CONSTRUCTION OF TRADE STRATEGIES FOR FOREX MARKET, USING MARTINGALE.
 

Many of you probably were in a casino and heard that a casino had limited the sum of rate in most playing machines; thus, you will not be able to compensate a few successive losses; even, if you have sufficient amount of money.  This problem is easy to overcome applying Martingale system, when you use it in strategies for FOREX market. Especially when you play roulette you can not predict the result with probability higher than 47%, but it is not so with Forex market, where there are systems (forex robots, expert advisors) with a high probability predictions.

Despite the legend, the method of Martingale is named not in honor of cardplayer, who founded the system. The first meaning of the word is a collar in a harness, which keeps a horse from throwing its head backwards. Second meaning is fragments of the permanent ship rigging, and these fragments are used for strengthening of bowsprit and jib from force of front stays.

Method of Martingale has two forms: simple and difficult ones.

A simple form requires doubling of your rate after every loss, so that, by winning only one time; you compensate a sum which was originally exposed to the risk. If you put a rate in a 1 lot and you lost, then a next rate will make 2 lots, than after a loss, 4 lots and then 8 lots. A winning rate in 8 lots  compensates all of your loss = 1lot +  2 lots  + 4 lots = 7 lots  – and leaves  you with winning of 1 lot.  When you lose 3 times, and win only 1 time, it means you compensate a sum which was lost in the series of successive losses – what actually Martingale method is.

The difficult form does not double a rate but increases it on 40%. This system does not allow you to compensate a few losses by one winning. Only a few successful rates will bring you a profit.

We developed Forex Expert Advisor MARTINGALE THEORY, in which Martingale is used in the modified form. Let’s make an attempt to test the system on the different areas of quotations (currency of EUR). The initial lot is = 0, 1.   I would like to stress that when you use initial lot = 0.01 on different pair and timeframes you reduce the risk by several times.