The Martingale strategy is a risk management technique used in Forex trading where a trader doubles their trade size after a loss to recover previous losses and make a profit when they win.
🔹 How It Works:
1️⃣ Start with an initial trade size (e.g., 0.1 lot).
2️⃣ If the trade loses, double the lot size on the next trade (e.g., 0.2 lot).
3️⃣ If the next trade also loses, double it again (e.g., 0.4 lot).
4️⃣ Continue until a winning trade occurs, which recovers all previous losses + a small profit.
5️⃣ Reset to the initial lot size after a win.
🔸 Example:
- Trade 1: Lose → -$10
- Trade 2: Double lot size → Lose → -$20
- Trade 3: Double again → Lose → -$40
- Trade 4: Double again → Win → +$80
✅ Total profit = $10 (Recovers all previous losses + initial profit)
⚠️ Risks of Martingale:
❌ Requires large capital to sustain consecutive losses.
❌ High risk of account wipeout if trades keep losing.
❌ No guarantee of market reversal in the short term.
🔹 Is Martingale a Good Strategy?
Martingale can work in ranging markets but is very risky in trending markets where price keeps moving in one direction. Many traders use a modified Martingale with stop-loss and proper money management to reduce risk.
