Topic: Martingale strategy With Stop Loss (Read 327 times)

Most people do not understand math, while they also have a narcissistic view about the world, in which if they need something then everyone and everything should be changed so they can get their way.

So if they need martingale to work, then in their minds it should, even if the math says otherwise, but as we know no one can really do this, and instead of adjusting their views and realize their mistake, they push even harder to get their desired result, which leads them to a scenario in which even if they were to eventually realize the truth, the only way for them to recover their money is to keep taking absurd risks and hope for the best.

Martingale doesn't even work with gambling, why would you assume that it could ever work with anything else? I am not saying that this is a stupid idea or anything, you can go ahead and try whatever you want, I am sure you will do fine if you know what you are doing but I personally wouldn't trade like this at all. I believe that we are going to just use the normal strategies and shouldn't really worry about these new stuff.

There is a reason why there is a TA and FA system in place, most people use those and they make money based on that. If you want to give it a try and find something new, the best I can do would be follow the topic and support you along your journey and see if you are doing good or not, and cheer you when you make some money with it.

Even though I am a day trader and I often scalp, I don't like this method and I avoid it. Because actually this can also increase greater risks. And a bit contrary to good risk management in my assumptions. Looks like it could work well. but when the market continues to show no reversal. then tragedy will begin and I'm sure someone's psychology will start to be disturbed or their emotional management will start to falter. Unless it is done for long-term trading. And carried out on trading pairs that fundamentally have good potential. For example, bitcoin and ETH. Apart from that I don't think it's advisable to wear it. Unless we are ready to take the risk. On the one hand, this method also has a good impact, but only for investing in coins that have strong fundamentals. Because this is a bit similar to Average down. It's just that the amount of allocation we enter is enlarged at each lower position. But for scalping I hope you are careful. Because I also don't use it in scalping. but I sometimes use it in long term trading.

Truth be told, Martingale strategy will end up losing you more money than you bargained for. It's a strategy every noob trader should avoid. Why not just take a maximum of two trades at the same time, depending on one's capital and the lotsize/leverage used. I think one ought to wait till the first trades are in profit before entering more. There's no point chasing the market and trying to force it to obey. The market is king and we should know that losing trades have a way of affecting traders' psychology.

Another trading strategy no newbie should touch is Hedging. You get to find that in FX trading/Binary and now in Futures. It's when a trader is scared on placing a SL and instead opens trade(s) in the opposite direction as to balance their losses. The problem then becomes at what point to exit the winning trade(s) that the losing one won't hit more losses.

On the Risk/Reward thing, I won't take a trade if it's a 1:2. Nah! That's not a good ratio for me. I aim at 1:4 at the minimum.

Seems not good enough to me to use the martingale, it's just like you are doing a not realistic trading, you make a position and then if you lose make another position to get back your losses, this kind of strategy doesn't require any kind of analytics or knowledge to think about of the next move of the market like in the gambling activity, scalpers still make an analysis with the help of their price action and technical indciators, you can easily manage to back those losses even though its not a revenge trade.

Martingale is good and all until you hit lose streak, you might think such thing won't be possible with trading but with future which most of people usually trading within short interval its definitely possible.
if you have experienced with future I think you might notice some people that have lose streak, you can see some example in the dex that also provides futures as a feature.
there are some people whose address are having some lose streak, but with martingale indeed it might delay our losses if our strategy is bad and we undeniably gonna incur losses.
but until when, the burden of making the lost capital up is being compensated through multiplying the capital on stake, but if we for example just having a bad day it could easily drain us of our capital.
since the more loses we get, the bigger chance that we gonna lose our money altogether, thats just how bad it is.

If you have never tried it then it is just a theory and you know how easy it is to explain the theory but the implementation you finally realize is even more difficult than you ever imagined.
Martigale is more often used in gambling and this is one of the well-known strategies and all gamblers admit that this never provides certainty of profit, sometimes it can provide profits but only in the short term and when you use it only occasionally, in the long term the results will only reduce our money, and I am sure that in trading this will not be as easy as you explained.

