What are the systems other than martingale. What is the essence of the Martingale system? Martingale system: reviews

Introduction

Martingale (martingale, from fr. martingale) - a system for managing bets in gambling.

The essence of the system is as follows:

• The game starts with some pre-selected minimum rates.
• After each loss, the player must increase the rate so that, in case of a win, to recoup all past losses in this series, with a small income. (For example 1-2-4-8-16-32-64 etc). If the sequence is followed, the player's profit when winning will be equal to the initial bet.
• In case of a win, the player must return to minimum rate.

Using the system martingale, the player does not receive an advantage, he only redistributes his winnings. Player loses rarely but a lot wins often, but little by little.

Martingale in the theory of random processes - such random process that the best (in the rms sense) prediction of the future behavior of a process is its present state.

Consider an example of a game in which tossing coin, and when " eagle»player wins 1 rub., and in case of loss of " tails» 1 rub. Then:

• if the coin is balanced, then the player's state as a function of the number of games is martingale;
• if heads are more likely, then the player's state is submartingale;
• if the loss of "tails" is more likely, then the player's state is super martingale.

3 strategies based on Martingale and Martringale.

1. Based on the classic Martingale system

The essence of the strategy: doubling down every time after losingwe recapture all losses on any winning move and getsmall profit. Over a long period of time, we geta lot of small gains. The main thing is that the unprofitable series should not be protracted.

• Data RTS-6.15(RIM5)
• 60 minutes
• Minimum bet: 1 lot.
• We make deals alternately
• Missing
• Capital Management - Martingale twice
• It is possible to change 1:1
• Commission 0,001% from the transaction amount.

Reductions of trades on the chart: L-Long; Sh-Short: ZL-Closed Long; ZSH-Closed Short.(There are a lot of deals, so it makes sense to reduce their names to one letter. This brings convenience when analyzing deals.)

114 transactions 61 (53,5%).
Highlighted in green growing returns.
is equal to 4 . Reached 2 times.
Maximum position reached 16 contracts.
Series out of 3 losing trades there were 4 .
Yield in year: 1908%

Profitability per month was 27.96%, and the maximum drawdown is -23.78%. Need right understand that the maximum drawdown is the largest rollback of profit from the highest profit value. But not a decrease in the initial deposit by this percentage.

Conclusion: with small series of losing trades, the strategy shows itself perfectly and the profitability grows very quickly.

Is it possible to improve the results of the strategy and how to do it?

There is always a chance of getting a long series of losing trades.
At the last step, when there is no more money to raise the rate, there will indeed be a significant loss. And then all the accumulated profit will be lost.

But, no one forces us to keep the losing streak as long as possible.

We can try to do the following: what if we don’t wait for a big series of losses and independently determine exit from the series, for example after the third consecutive loss. Or after the second. Yes, we will take a loss. But it will not take away the entire deposit at once and will not lead to a margin call.

The gist is simple: the shorter the series, the smaller the loss, in absolute terms. There is still quite a lot of money left to continue trading. If our trading strategy gives more correct entries than losing ones, then we should be in the black.

2. With variations of the Martingale system

The essence of the strategy: doubling down every time after losing we recapture all losses on any winning move and get small profit. Losing series not we extend more 2nd transactions in a row, and start trading again, with the minimum rate.

Specifications of the strategy:

• Data for the strategy: futures on the RTS Index - RTS-6.15(RIM5)
• Time interval (timeframe): 60 minutes. Every hour we make a decision on a deal.
• Minimum bet: 1 lot.
• We make deals alternately: buy, sell, buy, sell, ...;
• Missing trading strategy based on the analysis of price movements or changes;
• Deciding on the next deal without auxiliary indicators;
• Capital Management - Martingale: if the trade is unprofitable, then increase the bet twice in the next trade; Upon receiving a profitable transaction, we start a new series with the minimum bet;
• After two losing trades in a row, we stop and start a new series with the minimum number of lots. DO NOT INCREASING POSITION IMMORABLY!
• It is possible to change take profit/stop loss ratio; In this case, we use the ratio 1:1 . That is, the value to the profitable level is equal to the value of the unprofitable level. For example, +1000 points and -1000 points, from the level of the transaction.
• Commission included in this strategy is equal to 0,001% from the transaction amount.

Below, on the chart, we can see 378 transactions, for 3 months of trading. Deals Won: 214 (56,6%).
Highlighted in green growing returns.
Maximum series of losing trades is equal to 6 . Achieved 1 time.
Maximum position reached 2 contract.
Yield in year: 589%

Statistics

Conclusions:

We see that the profitability of the system has decreased from 28% per month to 17%.

But also maximum drawdown decreased from -24% to -8%.
The recovery factor has doubled! From 2.9% to 6.38%.

The strategy, based on current data, has become more reliable and less risky.

Is there any other way we can influence the results of the strategy?

1. Oh sure! Existtrading strategies, which make profitable trades with a probabilityover 50%. Using them in combination with Martingale, you cangreatly increase profitability trade.

If a getting a profitable trade is more likely than getting a losing trade, then the state of the system will be submartingale. Accordingly, the chances of winning increase.

2. There is another interesting point. When playing in black White or in heads/tails we only have two outcome: +1 /-1 . And if we win, we'll only take a small part of the profit.
The market also providesability to managethis parameter (Profit/Loss in one trade). For example, Stop Loss can be set at 100 pips and Take Profit at 300 pips. Accordingly, with a strategy with payoffs of 50% or more,profits will grow much faster. Since we'll take every time3 times more profitthan was intended in the standard Martingale.

