One of the most accessible trading strategies for all IronTrade traders is Martingale. It is pretty simple and accessible for anyone. Many traders use it alone or combine it with other strategies. We will take a look at it and describe how to use it in practice.
So, how does it work?
You can use Martingale with any asset, but we recommend using it with Forex currency pairs. It relies on the theory of mean reversion when currency pairs tend to trade in ranges over time, so the same levels may be revisited several times. This strategy also helps if you understand the market because it does not depend on it.
The main principle is straightforward: you should double the investment amount each time your trade closes with a loss. You should do it until your trade wins. It will allow you to cover previous losses because of doubled investments.
For example:
1. We start with $10 and make the first trade, which ends profitably.
2. Next, we open a new trade again, investing $10, but it ends with losses.
3. We double its amount and invest $20 now according to the strategy.
4. If the trade is losing again, we double it and invest $40. If it loses, we double it again and so on. If it wins, the profit covers all previous losses.
Indeed, in Forex, there can be a sure profit or loss, which is not necessarily a 100% return.
Advantages and Disadvantages
As we already mentioned, this is based on multiplying the investment after each losing trade, making it possible to cover the losses and get profit. Keep in mind that this approach may lead to a more significant loss in case of multiple trades close negatively.
This strategy is simple and requires minimal practice. However, you should prepare a significant amount of funds available. Even though the last successful trade will cover the losses for previous ones, in real life, people can not afford to double the investments unlimitedly.
That’s why it is essential to draw your trading plan, which will determine the length of the trading sequence (i.e., how many trades in a row you can make). You must stop and cut your potential losses when you reach your limit.
Happy End
As we can see, this strategy can be easily applied to IronTrade. It has a set of simple rules to follow. If you follow them, you can successfully generate potential profits. At the same time, you are exposed to an increased risk of bearing much higher losses, which can be unacceptable for many traders.
Anyway, we wish you good luck and hope this article was helpful for your further investment career on IronTrade.