From a mathematical standpoint the problem with Martingale Strategy is that eventually you will reach a losing streak long enough to wipe out all your funds. And it is not a question of IF but rather WHEN.

So the strategy does not work (unless you have infinite funding). I don't know why people think they can outsmart mathematics.

Positive expectation is nothing but a positive expectation alone means, there is still a big chances that it might not work. Martingale will always be martingale, it doesn't matter on what activities you will use it. There is a time that you will face a really big risk if the losses continue more than the wins, this is why it had a bad reputation and was not advised by the experienced people who once used it.

Trading is still different from playing a gambling inside a casino where the owners had more advantages than the players because in trading, our performances will only depend on us. So if ever we are using a good/working strategy, it will also allow us to earn a better profit.

I suppose that traders using martingale are assuming that if they were to use a strategy which had a positive expectation, then martingale could become viable and it could make them money, unlike with what happens when that strategy is used as a betting progression at casinos.

But for their misfortune this is not true, even if a trader could win more trades than the ones they lose, if they trade for a sufficient long period of time, that should be enough to lose enough trades in a row, which will cause them to bust their account.

Whoever refuses to believe me when I say majority of people are not really trading but gambling only need to look here and understand what I mean.

Martingale is not supposed to be a strategy in any trader's book, but it actually is, I seen it on stocks, forex forum, etc alongside yolo strategy on 100x leverage.


At least with dice you know the hard statistics. With trading, it's got nothing to do with probability.

Honestly I tried this strategy with Dice and it didnt go well.

You always think that, its not possible to get 10 losers in a row but you will be surprised. Eventually with enough trades you will run into a losing streak this large.

With Dice I think at one time I got maybe 12 losers in a row which seemed like impossible and was cleaned out. I dont think this is a good strategy at all, with trading the markets or any of the gambling sites such as dice.

Hahaha...That still doesn't stop me from being a genius as I am on top of my games when it comes to trading. However, I knowingly added the demo account so that it would reflect the truth, nevertheless, I can replicate this in a live account if I want to because I know what I did and I'm even better at trading presently than at the time. All I need is a serious trending market like what Bitcoin did a while ago and zero my mind about the money. I also need good luck on my side because a slightly bad market movement could cost the whole process of it. But for the replication of it like that of the demo account, I can do that perfectly.

After all, I've lost money in thousands of dollars to the financial market in the past, so zeroing my mind on a few bucks like $250 shouldn't be a huge task for me to perform. I will just view it as though it's no longer my money so that I can achieve the task, but in the end, I will smile hugely. Also, during my last post, I had the mind of revisiting such a risky task again on the demo account. I will try it three times, and then switch to the live account. I pray the good luck is on my side!

Martingale is just gambling and this case you're applying to trading!
Here you're not trading... but you're just gambling. Martingale has just 1 big issue in any case.
If you get a long streak of loss, You are trading just to recover your previous trade.
So with your example: Best chance you have 1 USD as profit. Worst chance you lost 16 USD.
The profit remain always the same even if you hit a longer streak (big stop loss), meanwhile the amount loss continue to double each game...

Demo account is different from real account when trading and when you open a trade, it might be different from what you thought. When I was reading your post, I was like this guy is a genius until I saw you said it was a demo account.

If you must trade, you should use a small amount to trade and do not think of making big profit, because greed is what do wreck most traders. I have not found the strategy that works for me yet in trading, because whenever I trade and make profit, I end up losing it.

I don't understand why you should use a martingale strategy in trading. You don't need to set stop loss if you are a long-term investor and you don't trade futures. I would only trade with well-known coins and set the stop-loss to protect myself from very unexpected moments like a coin going bankrupt but if that happens, I believe the stop-loss option will not be triggered. If you set stop-loss option on low price range, then there might be a quick fall in price, your coins will be sold, then price will go high and you'll be in a significant lose.
I'm sorry but your strategy doesn't make sense to me. I prefer long-term holding instead of daily trading with SL.

Martingale strategy implies doubling the position in case of loss and it really should eventually lead to a win. But the main problem is that the player may not have enough money to eventually make a winning bet. And despite the fact that trading is not a casino, but this fully applies to it.

