# Martingale on Forex. How Does It Work?

Most experienced traders pay a lot of attention to money management, sometimes considering it as efficient as a quality trading strategy. Generally, even beginners do realize that is you enter the market with your whole capital, you are likely to lose it all in quite a short time. However, if you divide the money on your account into 10-20 parts, you will be able to stay on the market much longer and are absolutely not likely to lose all your assets at one trade. There are plenty of money management options. Among the most popular, we can name the Martingale method, the Anti-martingale and the Fixed Fractional trading.

Most often, using Martingale on Forex is reduced to merely doubling the position after a loss.

Of course, it is hard to imagine ten Head and Shoulders patterns in a row turn out to be false. As with a coin tossed, ten reverses one after another is not totally impossible, but very unlikely to happen. So, after a losing position, the possibility of another losing one seems lower. Some traders even use a demo account for trading until they receive two losing trades one after the other and only then start real trading, believing that the probability of a third losing trade is quite small. However, mathematicians evaluate the possibility of realization of each next signal as 50%. That is why, when using Martingale, after a loss of 0.1 lot, the next trade will be open for 0.2 lot; in case of another loss, it will open for 0.4 lot.

Here, of course, the size of the capital matters; also, it is important to realize that risks are serious if the trader is simply averaging their position against the trade instead of locking in losses and waiting for a new signal to form.

## Martingale Types

We can diversify this approach a little, like any other trading strategy. Conservatively, we may not just double the size of the lot but also move at a slower pace. For example, after a loss of 0.1 lot, we open the next position for 0.2 lot and the next one — for 0.3 lot.

Some traders also use a trick. Let us imagine we are using the Head and Shoulders pattern, open our positions from the level of the right shoulder and place a Stop Loss a bit higher. When the price approaches the SL level, we open another position doubled in size with a near stop.

If the price moves on, a minimal loss will be received on a large lot; if the price pulls back, the doubling will maximize the profit. This approach may also be called a Martingale type; an undoubtful advantage here is a clear trading method with understandable rules of entering and exiting the market. Meanwhile, most EAs based on such methods trade in one direction only and start increasing the position size after a certain number of points. It cannot be said that this method is always wrong, but there is a risk of serious losses in it. However, if the market shows low volatility and is trading in a flat, such EAs can yield good profit

## Safe Martingale

If we would like to make this approach safer, we will need a strategy with clear rules of entering and exiting the market either with a profit and a loss. It would be useful to study your trading history and find out how many losing positions in a row you have had. For example, if there has been a maximum of ten such positions and five averagely, you should start increasing the lot from the fourth losing trade or, alternatively, increase it not after each losing position but after two or three of them, when the possibility of a profitable trade is maximal.

## Is Martingale worth using?

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