To trade or not to trade
Martingales are based on the premise that only one trade is needed to turn your fortunes around.
Traders enjoy the winning, but often turning a blind eye to the floating drawdowns. Margin call or a blown account could happen today, tomorrow, 10 days from now, 100 days from now or even 300 days from now!
Most strategy developers just remove the blown account from public display, leaving traders high and dry. While it should be acceptable that no strategy can be successful for ever, developers should learn from their experiences. It is of paramount importance for developer to be transparent and honest with traders so they can trust their money while trading their system.
Blown accounts, the only sure thing
There is no profit without capital. The first step to protecting capital and avoiding blown accounts is to digest the fact that any martingale or grid, however safe, good or fool-proof will fail.
This is simply because it is gambling and not trading. The martingale strategy places a gamble on the direction of the movement of the price – This is a coin toss with a binary outcome. Martingales system is like a car without breaks. Forex market is not a smooth highway to be driving a brakeless car!
The number of such strategies sold and accounts blown are countless. Most vendors disappear only to appear again with a new fool-proof betting system, get traders onboard and crash again. Many traders and developers refuse to accept the fact that martingale was not designed for trading. The cycle continues as the traders believe that the cause of crash was a one-off case, which will never occur again! One of the most attractive selling point of a martingale system is often the lure of smooth upward equity curve and backtests of several years. Backtests are no good when the strategy is being designed using hind-sight. The smooth upward curves lasts till the market decides to change direction – and it eventually does.