I use an EA that employs the Martingale trading strategy. I would appreciate your assistance in understanding the calculations that determine take profit, stop loss, range, and lot size multiplier.
Here are the parameters:
Range = 21 pips (distance between trades in a sequence)
Initial lot = 0.01
Multiplier Lot size = 1.7
Maximum trade = 12 (maximum Martingale trade sequence)
TP (Take Profit) = 30 pips
SL (Stop Loss) = 253 pips
Star_ModifTp = 4 (This means that when the number of orders = 4 orders, the take profit will be modified at the last order price)
Based on my understanding, the calculation for Stop Loss is: SL = (Maximum Trade x Range) + 1, which results in 253 = (12 x 21) + 1.
The Take Profit formula is: TP = (Range + Broker Spread) + 9, leading to 30 = (21 + 0) + 9.
I am seeking your guidance on how the values for range (21), multiplier (1.7), and maximum trade (12) are decided. Additionally, I would like to know how I can minimize risk by adjusting these values. I experimented with a multiplier of 1.4, but it resulted in losses upon reversal. I also tried changing the range, take profit, and maximum trade, but default values seem to yield profits upon reversal.
I hope you can help me understand the mathematical calculations behind this Martingale strategy and guide me in determining new values that minimize risk.
Sounds very similar to something I tried a few years ago. Needless to say, it didn’t work. It’d work for a couple of weeks and then lose everything on one bad day
It has to be 1.7 because that’s the ratio between TP and SL. If it’s lower than 1.7, then the second position doesn’t make enough profit to cancel out the first one’s loss.
The problem with this system is essentially in your data though. TP is 30 pips, that is fixed, you will only ever make that amount. But your SL is 253 pips. To have your risk over 8 times the size of your reward is crazy.
I didn’t bother trying to understand all this mumbo jumbo just to save my brain the stress.
But you see, at the sound of that word “MARTINGALE” I cringe.
There’s no safe net as long as this strategy is concerned.
Few months ago before I decided to learn forex. I was following the signals for binary options trading sent to a telegram channel. The trader uses this martingale strategy.
At first I was feeling so blessed, I started with $20 and in just a week I was already a little above $100. I had to tell friend who gave me $50 to help him trade, then I added an extra $100.
With the signals I made close to $200 or more within the space of 2 weeks after I started with $20.
BUT!
I guess I ran out of luck, with just one wrong signal, I lost more than half of the profit made in just one day😢
Then I wasn’t so lucky anymore with the signals, gradually I lost everything.
Bottom line, the martingale strategy is a suicidal strategy. I can advice anyone to go for it.
If you ask successful or professional traders, they usually say 0.7 or 0.75 reward to risk (=1.3 or 1.4 risk to reward) but if you ask beginners or people in forums they often say 2.0 or even higher reward to risk (=0.5 or even lower risk to reward).
I know who I believe.
I am a maths teacher, so I know this is right. But the people who do not want to hear it will not listen to it. They will tell you that everything is a game of numbers, as if they imagine that these vague words somehow justify their own mistaken beliefs.
I do understand Martingale is risky and suicidal strategy. But i still want to try atleast in Demo or cent account.
Help me understand above calculation. So, i can minimize the risk of suicide (Martingale). What i understand, i made new calculation but it fail badly.
1. Range = 5 pips (distance between trades in a sequence)
2. Initial lot = 0.01
3. Multiplier Lot size = 1.2
4. Maximum trade = 6
5. TP (Take Profit) = 10 pips
6. SL (Stop Loss) = 31 pips
7. Star_ModifTp = 4
I really don’t understand all those parameters used here and where you got this, but the martingale I know is quite straightforward.
Simply N
Where N is your initial trade amount.
If you lost the trade, your next position would be, Nx2, and if you lost again, your next position would be (Nx2)x2, and so on.
Your stop loss and take profit will be determined by you risk-reward ratio. Ideally, it shouldn’t be more than 1:2, you can do from 1:1 to 1:2.If from your analysis 20pips is your stop loss, then your take profit, using the mentioned rrr, should range from 20pips to 40pips.
Martingale only works to recover losses, even then you want to use other strategies where possible, it never works to generate sustainable profits, there are no exceptions.