Note if Stop loss and Take Profit exhibit the same(for example, 100:100 points), thenprobabilitytake profit triggersincreases. And accordinglydecreaseschance of gettinglong run losses. We reduce the risk. As a result, the scheduleprofitabilitywill be more gentle, butmore stable.

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The method is that you choose the size of the first bet, fix it, and then, in case of a loss, increase the bet size so that the next bet covers both the loss from the first bet and the second bet. Further - on the rise. If there is a win, then the series is “reset to zero” and you start betting again from the first bet. The obvious disadvantage is that the bank needs a fairly large reserve of the game budget.

Example. We bet on the outcome of a football match Even / Odd (the estimated probability of this outcome is 0.5 or, simply, 50/50). A certain average bookmaker gives a coefficient of 1.8 for this event. The series of bets for the first bet of $1 would look like this:

• 1 bet - $1
• 2 bet - $3.25
• 3 bet - $8.31
• 4 bet - $19.70
• 5 bet - $45.33
• 6 bet - $103.00
• 7 bet - $232.74
• 8 bet - $524.67
• 9 bet - $1181.51

This calculation includes the winnings from each step of the bet. So, if the win occurs on the 1st bet, the winnings will be $0.8. If on the 2nd - $1.6. On the third - $2.4. If you win on the 9th bet, you will earn a total of $7.2. Moreover, in order to reach the 9th level, you will have to lose the previous eight, which, you see, is quite nervous. In addition, if we talk about the ratio of funds won to bet, the proportion at the 9th level is also not the best: 7.2 / 211965 = 0.0034 or 0.34%.

Is it possible to reduce the risks while betting using the Martingale system?

Can. Here are some ways:

• start the series with small bets, in our example, the initial bet can be reduced by 10-20 times;
• pledge your winnings only at the first levels, then reduce your profit to zero, so that using a smaller bank, you will quickly return to the first level;
• bet on events with high odds. In general, the larger the coefficient, the slower the growth of rates will be with each next level. So, in our example, if the odds were not 1.8, but 1.91, then at the 9th level we would have received a bet of $631 (instead of $1181) and the total amount involved - $1’200. By just increasing the coefficient by 0.11, we got an almost twofold decrease in the total budget.

How to lay the zeroing of the working bank in the mathematical model?

Since one of the features of the Martingale system is the periodic zeroing of the working bank, it would be advisable to initially lay down this development of events in order to exit with a profit at a distance. How to do it?

Not difficult. If more than a single increase in the bank takes place before the estimated drain of the bank, such a model can already be considered a winning one. This means that if the starting bank increases by 1 or more times (for example, twice), after which its planned reset occurs, then such a scheme will still bring profit to the player.

The simplest example:

Starting bank $100.

With the help of Martingale, every cycle we triple the bank, we work on half (for safety net) of the budget. This will give:

• 1st cycle: win $150, lose $50. In the bank - $100 + $50 = $150 (we take half for the next cycle, i.e. $75)
• 2nd cycle: win $225, lose $75. In the bank - $75 + $150 = $225
• and so on.

Martingale - evil?

Among most sports bettors, there is a fairly persistent myth that betting on this system inevitably leads the player to a complete (and very bitter, what is there) loss of the pot. The statement is not indisputable, we will explore this below, but it has the right to exist. Moreover, probably everyone who starts to somehow systematize their own bets, that is, is already engaged in professional betting, faced this very zeroing of the working bank.

And, despite this, the financial strategy of Martingale, unlike the players, has been exchanged for more than one hundred years. Invented in the 18th century (and according to some sources even earlier), the strategy continues to take over the minds of players who are trying to find their own version of its implementation in one form or another. Isn't it strange? If the strategy were completely worthless, would it not have sunk into oblivion two hundred years ago?

With this article, I would like to tell and analyze the Martingale system from the inside in a simple, understandable language. Look at the pitfalls and, more importantly, outline ways that can help the player use strategy to their advantage.

There are not many facts that point to the truth of the statement: “the Martingale system is an absolute evil”, although they are not many, but they are weighty:

• There is a strong mathematical proof that the classical use of the Martingale system on an infinite number of bets inevitably leads to zero winnings. In other words, the player ends the series with exactly the same pot with which he started.

Conditions: toss (probability of heads / tails = 0.5), we bet all the time on heads, in case of loss we double. There is an initial capital that can be enough for a series of (\displaystyle n) bets (that is, the size of the initial bets).

Probability of ruin: . Probability of winning:.

Now, for example, in numbers: the initial rate is 1 dollar, there is a capital for doubling rates, that is, a dollar.

The result of 10 rolls can be anything: all heads can fall, all heads can fall, 5 heads can come up, then 5 heads can come up, 5 heads can come up, and then 5 heads, etc., combinations are possible in total. All these combinations are equally likely, and the probability of each of them is . At the same time, of all possible combinations, only one will lead to ruin: 10 tails, that is, the probability of ruin is .

The probability of winning, that is, any other combination, except for ten tails, is equal to. The ratio of the probability of ruin to the probability of winning is equal.

The amount of possible winnings in the series is $1. In this case, the player risks all the capital equal to 1023 dollars, that is, the ratio of gain to risk (1:1023) is equal to the ratio of the probabilities of ruin and gain. If you play a large number of series in a row, then on average the player will lose every 1024th series, losing all the winnings from the previous 1023 series on it, and as a result, on average, he will remain with his own. The mathematical expectation of the game is 0.

• The real development of the strategy requires an initially high game bank. If you bet on candy wrappers, that is, without making real bets, the feeling of reality is lost, bets are not made as carefully as in a real game.