This is not about putting a stop loss but managing your Risk. And the risk management on the example is awful actually. Because you are losing consecutively yet you are doubling your risk. Which means you're betting bigger. Instead, what you should be doing is to lessen the risk until you have a better feel with the market and your strategy. Instead of doubling it, you should be halving your risk. And when you starting to have a winning streak and have a better read on the market, that is when you double down and risk more.

With regards with stop loss, this is just a hypothetical level of the invalidation of your trade idea. Thanks me later.

The problem is that in the first 5 steps, btw that not pure martingale since winning from your second trade won't earn you a penny, it looks like a no problem, but you're still playing a 50/50 chance bet, since you initially gamble will still be 50/50 in the case you presented will make 1$ out of your winning initial trade, zero dollars out of any consecutive up to 5 losses, and you're going to lose 8 for each consecutive 5. Unfortunately again, math is against you as you don't earn from every positive trade, you earn only from each consecutive positive trade.

Martingale strategy is very risky. You may be a scalper and start trading, the more you increase the leverage as you are losing which is the martingale strategy, the more will be the losses if the coin you are trading is still going against your position. Although, it is true that if you increase the money and enter when losing, the price to start making profit will be closer but it is very dangerous. But if you can start it with a very low amount of money and still using your money to get closer to the mark price, it is better as it will make the liquidation price not closer but still also as profitable as it can be, also as the lose as it can be.

I must say I so much appreciate this simple exposé, many might see it as nothing but as an experienced trader, I value it and could go a long way in helping traders trading martingale. However, the martingale strategy is a very risky trading strategy that Can Only work in a strongly trending market condition. No amount of additional strategy, tweak or management can help it so far the trend is not strong, definitive and impactful. An aggressive martingale trader may start with just $200, and if lucky enough, could earn more than $100,000 in 2 days, but the risk is always too high for me. For the record, I've used the strategy to achieve almost $50,000 from a starting capital of $250 in the past, but it was on a demo account.

Nevertheless, I got discouraged because I couldn't replicate it ever since then, though I tried it minimal times. For me, I believe that a separate account is good for martingal strategy and a tight stop loss is not advisable. Your strategy seems to be considering a tight stop loss which will only put the account in trouble pretty fast. The market might be strong and trending upwards, but at times, it might just retrace sharply with about 100 pips, what would the trader do in that sense? The stop loss will be cheaply hit, of course. That is why the best approach is to either use a separate account for it which you know can be lost entirely, but trade it without the use of stop loss. If at all you would use stop loss, you might want to reduce the risk and increase the amount of stop loss use so that the market will not hit it easily.

If that what works for you, good.

But it's not going to be applicable with everyone. While it's a good addition to those that don't know how to stop loss but as soon as you're able to get your own strategy that works for you, fine.

As bitmax said, if it's still possible for you to do some backtest, much better.

It might work for you or not why not do some back testing and try the strategy you have. If you have tradingview paid subscription they would allow you to use the backtesting tool you can use your strategy with their paper money.

Or I think try it on some apps that have live trading with free paper money check this one "Stock Market Simulator Game"

Take note without a technical analysis this would never work because your entry point is random. You would end up losing much than making a profit.

What if you didn't hit your SL on your first or second trade? Anyhow, we've seen how dangerous Martingale System is in gambling, and if you adopt it in crypto trading? Same result. So I guess there will be traders like you who might want to take that risk and try, that even if you win, the profits is still not enough for the cumulative losses that you incurred. But if you insist, then best of luck to your strategy.

When using a Martingale strategy most people dont use SL

Here is a Martingale strategy using SL when scalping

Let me know what you think about the idea

One EXAMPLE

When scalping look for trade setups with a Risk Reward Ratio of at least 2/1

First Trade - If it hits your SL you lose $1
Second Trade - If it hits your SL you lose $1
Third Trade - If it hits your SL you lose $2
Fourth Trade - If it hits your SL you lose $4
Fift Trade - If it hits your SL you lose $8

And so on until you get a trade right with at least 2/1 Risk Reward Ratio

Regards