale system in roulette has turned negative, and in this way deprived the full sense of its use.
To finally understand the basics of Martingale, let's consider a common example . Imagine, we toss a coin and betting on the loss of only eagles or tails with an initial rate of $ 1. There is a 50% probability that the coin comes up tails or an eagle or a throw, and every independent, ie each previous shot or does not affect the outcome of the next. As long as you stick to one path, you can still end up, but given an infinite amount of available money you have, wait for the necessary loss of the coin and thus win back all their losses received + $ 1. This strategy is based on the premise that we need only one transaction, so that our losses again become a profit .
Option number 1 (Eagle or Tails, the odds - 50/50):
|your bet||amount of interest||result||Profit or Loss||size accounts|
|Eagle||$ 1||Eagle||$ 1||$ 11|
|Eagle||$ 1||Tails||- $ 1||$ 10|
|Eagle||$ 2||Tails||- $ 2||$ 8|
|Eagle||$ 4||Eagle||$ 4||$ 12|
Imagine that you only have $ 10 to place a bet, from the 1st to $ 1. You bet on what will appear eagle, eagle coin drops it and you win $ 1, while increasing its assets to $ 11. Each time, as soon as you win, continue to put exactly the same $ 1 until you lose it. The next shot and you lose your asset was $ 10. Now, on the next roll you bet is $ 2 in the hope that if the coin comes up heads planted, you will be able to recover past losses and bring the net profit and loss back to zero. For it does not sorry, but the coin falls tails again and you lose these $ 2, reducing its expense to $ 8. Thus, under this system, the Martingale, the following should be equal to your bet double the previous rate - $ 4. And then you have won and received $ 4, bringing its total assets to $ 12. Now you see what you need to recover all past their losses - only a single win.
But let's look at what proizhoydet, if you suddenly find yourself in a losing streak , as a possible scenario number 2:
|your bet||amount of interest||Result||Profit or Loss||size accounts|
|Eagle||$ 1||Tails||- $ 1||$ 9|
|Eagle||$ 2||Tails||- $ 2||$ 7|
|Eagle||$ 4||Tails||- $ 4||$ 3|
|Eagle||$ 3||Tails||- $ 3||ZERO|
So you have $ 10. In this scenario, you immediately lose your bet on the first and reduce your asset to $ 9. Now you double your bet on the next roll, you lose again and stay with is $ 7. At the 3rd toss your current bid has been - $ 4, and after losing to you there are only $ 3. And now you absolutely do not have enough money to double down, and now the best thing you can do - is to put everything you have. If you suddenly lose you - a complete bust, but even if you suddenly to win, then to the initial capital of $ 10 will still be heavily away.
application of the method (strategy) Martingale in trading Forex:
You can assume that a long string of losses, as in the example above, is a very rare bad luck, but once you are trading currencies, they tend to their trend and trends can last a very long time and this is more noticeable if you had a deal in the wrong direction (against the trend). However, an important property of martingale strategy as applied to trading in forex is that "doubling down", you will significantly lower your average entry price into the market . In the example described below, for 2 lots to get to breakeven at the conclusion of the transaction, you need to the currency pair EUR / USD has increased in price from 1.2630 to 1.2640. Since price moves lower and you add four lots, to break even you now want to increase the value price of only 1.2640 to 1.2625 instead. The greater the number of lots you add, the trade, the lower your average entry price. And even though you can easily lose 100 pips on the first prisoner lot EUR / USD, if the price for this come to 1.2550, you will need only to currency rose to a level of 1.2569 to the total capital in this area came in breakeven. It's also a good example of why the need deep pockets. And if you have a trading account was only $ 5000, you would have been bankrupt before that time, the currency pair EUR / USD reached 1.2550. The currency pair may, in the end, turn around, but when using the Martingale system is often so that you may not have enough money to stay in the foreign exchange market requires a long time. So if you trade in Forex Martingale, then certainly with small lots nichinayte .
|currency pair EURUSD||Lot Size||average entry price or breakeven||cumulative loss in trading||distance to break even|
|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 Martingale still works better on the Forex market (FOREX):
One of the main reasons why the martingale strategy trading is so popular on the market, is that, unlike stocks, currency pairs rarely go to zero. Trading companies can easily go bankrupt, and States - can not . There are times when the currency pair is devalued, but even with a sharp drop in vareante, currency's value will never reach zero . This is not just impossible, and for this to happen, happened something very terrible that even considering this option do not want to.
The crux forex trading strategy according to the method of martingale is that the price can not be infinitely long in the same range and must sooner or later it will be out of this range. And if calculated over all quality indicators forex trading platform, for example - metatrader 4 , but when this happens the output, you can safely put pending orders at the entrance to the market and wait for profit . And even if one or two deals will close with a loss, then all the same series of orders in the forex trading closed with a profit and the main thing that you had the size of your deposit:
Currently, there are plenty of forex companies offering advanced trading forex signals and Mechanical trading systems are based on the method of Martingale. Developer's company, making a huge number of improvements and additions, as well as all sorts of instructions are sent to torgvym forex signals over existing methods, which allow you to avoid fewer risks when trading in the forex market . But the main thrust of these strategies - all the same method of Martingale. And I'm not arguing that these improvements enable traders to make money and with a decent amount, and I personally know several traders who trade successfully on these signals and MTS (automated trading systems) but Yet we should not forget that the size of the deposit must still withstand a few turns to let the market. To one of the deals still closed profit and you got your bonus to deposit. And for this we must first do not be greedy and open davolno small lot ...
Forex - the market also offers one a unique advantage , which makes it even more attractive to traders who have sufficient assets to work on Martingale system. ability to make a difference in interest rates , allows traders to compensate for trading losses of their income as a percentage. This means that a trader can trade only on the Martingale strategy currency pairs in the direction of a positive swap on your trading account. This means that he must buy a currency with high interest rates, while earning a percentage, and sell a currency with a relatively low level of interest rates. With a large number ve lots traded interest income can be quite noticeable and, thus, will work on reducing your average entry price in the market.
always remember the risks involved in Forex trading strategy Martingale:
Martingale strategy may seem attractive to some traders, but I want to warn those traders who try hard to practice this method of trading forex. Remember that the main problem of this system lies in the fact that sometimes one single trade deal can completely reset your trading account before the moment you get some political gain or even be able to cover the losses. trading the trader must always be ready for version , that he may lose most of the assets in the trading account of only a single transaction. Given this is necessary to allow the fact that we should not strive for profit kolosalnymi for trading on the method of Martingale . Therefore, forex trading strategy according to the method of martingale is not for all traders.