We have been systematically engaged in sports betting for a long time, we are opponents of such a virtual game (known as a “game for candy wrappers”). With the exception of mathematical modeling, which in most cases can fully replace the development of long series of bets. The introduction of any conventions into the game usually leads to the fact that the player, and we are talking, of course, about a professional player, ceases to pay attention to insignificant but important nuances of the game, which often determine its character: winning or losing.

The following factors can be listed for using the system:

• Using the system significantly increases the probability of winning at short-term distances.
• The system, being correctly calculated, allows the player to build game schemes of almost any complexity and duration.

We remind you that the game scheme is a combination of different types of strategies and / or methods of playing with bets. For example, game strategy + financial. Etc.

• The Martingale strategy goes well with most gaming strategies and game methods. Moreover, most game strategies initially involve working with catch-up

"Dogon" is often called the Martingale system. Wrong. Martingale is not a "catching up" strategy in all cases, the system is much more flexible.

• Easy to understand and implement.
• The ability to calculate and put into practice with high accuracy the seemingly uncalculable values ​​of the probabilities of sporting events. We focus your attention on this point, just below we will analyze an example illustrating this thesis.

Based on the above theses, it can be argued that:

The Martingale system is a reference progressive strategy.

Continued use of which, however, can do the player a disservice by resetting their bank. Working with the system requires a more flexible approach, it is definitely not worth working with it head-on.

What is the potential of the system? Let's take a live example.

We take an event with an expected outcome probability of 87.5%.

How to take such an event? - No answer. But just below we will show that this is possible using the Martingale system.

It is not possible to find such an event, so we will make the choice from the opposite, from the odds that bookmakers give for such an event. And here, attention! The coefficient, depending on the bookmaker (high or low margin), varies from 1.01 to 1.08.

How did we know? Very simply - from the table of correspondence of probabilities and coefficients.

Any professional player will tell you the price of a bet on any of these odds. After all, it is not a rare situation that events for which such insignificant odds are set are underestimated by the bookmaker. There are many factors for this and this is not at all a desire to cash in on simpleton players (although not without it, of course), for example, such a factor can be leverage overload in betting on a favorite or on the most expected outcome.

So, on one side of the scale, the bet on the coefficient is from 1.01 to 1.08, depending on the bookmaker.

On the other side, there are three bets on an equally probable event (probability = 0.5 or 50%, bookmaker odds from 1.85 to 2.02), which, unlike any other probability, is not difficult to find, at least one of which must win . Why is that? Very simple: 0.5^3 = 0.125 is the probability of losing. The win will happen with a probability of 0.875 or 87.5%. As in the first case.

What would you bet on in this case?

Of course, in the above example, a bet on a low odds (it doesn't matter if it's 1.01 or 1.08) will be the most illogical. After all, the probability of losing is very high. A win of 1-8% of the bet amount is not high enough. A series of bets on the Martingale system with the same bank will give about 9% increase when winning at any of the levels.

The Martingale calculation is quite simple, but if you do not quickly calculate, you can use the Martingale system calculator or the mathematical modeling table, it also has a built-in calculator.

And the main conclusion from here: with a long-term development, the Martingale system will show a better result than just a series of bets on low odds.

And here a contradiction came to light: in fact, the Martingale system can show a better result than regular bets already in the long term. The main thing is not to work with the whole bank, but by distributing it.

But a better result does not mean a winning one. In principle, you can reset the bank in one way or another. After all, the margin of the bookmaker's office still reduces the final odds, which means that you need to somehow get around this. Perhaps the Martingale system will help with this?

Before considering this, I would like to dwell on, perhaps, the main characteristic of the system:

The Martingale system, not being absolutely winning, allows you to redistribute winnings and losses over time, from bet to bet.

Using this property, you can manage your income, laying the inevitable losses in the gaming system. So that the amount of winnings is always greater than the amount of losses.

Carrying out preparatory work for the development of a particular strategy, a professional player must always calculate the probabilities of all expected events in the game cycle. If there are N events in the cycle, the probability of each of which is 0.5, then the probability of a series of two such events is almost 1 (that is, almost 100%), but the probability of a series of 8 events in a row is less than 0.4%. This means that working at a long distance, the player can lay down 4 losses out of 1000 bets (which is the same 0.4%) or 1 loss per 250 bets. And here we are not talking about losing one bet, but about losing a series of bets, that is, when the Martingale system "zeroes" the bank. But with a preliminary calculation, this zeroing will be insensitive for the player, if he initially calculated everything.
And this means, in turn, that after losing once out of 250 series, in the remaining 249 series, the player must earn more than the amount of his working bank in each series. And here a huge variety of work options open up: you can work flat (speaking of equal amounts of working banks), or you can make Martingale-in-Martingale, increasing the amount of a working bank to work out further series. These are just two of the many possibilities for the player.

All of the above is an exploration of the Martingale itself. But we must not forget about the flexibility of this strategy, its ability to combine with other strategies. After all, in essence, the Martingale system is just a principle, following which the player moves his winnings in time. So why not move it in such a way that you win a lot and lose a little? A principle similar to this idea is used in the Dynamic math overweight system, for example.

What conclusions can be drawn?

1. The Martingale system is not as scary as it is commonly believed.
2. At the same time, using it directly for a long time, without any safety options, will most likely lead the player to a loss. This use of strategy is very common among those new to sports betting.
3. Flexibility and convenience of work (calculations and rates) according to the Martingale system are among the best among all existing systems. This is especially convenient when making calculations before starting to work out game series.

The assertion that Martingale is evil seems to us to be somewhat ill-conceived and even sweeping. The fact that many players have lost money on this system does not make it bad. Just like a bad car does not make its driver bad. The financial strategy of Martingale is one of the most effective and progressive (here - from the word progress) tools for working with rates. It is only necessary to work carefully and not neglect preliminary calculations.

