Peculiarities of trading on Martingale: how to insure themselves against loss of deposit
On the Internet there are a lot of “pros” and “cons” of trade based on Martingale. Most of the reviews are negative, because it is believed that this strategy leads to 100% “plum” of the deposit. This is partly true because stock markets do not obey probability theory. On chaotic motions (anomalies) probability still could be working, but in markets where the trend is run by fundamental factors and the struggle of traders (bulls and bears), there is a series of trades of the same nature. In other words, do not expect that in the interval of 50 deals, half will be profitable, half losing.
Trade on Martingale
A practical example of a trade on Martingale we have already discussed here. Although martingale traders do not perceive as profitable strategy this system is inherent in many trading advisors and its proper use remains almost the only opportunity to build a break-even trade.
A few trading rules on Martingale with the use of a robot, the observance of which makes the shortcomings of the system in the pros:
- enter the market after a long series of identical results, opening the position in the opposite direction. It is important to identify the entry point. For this map the length of growth (falling assets) with the average performance. Deceleration of the trend can also be a sign of his reversal;
- trade on Martingale is better for cent accounts. Since the robot increases the bet all the time, it is necessary that the deposit has a large sum;
- use max leverage (optimal 1:500). Many losing trades with small shoulder quickly reset the deposit. Maximum leverage increases the chances of an exit in profit;
- listen to the recommendations included with the Expert Advisor. Input terms of trade on Martingale were accumulated with experience, deviation from them is not recommended;
- check the performance of the EA on a test account. Although the actual trading results will differ from test, the test will help to determine the size of the maximum drawdown;
- periodically withdraw profits. Trade on Martingale manually implies a smooth increase of lot (not in 2 times, but on 30-70%);
- use no-swap accounts — eliminate unnecessary costs of transferring positions to the next day;
- use a VPS server.
At first glance, this all — truths. Partly Yes, but in practice, obviously, for some reason, and ignored. Trade on Martingale does not carry serious danger, if it is applied carefully, knowing the direction of the trend.