What is Martingale?
Martingale is a strategy of increasing the bet (or size of the next order) after each loss.
Originally invented for gambling in casinos, but traders picked up this idea and started using it in trading on financial markets.
The essence of Martingale is simple:
Made a deal — lost — increased the next deal.
Lost again — increased again.
And so on until you win and cover all previous losses.
The main idea is that when you win, you not only recover all losses but also make a small profit.
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How is Martingale applied in trading?
In trading, Martingale is used for averaging the price when the asset is falling.
That is, if the price of the coin or stock goes the wrong way, the trader opens a new buy order, but with a larger amount.
How it looks in practice:
Bought the coin at a price of $1 for $10.
The price dropped to $0.95.
Opened a new order for $12 (20% increase).
The price dropped to $0.90.
Opened another order for $14.4.
And so on...
Each time the purchase happens at a larger amount, which causes the average purchase price to drop.
Conclusion: even a small price pullback upwards allows you to close all orders in profit.
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Why does this resemble a casino strategy?
In casinos, players often use Martingale on roulette:
Bet $1 on black — lost.
Bet $2 on black — lost again.
Bet $4 — lost again.
Bet $8 — won.
Total: the player recovered all losses ($1 + $2 + $4 = $7) and made a profit of $1.
Martingale works the same way in trading — increasing the bet until a win.
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What are the advantages of Martingale?
Fast recovery of losses. Even if the price returns slightly, you are already in profit.
No need to guess where the reversal will be. You gradually "catch up" with the price.
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What are the downsides of Martingale?
High risk of losing the entire deposit. If there isn't enough money for the next doubling — all previous losses remain.
Strong pressure on psychology. Constantly increasing bets can be nerve-wracking.
Doesn't always work. There are markets that fall without retracements, and averaging turns into a disaster.
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Example with real numbers
Let's say you have a deposit of $100.
You've set it up like this:
Starting order — $10.
MARTINGALE — 20% increase for each subsequent deal.
How a series of averaging will look:
After 5 averages, you will have spent $74.42 out of $100.
Conclusion:
If the price doesn't turn around soon, you may not have enough money for the next order.
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How to use Martingale correctly?
1. Set small values: 10–20%.
This way, the growth of trade volume will be moderate.
2. Control the number of averages:
Calculate in advance how many orders you can open with your deposit.
3. Don't bet the entire deposit at once.
Leave some money for several additional orders.
4. Use additional filters:
For example, follow the trend. If the asset is falling in a continuous decline (strong downtrend) — it's better not to average.
5. Remember: Martingale is a risky strategy. Use it consciously and don't exceed reasonable limits.
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Conclusions:
Martingale is a powerful averaging tool and a way to profit.
If used incorrectly, it can quickly lead to losing the deposit.
Works only with proper risk calculation and discipline.
Beginners are advised to use minimal increase values and to have a plan in case of a prolonged market decline.
Here’s a compact and clear table for calculating Martingale (for 5 orders) at different percentages: 10%, 20%, 30%, 50%.
Starting order — $10.
Martingale calculation table (5 orders)
How much money is needed for 5 orders:
Conclusion:
At 10% — calmly, the total expenditure is about $61.
At 20% — orders grow a bit faster, need $74.
At 30% — you need $90 already.
At 50% — almost double: $131.
Formula for calculating the next order using Martingale:
Size of the next order = Size of the previous order × (1 + Martingale / 100)
Where:
The size of the previous order is the amount of the previous purchase.
Martingale — by how many percent to increase the order (for example, 10%, 20%, 30%, 50%).
Formula for calculating the entire series of orders:
Total order amount = Sum of all orders calculated using the formula above
That is, for each new trade we take the previous amount and multiply it by (1 + Martingale / 100).
For example (Martingale 20%, start $10)
1. Order 1 = $10
2. Order 2 = 10 × (1 + 20 / 100) = 10 × 1.2 = $12
3. Order 3 = 12 × 1.2 = $14.4
4. Order 4 = 14.4 × 1.2 = $17.28
5. Order 5 = 17.28 × 1.2 = $20.74
Total amount = 10 + 12 + 14.4 + 17.28 + 20.74 = $74.42
In short:
Each subsequent order = Previous order × (1 + Martingale percentage)
Conclusion:
Now you know what Martingale is, how to calculate order sizes, and why it's important to choose the increase percentage correctly.
Remember:
Martingale is a powerful averaging tool, but it requires strict control over the deposit.
Recommended increase level for beginners is 10–20%.
Always calculate in advance how much money will be needed for a series of orders.
Trade wisely, manage risks, and don't let emotions take over!
I wish you luck and profit, my dear
Dear subscribers!