Strategy mechanics

The idea of ​​the Martingale technique is based on the dependence of the size of the next bet on the outcome of the previous one. Initially, the algorithm of actions is not much different from the classic uniform Flat. The game deposit is divided into equal parts. Usually they try to bet with a small percentage. It can be 1% or 2-3%. In the presence of a very large bank - a fraction of a percent. If the first bet wins, then they continue to bet the same fixed amounts. If you lose, then the size of the second step is increased in order to cover the sum of the first and second iterations. If the second move turns out to be winning, then they return to the original bet size. If there is a second loss in a row, they continue to increase. There may be options here. You can increase in order to even win back the size of the first entry, or you can also lay down profit. Let's look at this with examples.

Initial deposit: 100,000 rubles. The amount of the first bet: 100 rubles. or 0.1%. We will bet on the average odds of 2.00. If a losing streak begins, then each next run we will increase in order to win back the sum of the previously lost steps. We do not lay profit on moves beyond the first one.

1. 100 rub.
2. 100 rub.
3. 200 rub.
4. 400 rub.
5. 800 rub.
6. 1 600 rub.
7. 3 200 rub.
8. 6 400 rub.
9. 12 800 rub.
10. 25 600 rub.

At this stage, we have already lost more than half of the deposit, namely: 51,200 rubles. By betting the entire balance of 48,800 in step 11, we won't even cover the full loss. Having lost this move, we will merge the score to zero.

All the advantages and risks of the described algorithm are obvious. Rarely enough will happen such a grand series of losses. With a quality approach to predicting and choosing events, you should not allow a series of 10 losses in a row.

The equality of visits 1 and 2 should not be surprising. Having lost on the first step, on the second we put the same 100 rubles. If we win, we will return the amount of both bets and we can start again.

Entry 3 is already increased to 200 rubles. Having won on this move, we will receive 400 rubles, recapturing the money of the first two moves and compensating for the third. And so on. As you can see, with such initial ones, the deposit is enough for 10 iterations. Well, or on 11, given the last defective move by the rest.

With all external reliability (I will never make 11 losses in a row!), we must understand that in step 10 we are risking a quarter of the bank just to win back previous losses and not make a profit at all.

Consider an example with a pledged profit of 100 rubles. on any of the moves that wins. So that at the moment the losing streak is interrupted by a victory, we not only go to zero and return to the beginning, but also grow by 100 rubles, as with the victory of the first bet.

1. 100 rub.
2. 200 rub.
3. 400 rub.

It is clear that we just shifted one move and then the pattern is the same. Now we have only 9 steps of "Catch-up". On the last full move, we will bet 25,600 rubles. to earn 100 rubles. in case of a win. This is 25% of the pot in the hope of winning 0.1%. The reward to risk ratio is huge.

Sports betting is quite an adequate place to apply the Martingale strategy. Unlike online casinos, where algorithms are laid down to ruin the "catchers", in betting everything depends on the player. The quality of forecasts should be such that such long negative streaks are not allowed. The development of this strategy by professionals in specific sports shows that it is extremely rare for a series of even 3-4 losses in a row, not to mention fatal 9-10 defeats in a row.

Compare with "Flet" under the same conditions. Average coefficient 2.00. To stay with his own, the player needs to make at least 50% of positive bets. To save the deposit according to the Martingale strategy, a much smaller percentage of wins can also come off. The main thing is not to allow a long series of losses.

Let's look at one more example. In the past, a factor of 2.00, convenient for calculations, was used. Here we take a more realistic coefficient of 1.80 from practice. The rest of the originals are the same. Starting deposit: 100,000 rubles. Since the winnings on the first bet will give 80 rubles. net profit, then this increase will be included in the remaining steps.

1. 100 rub.
2. 225 rub.
3. 507 rub.
4. 1 140 rub.
5. 2 565 rub.
6. RUB 5,772
7. RUB 12,987
8. RUB 29,220

Here we have already used 52,516 rubles. Therefore, even putting the entire balance on step 9 will not compensate for previous losses. The lower the coefficients used, the more airbag you need to have.

It is obvious that different coefficients will be used in practice. Here I gave examples on average values, so that it would be convenient to calculate and catch the mechanics. To calculate the "Catch-up" in the practice of betting, special programs and tables are used, and mathematical models are built.

Advantages

The Matringale strategy performs well with professional players who pay great attention to the quality of forecasts and the choice of events. If you avoid the long series of failures that was illustrated earlier, you can not only keep your bank intact, but also grow confidently.

The algorithm makes it possible to be in the black, or at least with your own, even with a lower percentage of cross-country ability than is necessary when playing "Flat". This is obtained due to the fact that a series of several minuses is won back with one winning bet.

"Catch-up" goes well with almost all gaming strategies, except for those where too low odds are involved.

There are many varieties of Martingale, since the algorithm is very flexible and multifaceted. Therefore, the player can choose the optimal combination of financial plan and game models.

Flaws

If we compare the “Flet” and “Catch-up” strategies, then the growth rate of the bank is comparable. During winning bets, profits grow slowly, since a small part of the initial deposit is used for one iteration. At the same time, the risks of draining the entire Martingale account are much higher. As shown in the examples, with those initial steps, 9-11 steps are enough to completely reset the balance. With a larger bet and lower odds, the drain will happen even faster. With a similar losing streak with "Flat", the player loses only 9-11% of the bank, since it does not depend on the series of results.

