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 lastest ideas, successes, failures and thoughts so that other people can benefit from his scientific approach to the market. Follow his latest thoughts on Twitter. In this article, I am going to explain Martingaling, which is my favorite way to trade, but is very dangerous. Please understand that if you wish to try it, 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 system, martingale take advantage of this truth by increasing the forex 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. The problem with Martingale is—as you probably noticed—the risk is MASSIVE. 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 trading requires a lot of risk, then I am willing to do it. I would rather handle the risk to win, than 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 do 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 that 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 Forex Martingaling, YOU have an advantage. If you are choosing to begin a Martingale, trading will be Buying low and Selling high. If guide would choose to wait until the market goes pips away from you before you double the position and re-targetthe Market would have to go FIVE THOUSAND pips against you with ZERO bounces of pips AFTER you already bought low or sold high in order for you to lose 20 times in a row like the gentleman in that article suggests. Let me give you a little fact: The circumstance I mentioned above has never happened in the HISTORY of Forex. The reason I pointed that out was simply to help trading 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 reasonable, let us say that you can double the forex 9 times, using this array The reason for 9 is because it is easily achievable with a 10 thousand dollar account: Starting with a small size is ESSENTIAL to successful Martingaling. Assuming we are making good entries, not buying too high or selling too low, this array should leave VERY little room for trading. 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 times, 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. In my opinion, forex chances of that are EXTREMELY low. The hard thing about Martingaling is guide and ability to handle risk. This, for some people, will be too difficult to handle. If you do not think that you would be able martingale handle it, PLEASE do not attempt a Martingale strategy. Hope you learned something about Martingale today, be sure to follow me on Twitter to get all my trading thoughts! Any idea what happened to Nathan? I agree that adding to trades can be a profitable way to trade, and that many traders do that. This is not merely adding to trades, with a defined risk, it is doubling them to infinity. Martingaling will always blow out accounts, whereas adding to trades in a defined way can be successful. If you manage your risk, and maximize your entries there are many successful traders that add to trades. Martingaling always guide your entire trading account. There are those who have lost it all, and those who will. The fact that Nathan is no longer responding proves this point. Thank you for the explanation. I want to say for the people who telling that Forex is same like Gambling. It is Just a matter of time and they will suck your account. To be winner who knows where big account locate their TP ans SL location and when they will change trend direction and fortunately this is so hard for small Trader accounts. You will be winner if you use this strategy for long term as you life investment and use risk management. It will be so great. For example if you have 10, with a lot of calculation. Some body will say 10 years so long. Really I think seriously to go back using this way. By using big Time money ,and Risk Management at this time I will recover my lose. Firstly, it can easily be demonstrated mathematically that staking systems do not alter expectancy. None of them cite the use of progressive staking as a means of recovering loss, forex part of their trading strategy. Hay Nathan Many traders do similar and as an example can be done on brokers like Oanda for even less risk like starting at 0. It does work, because mathematics does not lie. The problem for many is emotions to many cause bad decisions when in draw down. Probably because they are risking too much to begin with. That is more than pips. It will not go further than that without one pips retrace, it never has done a move further than that in all pairs in history ever without one retrace of some type and that is including the volatile pairs like GBPNZD. I mean once we got the direction wrong, we will only manage to break even instead of coming out at the end with a WIN. I for one believe in mathematical trading instead of predicting currency movements. Could you also throw light on the system of doubling martingale the opposite direction after the pip stop loss. Which method do you think is more logical in the realm of forex movements. Hiim programing the martingale, works nice with trailing stop. Hii have 2 robots with martingale, and work nice. That depends on how you structure your Martingale. The most profitable way to Martingale is actually to keep two positions open at once. In other words, when the first position goes down you keep it open and add the next guide, and when it goes down; you cut the first position and add your 3rd. This way, you get the second to last position at break-even instead of a pip loss. Thanks for the comment, James. I am sorry to hear what happened with you…. But yes, if you keep it safe, it can definitely produce profit over the long term. Thanks for the article Nathan. I have been trying forex trading for about 2 years now. Martingale only time I made consistent money was martingaling. My strategy was somewhat different. I did know the risks of blowing the account and knew I had to maintain strict disclipline. One day the perfect storm occurred chartwise and I was in a bad mood that day and took on too much risk and boom. I have not tried it since but beleive it could have cntinued to work had I tweeked it some and maintained discipline. Your strategy is a much safer and conservative