Martingale in forex: Brilliant strategy or a one-way ticket to trouble?

What is Martingale

Martingale is a strategy that comes from the world of gambling, originally designed to gain a statistical edge in games of chance (Lu, 2013).

Imagine betting on red or black in roulette. You start with $10 on red. If you win, great. If you lose, you bet $20 the next round to make up for the loss. Still no luck? Now it’s $40, because this time it’s got to hit, right?

The idea is simple: one win is all it takes to cover all previous losses and leave you with a small profit.

Some traders took this logic and brought it into forex. Instead of betting on red or black, you’re betting on price going up or down. And when the market moves against you, you open a new trade in the same direction, but with a bigger position.

On paper, it looks smart. The market can’t just keep going one way forever, right? So it’s only a matter of time before you’re back in profit.

But here’s the catch: time and money are not unlimited in real trading.

How Martingale is used in forex

In practice, this is how it works: a trader opens a position, let’s say on EUR/USD. If the price goes down and the trade goes into loss, they don’t close it. Instead, they open a second, larger position in the same direction. The size usually multiplies: 0.01 lot, then 0.02, then 0.04, and so on.

The goal? To bring the average entry price closer to the current price, so when the market pulls back even slightly, all open trades can close with a small profit. You don’t need the price to return all the way to your original entry. Just a minor retracement can be enough.

On paper, it makes sense. But in reality, all it takes is a longer move in one direction and your account is at risk. Trade volume grows much faster than you expect and with it, the overall risk. Even though Martingale looks simple, the math behind it shows that it’s extremely risky, exposing your account to unlimited variance (Bas, 2019).

Why trading with Martingale is dangerous

Martingale seems like a strategy that helps you dig yourself out of a loss. But that’s exactly the problem – it helps you dig deeper, until you can’t climb out. Here are the biggest risks of Martingale:

Exponential position growth

Each new trade has to be bigger than the last one. For example:

• Trade 1 = 0.01 lot
• Trade 2 = 0.02 lot
• Trade 3 = 0.04 lot
• Trade 4 = 0.08 lot
  

 … and it keeps growing. Not linearly. Exponentially.

Rapidly increasing losses

One strong trend in the wrong direction and your account can crash. If the market trends without a pullback, you’re done.

No stop loss

Martingale often works without any protection. The trader is just hoping that “it’ll turn around.” But sometimes… it doesn’t.

Mental pressure

The bigger the position, the higher the stress. Even if you have a plan, emotions take over. And emotions make bad trading partners.

Example (with starting size of 0.01 lot and 50 pip spacing):

Trade	Lot size	Total volume	Max loss (USD)
1	0,01	0,01	-5
2	0,02	0,03	-15
3	0,04	0,07	-35
4	0,08	0,15	-75
5	0,16	0,31	-155
6	0,32	0,63	-315
7	0,64	1,27	-635

By the seventh trade, you’ve opened more than 1.2 lots and are down over $600 just from seven losing trades in a row. And you started with 0.01 lot.

Now imagine the eighth trade…

Does Martingale ever work?

Yes, Martingale can show profitable results in certain market conditions. As Shah (2024) points out, it may work temporarily in low-volatility, non-trending environments. But to even consider it, you need a massive account and the ability to stop at the right time.

At Fintokei, we can give you a massive account (just complete any challenge), but the ability to stop at the right time that’s up to you entirely.

In a stable market that doesn’t move too far in one direction, Martingale can work for weeks or even months. The price moves slightly against your trade, you double down, the market pulls back, and you close in profit.

But here’s the key: it only works as long as the market comes back.

As soon as you hit a longer trend without correction – and it will happen – Martingale breaks.  Backtests on EUR/USD and DAX have shown that:

• 35% of test runs ended in a wiped-out account,
• the expected value after accounting for losses was negative,
• short-term profits were followed by long-term losses.
  

From a mathematical perspective, it’s like playing roulette with a limited budget. It might work… until it doesn’t. And then it wipes everything out.

Why is Martingale so tempting

Some strategies just look too good to be true. Martingale is one of them. So why do so many beginners fall for it?

• It’s simple: no indicators, no analysis, no rules. Just double down when it goes against you.
• False sense of certainty: the market has to turn eventually, right? When it does, you recover and win.
• Quick results: Martingale can bring fast, frequent wins—until that one losing streak ruins everything.
• Feeling in control: increasing your position gives you the illusion of control. But it’s just that, an illusion.
  

After a few wins in a row, your brain switches into “this works!” mode and ignores the warning signs. That’s exactly when the system starts turning against you.

Martingale isn’t really a trading strategy, it’s a psychological trap. And most beginners fall right into it.

Who should definitely avoid Martingale

Martingale might look appealing at first glance, but the reality is harsh: for most traders, it’s a system that will eventually blow up your account. If you:

• don’t have a large amount of capital,
• trade without strict rules,
• struggle to control your emotions,
• haven’t mastered money management,
  

…then Martingale is something you should steer clear of.

It only has a chance of survival if you have unlimited capital, military-grade discipline, and a strict exit strategy. And even then, it’s more gambling than trading.

It’s also important to realize that many beginners are unknowingly using Martingale. They call it “averaging down” or “improving the entry”, but it’s the same thing: adding to losing trades and hoping the market will turn.

As Brémaud (2020) points out, many new traders unintentionally mimic Martingale by adding to their losses, thinking they’re increasing their chance of recovery. In reality, they’re just increasing their risk.

What to do instead of using Martingale

Martingale isn’t your only option. There are far safer and more sustainable strategies that let you trade with a clear head, instead of just hoping the market will “finally reverse.”

What smart trading looks like

• Fixed risk per trade: Decide how much you’re willing to risk before entering a trade. No random doubling down.
• Stop loss and take profit: Know when to get out—both when you win and when you lose. Risk management first.
• Position sizing: Learn how to size your trades based on your capital. Don’t risk more than 1–2% of your account per trade.
• Clear trading plan: Know when to enter, exit, and stay out. A solid plan keeps you from making impulsive decisions.
• Emotional control: Successful traders don’t chase losses. They know more opportunities are always around the corner.
  

If you’re drawn to Martingale, that’s totally normal. You’re just getting started, and fast profits always sound good. But if you want to make it in trading long term, you need to understand one thing:

Protecting your account is more important than winning any single trade.

Try it out with a free trial challenge

Want to try Martingale? Great, but try it out with a free trial challenge first. It also runs on a demo trading account, but only allows you to try the first round of the challenge—free of charge. So set up your strategy and see what happens. You’ll find out how quickly volume, losses, and stress can grow. Start without pressure. Gain experience. And find out if this is really the way for you.

And remember: Dimitrov and Shafer (2025) describe Martingale as a form of self-deception, a strategy that gives you the illusion of control in both gambling and finance. And illusions can be expensive.

Unleash your trading potential on Fintokei accounts too!

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Resources

^{_{Lu, Y., 2013. Theory of Martingales. , pp. 1-8. https://doi.org/10.1002/9780470400531.EORMS1078.}}

_{Bas, E., 2019. Basics of Martingales. , pp. 265-272. https://doi.org/10.1007/978-3-030-32323-3_17.}

_{Shah, R., 2024. Introduction to Martingales. . Brémaud, P., 2020. Martingales. Universitext. https://doi.org/10.1007/978-3-030-40183-2_13.}

_{Dimitrov, V., & Shafer, G., 2025. The martingale index: A measure of self-deception in betting and finance. Judgment and Decision Making. https://doi.org/10.1017/jdm.2025.12.}