Does bullet-proof trading exist in Forex trading?
“Might exist in a parallel universe, but no, not in this world,” you might say. But yes, there is such a thing, and no, it does not involve any cryptic magic or some sort of cheating. This strategy is called the Martingale Strategy which emerged in the 18th century and had a strong following since then.
We know how much you want to know more about this method, so let’s take you to the basics of this strategy.
The Basics of Martingale Strategy
The Martingale Strategy was originally a betting style. This strategy starts by making the first bet, and with each loss, a player must double the wager. Given enough time, the player’s one winning bet can cover the losses he has made in his previous bets.
The theory of probability plays a significant role in this highly rewarding yet very risky type of betting. In this strategy, the player must stay on his one particular bet, no matter what happens. This means that he must remain with it even in the midst of heartbreaking losses.
“Who in his right mind would do such a thing?”
Actually, countless people all over the world are crazy enough to follow this route. But really, there’s a method and logic behind this seemingly crazy habit.
The strategy says that as long as the player stays on one bet, the odds are slimmed down and every turn turns him closer to winning. On the contrary, multiple bets and changing halfway would blow up the player’s chance of actually winning.
Not For the Faint-Hearted
Yes, this seemingly ‘crazy’ but logic-based strategy can be used in Forex trading. But this strategy is not for everyone as it requires a deep pocket to reach the end goal. It is not recommended for traders with limited money to trade, because this strategy can easily wipe out an entire account.
Martingale on Forex
A series of losses, no matter how you look at it, seems really bad. But the story differs when you trade in currencies, because they tend to trend, and as every investor knows, trend stretches a long time. The “doubling down” logic of Martingale’s strategy can be very handy in Forex trading because it shaves off an investor’s average entry price. The saving that can be gained from it can be very attractive among investors.
Advantages of Martingale in Forex
Currency Rarely Hits Zero
The nature of currency is it won’t quickly drop to zero. It would take a global economic catastrophe before it can happen – and it’s an extremely rare occurrence. Yes, there are moments when currencies are devalued, but still, it won’t even hit the zero bedrock.
Interests
The wounds that traders got from their series of losses can be patched by the interests that they can earn while trading. It lessens the pain of accumulating a series of losses because of using the Martingale strategy.
Traders can earn a significant income by buying a currency with a high-interest rate. This technique allows a trader to earn high interests while selling the currency with a low-interest rate.
Conclusion
Using the Martingale strategy in Forex can come with high rewards. However, it also comes with high risks. Traders may see their accounts dry up even before recovering their losses and gaining profits. Every investor that plans to try this strategy must be reminded that it really takes a deep knowledge as well as a deep pocket to achieve success.
Also read: How Can You Become a Full-Time Trader?