Limited "Dogon"

As you can see from the examples given earlier, the pain point of the game "Catch-up" is long losing streaks. Indeed, it is ridiculous for the sake of earning 100 rubles. risk a quarter of the bank, for 25,600 rubles, as in the example. For this reason, a cut or limited martingale is practiced. Do not raise rates until the moment of complete drain. For example, they assign a limit to step 4. If there is no gain before this move, they roll back to the original amount. If the remote permeability is high, then this makes it possible to compensate for such micro-dips. If you persist and increase to the limit, then you can lose the entire bank on one "black stripe".

Martingale strategy within a single sporting event

There is an interesting way to apply the catch-up strategy within a single sporting event, a match. For example, bets on team sports, on goals (washers) in time intervals. The initial forecast assumes that there will be goals. A fixed part of the deposit is allocated for one game. Let's say 1% of the bank. This bet is split into parts in 3 moves of "Catch-up". In live, they put part on a goal in the first 15 minutes. If a goal happens, then the bet wins and they move on to another match. If he loses, then they put the second step with an increase by a goal in the interval up to 30 or 45 minutes, depending on the coefficients. The third stage will be used in the second half until 75 minutes. This is just one of the examples. Other formations are possible, depending on the sport and the specific market. The described approach is good because you can not go far in a series of losses. Having made a maximum of 3-4 raises, within the amount allocated for the match, they do not make a further increase. They just switch to another sporting event.

Conclusion

The Martingale strategy is very promising if used skillfully. Before a beginner can apply this progressive bank management model, it is worth testing their forecasting skills on a long series of flat bets. If a series of more than 3-4 losses in a row does not happen to you, then you can move on to Martingale. This is not a guarantee that such "black bars" will not occur in the future. But it’s quite possible to bet like this if you really understand the chosen sport and game strategy. If this is not the case, loss will be inevitable, regardless of the chosen financial strategy. It's just that "Dogon" devastates the banks of unlucky forecasters much faster than "Flet". This must be understood and applied wisely.

Working on Forex requires the trader to have his own trading strategy, which must be previously tested on a demo account. This is an axiom, and those people who, without adhering to such a simple rule, try to make money on Forex, can only be regretted, since with a high degree of probability they will join the number of those who scream with might and main about deceit, urging them to beware of the profession of a trader. However, the need to draw up your own trading strategy often confuses beginners, because here you need to take into account various important factors, trying to harmoniously combine the principles of money management, risks and expected profit within one trading system, which will justify the interest in Forex and the considerable time spent on mastering the basic basics.

At the initial stage, more and more beginners come to the idea that it is worth taking someone's ready-made strategy and using it. Indeed, why reinvent a hypothetical bicycle if the long existence of the Forex market has led to the emergence of a huge variety of different trading systems that justify investing in trading currency pairs, precious metals and other financial instruments. One of such systems, namely, the Martingale Forex strategy, will be described in detail in this article.

Classification of Forex strategies

Beginners should be aware that, despite the huge number of different strategies, some of which are distributed for free, and the other for money, there are certain basic principles by which trading systems can be conditionally divided into main groups and the number of the latter will be quite small. For example, according to the most common time signs, two main classes of Forex strategies can be distinguished:

• long-term;
• short-term (scalping).

It is also easy to divide all systems by profitability into two conditionally large groups:

1. strategies with low income and the same level of risk;
2. high income but high risk.

What makes even such a simple and crude classification possible? First of all, a trader can single out a whole type of Forex strategies at once, which corresponds to his ideas about the activities and performance of the profession of a currency speculator. In particular, when choosing any class of trading systems, a trader immediately sees very important main points, such as:

• the amount of the required deposit;
• perceived risks;
• potential profits.

Based on the ratio of such key factors, it is already possible to choose one or another Forex strategy, be it Martingale, Puria or any other. For example, a cautious trader will choose a system aimed at slowly but steadily increasing the existing large deposit, while more risky speculators will prefer to try out small amounts in work, which, with a certain system, can give a big profit in the shortest possible time. The latter type is usually referred to as a Forex strategy using the Martingale method.

Pros and cons of long-term strategies

It is difficult to single out any one of the trading systems, since all of them have the right to life, having a number of their advantages and disadvantages. If we continue to consider the most basic classes, then we can say that strategies designed for a large deposit and for a long time have the following advantages:

• relative stability of results;
• small risks.

But, it also has its drawbacks, which make more and more people turn to the Martingale principle:

• long waiting time for the result;
• the need for a large deposit to receive tangible profits.

In addition, the deposit used in such strategies cannot be fully in operation. There should always be a solid part of the funds that may be needed to maintain a trading position in the market in the event of a strong short-term price movement against the direction of an open transaction. Here you also need to take into account swap, gap, and so on, which passively reduces the possible profit.

Pros and cons of short-term strategies

Why are short-term trading systems dangerous and why so many people consider them the most effective, contributing to the fact that the Martingale Forex strategy finds more and more people.

Read also:

1. The main advantage is regular profit fixing. That is, a trader constantly performs some actions and observes the effect of them, which makes such systems extremely common among beginners who can not wait to start working and earning as soon as possible.
2. In addition, the Martingale strategy, like many other short-term trading systems, allows you to make a solid profit with a relatively small deposit, the main thing is to correctly calculate its capabilities and select the appropriate volumes for trading.

What can be the disadvantages with such advantages

1. The first and most important of them is still high risk. That is why popular advisers that use the Martingale principle should not be left unattended, since they can most likely drain the trader's deposit if they are not controlled.
2. The second disadvantage is the need for sufficient capital for a drawdown, which can knock a currency speculator out of trading during long and sluggish market fluctuations, when stop losses are regularly triggered.