strategy. The mathmatical odds are on your side. Believe me, if the casinos banned martingaling or made adjustsments to negate it, then you know good and well there is something to it. I beg to differ. For that to happen, you would have to lose all 18 holes in a row. If you have ever watched match play: That is a great point. I understand this, and still believe the strategy functions well if you stick to the rules. Thanks so much for the comment! You are a smart trader and your mathematical notation gives you credit. You are VERY right. My only objection is that in trading, there is some interference. Hey Gary, thanks for reading! Hello Wayne, thanks for the comment. I certainly understand where you are coming from. And I believe that your unit method could work; however, Martingaling is one of the oldest strategies in trading history, so there is a reason it has withstood the test trading time. I believe that I will stick to the Martingale system because it has proven to be successful for a long time. Perhaps I will adjust it over time, but I do believe—mathematically speaking—that forex has complete capability to retain profits in all market conditions. Thanks again for the comment! Sounds to me like he already knows quite a bit about trading. Doubling-up will work in a hypothetical example like the one he showed usbut not guide the REAL world. Back in the days when I went to the race track, I fooled around with progressive betting increasing bets after losers. If this race loses, on the next race, increase by one more unit. Go up one unit after a loss and down one unit after a win. Larry Williams mentions this kind of tactic in one of his books. After three straight losers or maybe three losing daysincrease trades from one contract to two. Check it out for yourself. By the way, Casey, when I grow up, I want to be like you. I want six monitors in front of me. Essentially, no trades were ever closed until they were in profit, which means you would have to endure tremendous drawdowns. The past is no indicator for independent events of what will happen in the future in probability or forex. No way forex exit your trade for pips profit in that case, right? Hey John, thanks very much for the comment. And yes, you are right! I definitely do not recommend this type of trading martingale most people. But from a practical trading viewpoint, my own thoughts are that a potential risk of hundreds to gain only 25 dollars a time sounds nerve-racking. Thanks for the comment… As soon as you get a win; which will cover all of your losses, you begin at the small beginning amount again. I appreciate you reading along and leaving your thoughts! Thanks for the comment. I did not say that guide was simply impossible to lose 20 in a row. I said in the circumstance that you are using pips before adding and not buying too high or selling too low. The simple fact is that it would have to go 5 thousand pips in one direction with no bounce of pips after the market had already gone in that direction for a while otherwise you would not make the entry there. That has never happened in the history of Forex on the major currencies which is why I say it would be virtually impossible…. I understand the adding to a winning position as well. If you have a good concept of the trend and are able to add appropriately, I think that can be a very profitable strategy; but of course, there is always more than one way to win. You are also right that the bet in the table is sometimes a bit more than double. That is part of the system in betting on a coin flip or blackjack because it allows you to get a little bit guide of a reward for your risk. In trading, when you double the previous position each time, the net gain will always be the same as your initial target. Is this part of the system? Good article Nathan, different refreshing viewpoint. Dangerous maybe, but all strategies carry risk, and you did stress the importance of valid entries. Would like to see more of different strategies. Gaps are hardly ever an issue if you are using a large grid to add to positions, like pips. However, if it were to gap and go against you beyond that grid, you can just add then and make a slight adjustment to your target. Trading forex on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully trading your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or forex of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. Home Blog Tools Pricing BROKER About Us Were Hiring Contact Us! Martingale—The All or Nothing Strategy Written by admin on January 10, 42 Comments. You may ask, how could you justify risking a thousand dollars to make a sixty dollar profit? Winners Edge Trading was founded in and is working to create the most current and useful Forex information and training available on the internet. Latest posts by admin see all. I see yes we agree on that. Mike, If you manage your risk, and maximize your entries there are many successful traders that add to trades. Hello Nathan Thank you for the explanation. Less risk style, pips spacing like you say- 0. Also great to do on positive swap pairs. Sell at weekly highs, buy at weekly lows. Martingale few big moves and you are wiped out. Jack, that is insane!! How would you handle gaps? Popular Views Hot Off The Press Most Commented Popular Trading a Small Account with Patience Trading Volume In Forex, a must needed guide Long Term Trading Strategy for Forex Trend Reversals: Long Term Trading Strategy for Forex Creating a Forex Trading System: Success Tips Forex Trading: Home Contributors Site Map Privacy Policy Legal Disclaimer Terms and Conditions. Enter your email here: DOUBLE TREND TRAP STRATEGY. Do You Need a Trading Trading Strategy? Where Should We Send you Our Double Trend Trap Strategy? Now Take your trading to the next level by taking our trading quiz to martingale your strengths and weaknesses. NO THANKS I DONT NEED TO IMPROVE MY TRADING IN ANY WAY.
Warning: How the Martingale Trading System Destroys Traders [forex, finance, stock market]
Warning: How the Martingale Trading System Destroys Traders [forex, finance, stock market]
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