Forex algo trading


Just wanted some opinions. I have traded for approximately 5 years using a discretionary method.

My friend who has no experience trading has started using an algo which is yielding 10% returns monthly. He pays the owner of the algo a 30% commission on profits. The owner of the algo says he got it from a hedge fund.

I’ve had a brief look at the bot and it seems to be using a martingale strategy with 1% profit taking and 10% stop loss. The leverage that has been applied on the account is 500:1 and each trade is opened as a micro lot.

I’ve always heard negative things about the martingale strategy even though in this case the loss is capped at 10%.

What are your thoughts on this bot?
Are there already similar ones online and available To the public and they have just marketed it as a special one that is used by the hedge funds?
What are the risks of a blow out using this strategy along side the leverage and lot size being used.

The reason I’m asking this as I’m also tempted to use this algo but it just seems to be too good to true especially when you compound a 10% monthly return even over a few short years, 10k Initial capital could potentially return hundreds of thousands.


Martingale = Nope

Think of it this way, if you are trading and you are using martingale what if the 10 winners come first before a winner, then you start doubting your strategy and will lead to more mistakes and that could lead to an account blown.

Yes, it’s making money now but what happens when it does not?

Learn to trade and trade with proper risk management you need long jevity in the game it’s not a sprint.

Hi, this is probably short time when strategy is profitable, in long term probably this strategy will lost everything. Regards Greg

I agree, I understand risk management etc. Just wanted to know others thoughts on whether this could work. I presume if you hit 10 trending markets in a row, you could lose 10 times in a row and that is the only way you can blow out. Or potentially a flash crash

When you say long term, what time period do you think.

at least one year

I doubt that any hedge fund would utilize a martingale strategy.

Yes sorry , I checked with him and he said it’s another company…not a hedge fund.

Do you think this strategy will eventually cause them to blow up? My understanding is 10 losers in a row is possible with any strategy including martingale?

I cannot say for certain without examining the workings of the bot but any martingale strategy will eventually fail if the strategy determines that it should trade in a particular direction and subsequently the market enters a trend in the opposite direction for an extended period of time and with a huge price differential relative to the entry point. Mathematically, the probability of failure is extremely high and when it fails it will wipe out the account.

I would advise against using this bot and would encourage you to convince your friend not to use it too. For the person who sold this bot, it’s a numbers game. He collects 30% from all clients until the client wipes out. He’s unaffected by losses. Read the disclaimers and risk clauses on his contract.

Where’s the emotion?, a bot using a dubious strategy, doesn’t sound a good combination, at least as human being you can make a logical and emotional call when things go wrong.

Hi, I will also support opinion from other forum members on martingale strategy. It is always better to develop your own strategy that works on a long run. At least, I think, that long run sustainable strategy should be goal of every trader.

I’m an algorithmic trader. I have never done discretionary forex trading because there are calculations such as risk, position size, margin to use, pips calculations for stop & profit taking etc. I couldn’t imagine all this doing manually. I have developed my own strategy and trading live with one instrument. Here is my journal Algo trading Fx

My backtest has shown significant results because of that I have decided to trade it live. Somewhere I have read, only use strategy that you can backtest.