History of the Martingale Principle

Martingale systems have been known since the 18th century. They were based on a simple observation, which is known from the theory of probability - under certain conditions, it is possible to calculate the possible occurrence of an event with a sufficiently high accuracy. Usually, a coin is cited as an example, which can fall “heads” or “tails”, that is, one of the two sides. In fact, there is a 50% chance of falling on one side and this rule works well in the long run. That is, after tossing it 10 times, we can expect that, for example, “tails” will fall out 6 or even 7 times out of ten, which will leave 60 and 70 percent, respectively. But by repeating the procedure 100 times or 1000 times, the probability will be as close as possible to 50/50.

This principle was immediately appreciated by gamblers who first began to apply it for profit. The essence of the practical application of the Martingale principle is quite simple and is used when playing roulette, where a bet is made on "red" or "black" by analogy with "heads" or "tails". Thus, understanding that the event has two outcomes and the probability of one of them is 50%, you can slowly start accumulating capital according to the following scheme.

For example, $100 is bet on "black". If “red” falls out, then the next bet is simply re-made with a doubling of the size, that is, in the amount of $200. If she "wins", then the player gets their $200 back and earns another $200 on top. Considering that before that he lost $100, then the net profit will be $400 - $200 (invested in the transaction) - $100 (spent earlier) = $100.

If the $200 deal does not work, then the Martingale method should be applied further, the roulette wheel should sooner or later show the result the player needs. Thus, the player will continue to double further, increasing the size of the third transaction to $400. As a result, if she wins, he will receive $800, of which the net profit will still be $100:

800 - 400 (invested) - $200 (lost on the 2nd trade) - $100 (lost on the first trade) = $100.

Continuing the analogy, if a deal of $400 does not become successful, then you need to double the amount of the next one to $800, which will allow you to return the previously invested $400+200+100=700$ and still earn your $100.

Risks of using Martingale

Given the fact that in the long term, the number of “red” drops will occur, as well as “black”, the player will sooner or later return his money and earn. That is, theoretically, there is no risk and players should take substantial amounts of money out of the casino, and the latter should have simply gone bankrupt, making a large number of smart people rich who use the Martingale principle.

In practice, of course, this happens extremely rarely, since this strategy has one main disadvantage, which is formed by the approach used, and, in addition, the owners of gambling houses also provided for the possibility of using this profitable system by clients and added the “0” field to the roulette ("zero"), when only the gambling establishment itself wins. Moreover, many casinos today limit the number of steps in one direction to seven, which reduces the practical value of the Martingale strategy to a minimum.

As a result, playing according to the Martingale principle can show a positive result for quite a long time, but in the end it will still lead to inevitable financial collapse and the loss of all available funds, enriching the pockets of casino owners.

Martingale in Forex

But, if we discard the "zero" sector, which is not on Forex, then what is the danger of Martingale for a trader? After all, there are no interested casino owners here. If we turn to the previous example, where it was required to double the amount from the initial $100 on each operation, then we can see that ten unsuccessful trading operations in a row will lead to the need to increase the amount of the next transaction to $52,200!!! And this is just to return the invested funds and earn a negligible $100.

Of course, it is difficult to close more than 10 unsuccessful deals in a row, but still such a risk cannot be ruled out. As a result, it turns out that for a stable income of $100, it is necessary to keep more than fifty thousand dollars on deposit, and it is better to increase this amount to $100 thousand in order to avoid all sorts of “probabilistic accidents” in the form of Margin Call .

Working mechanism

How, in theory, should the Martingale strategy look like when it is used on Forex? Here you can make several basic recommendations that have been identified by a large number of traders in the course of the practical application of this method in the international currency market.

1. Before opening a trading position, it will be useful to use any indicator you like to determine the trend in the market.
2. When opening a position, you should immediately set a take profit and stop loss, which will be located at the same distance from the entry point to the market.
3. After the price has reached the extreme value, you need to react according to the Martingale principle:
   • if the deal was closed in the "plus", then you can open the next position along the trend with the initial lot;
   • if the trading operation closed with a negative result, then the lot volume should be doubled and opened in the direction of the price movement.

The last point requires further clarification. If, for example, the trend is up and a buy position is opened, implying a further development of the existing trend, but the stop loss is triggered, then the next transaction with an increased volume should be opened for sale, although the trend may not reverse.

Martingale Paradox

Thus, in theory, the Martingale Forex strategy performs very well, showing that you can make good money by doubling the rates. In practice, the constant need for such a large deposit may render this approach generally inappropriate. In addition, if we consider the statistics that were taken from the reports of practicing traders, then there is a clear trend according to which this strategy works well only in the long term, and not at all in the short term, as is commonly believed.

This forms a kind of paradox, because the advantages of this strategy are designed specifically for short-term trading, where such a system of work, as it turns out, does not bring stable results. But still, in certain situations, the dry mathematical approach, which is the basis of this strategy, justifies itself.

Classic Martingale in the stock markets

The Martingale principle has proven itself very well in the stock markets when buying shares. Its essence in these conditions is to use the so-called averaging for its own purposes. For example, a client purchases a share for 1,000 rubles, expecting its further growth. If the price has risen by 10 rubles, he sells, earning his 10 rubles. net profit, if not, and the cost has decreased to 990 rubles, then it is necessary to buy one more share already at a new price, as a result of which the average cost of each of the two shares will be:

(1000+990):2=995 rubles

If in the near future the price rises by 5 rubles, then the player on the stock exchange will close his positions, earning the same 10 rubles. But the price may continue to fall, which means that at the level of 985 rubles, you need to buy 2 more shares, averaging the price to 990 rubles per share, and so on.

