Worst Friend: Martingale

By looking at an Equity Chart, Martingale strategies are easy to spot. If you find yourself looking at a positively inclined equity curve with little or 1 big drawdown, than most likely, you are looking at a martingale. Now, is this a big Deal? For Long Term safe growth, Yes.

Often, the finished result from most Martingale strategies are negative, however, the question that All investors really care about is, “When will the next crash happen?” Avoid the Crash, by avoiding Martingale.

I have been researching forex strategies for over 5 years. I have came across Martingale strategies that have doubled accounts in one year, then suddenly face a 50% loss within a few days. I have seen some Martingales that work for several months, then face a 30-60 % drawdown, crash, or Margin Call. For what ever reason, most programmers and Forex Speculators believe if they can not succeed with their own trading method, adding Martingale to their system will increase their chance with success.

Is this true? Temporarily, adding martingale may save your investment 1 week while exposing your profit and your initial deposit the next week. If the Market ranges with no trending behavior, this strategy may work perfectly, but when there are uncertainty, then stay away.

Bottom Line is Be aware of Martingale. Equity Curves look Too Perfect. You will always be at mercy of an unexpected Crash, Drawdown, or Margin Call.

How to Spot Martingale
1. Negative Pip Gain, but Positive Equity growth
2. Lot Sizes increase at a loss (typically a 2x Increase with each loss)
3. Aggressive Equity curves that Look stable!

Profitable but dangerous!

From my first view on the system below, I saw a few trade positions that were at 45 lot position (June2010). However, Today (August 13th 2010) I reviewed this statement to notice that the 45 lot positions is no longer in this statement and now I see a Max of 10 Lot positions… This means that the Trader, edited the Trading Statement and Uploaded the manipulated trading statement to hide the Huge Lot, caused from the Martingale Strategy. I will have to report this information under my Forex Scams Review

2012 Update

– The Trader with the manipulated MT4i statement no longer uses the Martingale system and the current system has not been updated in over 8 months.
Live Account with 45 Lot positions
Russian Martingale EA for $290USD 550% Equity Gains – Website No longer Active – Account Blown (2012)
Detailed Trading Results Here: Account Blown ( 2012)

There are many Commercial and Free Martingale EA’s and they all have 1 thing in common, BLOWN ACCOUNTS