This is the Martingale strategy often used by many friends with high win rates.
Advantages of the Martingale strategy: high win rate.
Due to continuous averaging down, as long as the market eventually rebounds, traders have the potential to make a profit, thus increasing the win rate of trades.
Average cost: By continuously increasing the position size, traders can lower the average cost during market declines, preparing for future rebounds.
Disadvantages of the Martingale strategy: significant capital pressure: when the market continues to decline, traders need to constantly increase their position size, which can lead to rapid depletion of funds.
High risk: If the market trend continues to be unfavorable, traders may face significant losses and even risk liquidation.
Low return rate: When the market rises, due to the overall small position size, traders' return rates may be relatively low.
Trading costs: Frequent trading and averaging down will increase trading costs, further eroding profits.
Pursuing a high win rate without considering the risk-reward ratio and return rate is meaningless.
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