(1000+990+985+985):4=990 rubles

This is not the only dilution strategy option, there are others, but the common thing is always to increase positions in case the price moves in the opposite direction.

The perversity of the Martingale strategy lies in the fact that, in fact, this is the opening of an increasing number of positions against the trend as it increases. At the same time, the probability of a trend continuation usually exceeds the possibility of its reversal and the beginning of a correction.

However, there is also a fundamentally opposite approach when using the Martingale strategy. It consists in continuing to increase the profitable position as the trend moves, and in the event of a reversal, immediately close all existing positions. This is a very effective solution in practice, which, however, has its drawbacks.

Binary Options

Recently, with the growing popularity of binary options, the Martingale strategy has found its second wind and more and more traders are using it to make solid profits with relatively low risks. The following video will tell you how the Martingale strategy is applied on binary options, since it is better to see once than to read a lot on a given topic.

In this article, we will consider the following questions:
1) The history of Forex martingale (Forex martingale)
2) Reasons for the popularity of this trading method
3) Varieties of martingale
4) Pros and cons

This method, strictly speaking, is not a trading system. This is a betting system (money management or money management), which can be "screwed" to any trading strategy.

The history of the martingale.
Several centuries ago, a French mathematician set himself the goal of finding a win-win method of playing roulette. Those. wanted to beat the casino. And found it. The essence of the "method" is to double the initial bet after losing. This is the main principle!

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Example.
The initial bet is $1. If we lose, then we bet 2$, if we lose again, then we bet 4$ (2 times more) …8$ … 16$ …32$ … 64$ … 128$ … etc. etc.

Bets are doubled until 1 win is received. The essence of the system is that no matter how many losses there were, just 1 win is enough to win back all losses and make a profit equal to the initial bet.

Example.
If we lose 7 times in a row in the considered situation, and win on the 8th time, then our result will be equal to (-1-2-4-8-16-32-64 = -127$). The eighth bet gives us a profit of $128. In total, we have $ 1 net profit.

Let's look at the reasons for the popularity of martingale in Forex.
Martingale is very popular among beginners. Most experienced traders treat it cautiously or even negatively. Let's look at the reasons for the popularity of this method among novice traders.

What is the dream of every beginner? About a simple, understandable and "win-win" method. Forex martingale seems like such a magical method. Indeed, why read books, improve, study trading strategies and systems, when you can “stupidly” double your bet after losing and be in “chocolate”.

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Another reason why traders are addicted to martingale in Forex (and options) lies in the field of psychology.

Any normal person hates to lose. Thanks to martingale, the problem with losses is solved with “one hit” (one win).

In the above example, the trader, thanks to the martingale, got out of a series of 7 losses due to one profitable trade (and the system of doubling rates). In a normal situation (without doubling), we would need 8 profitable trades in a row to close a losing streak. That is, from a psychological point of view, martingale is a way to get out of losses as quickly as possible.

Varieties of martingale.

There are a huge number of varieties and variations of martingale.
In the classic version, you need to double the bet after each loss. When, finally, the win comes, we return to the initial rate (initial lot).
The so-called soft martingale does not mean doubling, but a smooth increase in rates by X% (for example, by 50%).

Example.
The initial bet is $1., then $1.5, then $2.75, etc.

The averaging method is the opening of additional transactions, provided that the initial transaction is unprofitable.

Example. A trader bought 1 lot of EUR/USD at a price of 1.3000. The price fell to 1.2900, resulting in a $1000 floating loss. The trader buys 1 more lot at the price of 1.2900 - thus, he "averages the entry price". Now, in order to win back losses, it is enough to roll back the price to the previous level (up to 1.3000). In this case, the profit on the first transaction will be = 0., and on the second one it will be equal to $1000. If the price continues to go against the trader's trades, he will continue to average out - open additional trades against the price movement.

The averaging strategy works if there is at least a small price rollback in our direction. If there is a recoilless movement (this happens 1-2 times a year on the daily chart of almost any currency pair), then this will mean certain death for the Forex averaging method.

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A reverse martingale implies both a smooth increase and a smooth decrease in rates.

For example, with a losing streak, we increase rates:
1=>2=>3=>4=>5=>6 etc.
When a profitable trade occurs, we reduce the risk by 1 step:
6=>5=>4=>3 etc.

We have considered the main varieties of martingale, if you wish, you can find or come up with additional variations of this method yourself.

We smoothly approached the key issue!

Does the Forex martingale strategy give an advantage to a trader?

Several theses.
1) Martingale as a money management strategy is irrational.

Let's analyze this thesis with an example.
In order to be guaranteed to earn at an initial rate of $1, you need to have a reserve of $100,000 (or more). In this case, we are guaranteed to survive any series of losses ... But! With $100,000, would a sane person bet $1???

No, of course it's not rational. It's easier to put money in the bank.
If you start making initially large bets and apply the martingale, then there is a significant risk of complete ruin when a losing series occurs.
2) Martingale has one more unpleasant feature - it is not suitable for profitable trading systems.

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Example.
There is a trading system in which the average win (in $) = the average loss, but the number of winning trades = 60%.
Trader A trades with $5 risk per trade and does not change it.
Trader B trades with $1 risk and doubles the risk after losing (uses martingale).
After a series of 4 losses and 6 wins, trader "A" has the result:
(5*6 – 5*4 = 10$)
Trader, "B", using the martingale method, will receive a $6 profit.

That is, for a profitable trading system, martingale is an inefficient method. A more efficient method is trading with a constant level of risk.

3) The key point for trading systems based on martingale is the existence of links between transactions.

