Martingale strategy explained simply

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In short

Martingale is a principle from gambling, carried over to trading: after a loss the stake goes up, usually doubled. If the next trade wins, all losses of the series are recovered.

That sounds like a safe path, but it only moves the risk: many small wins against one rare, very large loss when the series runs too long.

The strategy as a schematic

A drawn price path, no market data. First the case where the rule works, then the same routine when it fails.

Closed: ±0 pips
Open: –
Open volume: –

Schematic, no market data: a drawn price path, results in pips weighted to 0.10 lots. Not a backtest and no statement about any real EA.

How the strategy trades

Open a trade with the start lot, a stop and a target.
If it ends at the target, the next one starts with the start lot again.
If it ends at the stop, the next trade opens with a multiple of the lot (typically ×2).
This repeats until a trade wins or the last step is reached.
At the last step the series stops; all losses of the series stay on the books.

Where the risk sits

Each single trade has a stop, the series does not. At ×2 the fifth step costs 16 times the first loss, all five together 31 times.

A won series earns roughly what one start trade earns. The ratio of possible gain to possible loss is therefore heavily lopsided, even if the series almost always wins.

How long a losing run gets cannot be limited, only how long the strategy goes along with it. The account has to carry the last step, otherwise the series ends earlier at the margin call.

When it works, when it fails

Tends to work when …

Losses come one at a time or in short runs and are soon followed by a win.
The account is large relative to the start lot.

Tends to fail when …

A longer run in the same direction, such as a trend against the entry direction.
Higher volatility that hits stops more often.
Broker lot limits or missing margin for the next step.

How to recognise it in an EA

Traces in the trade log of a live account, whatever the vendor calls the EA.

Lot sizes in the trade log follow a sequence: 0.01 · 0.02 · 0.04 · 0.08 … or another fixed factor.
A loss is immediately followed by a larger trade, a win by the start lot again.
Very high series hit rate, rare but very large losses.
Often combined with a grid: added positions at fixed distances with a growing lot.

Typical settings

Setting	Typical	Effect
Start lot	e.g. 0.01	Sets how large every step becomes.
Multiplier	1.5–2.0	Higher = faster recovery, faster growth of the risk.
Max. steps	4–10	Caps the series, not the loss of the series.
Stop / target per trade	equal, e.g. 20 pips	Sets how fast steps are used up.

Common ranges from EA manuals and set files, not a recommendation.

EAs in our tests built this way

17 graded EAs from our tests carry this design. Grade on a 0 to 10 scale, one formula for all; no live figures.

Showing the best 8 of 17.All EA reviews →How we grade EAs →

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Frequently asked questions

Why is martingale so risky?

Because the position size grows with every lost step. The loss of a broken series is a multiple of the usual gain. Such a series is rare but not impossible, and it hits exactly when the volume is largest.

How do I recognise a martingale EA?

From the trade log: lot sizes rise after losses in a fixed sequence and fall back to the start value after a win. With grid martingale you see several open positions with a growing lot.

How do we grade martingale EAs?

With the same formula as every EA. Without a proven hard stop for the whole series the grade is capped; details are in the methodology.

Video: the strategy in under a minute

The same animation as a video with subtitles, for those who prefer to watch.

The martingale strategy explained simply