An example of a lack of connections is coin tosses or the spinning of a roulette wheel. It doesn't matter how many times a coin is flipped - 1 time or a million - there is no connection between the flips. The probability of falling heads (tails) will be 50%, regardless of how many heads or tails were thrown before. There is even an expression: "A coin has no memory" i.e. “does not remember” the results of previous throws.

Does the price have "memory" in the Forex market?

This is a key question for the effective use of the Forex martingale.

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An example of bets, with a series of five steps:
3%=>6%=>12%=>24%=>48%

3) Martingale will merge sooner or later, despite all our efforts, therefore:
a) it is necessary to use for this method a small part of the total capital (5-10%)
b) With an increase in the deposit by 2-3 times, it is reasonable to withdraw part of the profit (withdrawal of profit
will mitigate the consequences of the "draining of the deposit" which will come sooner or later.
4) For the effective work of money, you need to use several different martingale systems on 1 deposit.

Example.
One system bets on the fact that the movement that has begun will continue (trend system). The other is that the movement that has begun will be “false” (counter-trend system) and the price will return to the starting point.
Using multiple systems increases the chances of success.

All of the above is also suitable for binary options.

Here is such a powerful review turned out (many letters)! Good luck and happy trading. Arthur.

The most furious discussions unfold around the Martingale Forex strategy. Both supporters and opponents of the system make very reasonable arguments, which makes it even more interesting and discussed. Many traders claim that the Martingale system provides almost 100% probability of earning, others are sure that sooner or later the use of the system will lead to a complete loss of their deposit.

History and main purpose of the strategy

First of all, it is worth noting that the system is not an independent trading strategy for trading, but only one of the risk management methods, which theoretically provides a win-win option.

The Martingale system was developed by the French mathematician Paul Pierre Levy in the 18th century, who wanted to get a win-win roulette game. The name of the system was according to some sources in honor of the city in which the mathematician lived, according to others - from the word form, which is translated from French as "simpleton". And indeed, working on this system is extremely simple and any beginner can easily cope with it. That is why the Martingale system is so common among Forex beginners.

The essence of the Martingale strategy is to double the bet in case of loss. Thus, compensation for the loss and, accordingly, income is ensured. However, it should be borne in mind that to work on such a system, you must have a sufficient supply of money, otherwise, as a result of several attempts to double and unprofitable bets, the entire account will be lost.

For a long time, the system, as expected, was used for gambling, in particular playing roulette in a casino. It is because of this strategy that modern casinos introduced two new positions on roulette 0 and 00, and also limited the size of the maximum bets.

Consider an example of a standard Martingale system for playing roulette.

For example, our player has $10 and the minimum bet on roulette is $1. The player makes the minimum bet on red and receives a loss as a result of black falling out. In the next game, the bet increases to 2 dollars and again a loss. The third bet of $4 wins and the player makes a profit of $4, which covers the previous $3 loss and earns $1.

Naturally, in such a situation, the probability of getting 4 losses in a row is very high, which means that the player could very quickly be left with nothing. Therefore, to work using the Martingale method, you need a large deposit and the ability to work with minimum rates.

Best forex brokers

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The principles of the Martingale strategy in the forex market

The Martingale system is widely used and actively used in Forex trading, but in this case there is a significant difference with roulette, since there is no absolute concept of winning or losing in trading.

The standard application of the Martingale in currency trading is based on working from the basic strategy by increasing the position size after each loss. For example, you work by levels and opened a position with 0.01 lots to increase the asset from the level in the hope of a rebound. However, the position turned out to be unprofitable, and you got a stop loss. Next, we enter a position for a fall after the level is broken already by 0.02 lots with the same stop. The position turned out to be profitable, and we covered the first loss, and also made a good profit on the second trade, especially considering its doubling.

There are also various variations of Forex Martingale trading that allow you to reduce risk, increase efficiency or increase profitability.

Soft Martingale

The strategy is the safest method and is completely identical to the standard one, however, to reduce the risk, each subsequent transaction with a loss increases not by two, but by one and a half times. This basically only allows you to cover the loss on previous transactions, however, the risk of losing capital is much lower.

Reversible Martingale

The reverse method involves a smooth increase in the amount of risk in losing trades, as well as a reverse decrease in winning trades.

Averaging

Averaging is one of the most conservative and effective variations of Martingale trading. The essence of the method is to add additional lot size to the position when the price moves against your entry point.

For example. You calculated the entry into a long position on the trend from the level of 1.3385, but the price immediately went against the entry. We add additional trays to the position at the lower levels, for example, at 1.3310/1.3285 and 1.3260.

Thus, we provide an average entry price for the position of 1.3309, which is much lower than the initial one, which allows us to increase the distance to the estimated stop loss, as well as get more income when the price movement resumes according to the initial analysis. As you can see in the example, the price later went up and gave an excellent opportunity to earn money. But even if we closed the position earlier than in the example, we would still have made a profit already above 1.3310.

There is also a variation of aggressive averaging, in which additional entries from lower levels are made at double the rates.

Accumulation

Accumulation or the otherwise called Pyramiding technique has little in common with the strategy we are considering, but it is also often mentioned in conjunction. The principle of the method is to add to a profitable position on rollbacks when the position is already in profit. Thus, you accumulate profits, and if the trend continues, then the income from the position will be quite good.

Effective and safe Forex Martingale

As mentioned earlier, the use of the strategy is recommended only in conjunction with a standard trading system built on the basis of . It is also recommended to increase transactions only when entering positions along the trend, which will increase your chances of a quick recovery.

Among other things, it will not be superfluous to use the standard risk manager. Set a limit for yourself on the number of buildups or averagings, otherwise with similar techniques, an inexperienced trader can part with his deposit too quickly.