A strategy that has a 100% success rate in Forex trading is a dream for most traders. However, in reality one such strategy actually exists, which requires deep pockets and you can say very deep indeed. Named as the Martingale way, this dates back to the 18th century when the same was used in the gambling casinos of Las Vegas.
This call for the reason that why these casinos now have betting maximums and minimums and why the wheel on roulette has two green marks, 0 and 00. This is in addition to the even and odd bets. Meanwhile, if somebody actually wishes to get 100% success with this one needs to have infinite cash, which is also a dream far from reality.
The strategy was decipher by a mathematician in France, Paul Pierre Levy, and it was initially introduced as a kind of betting style based on the principle of doubling down.
Martingale’s relation with Forex market
Unlike stocks, currencies have a very rare chance of going to zero. Companies may go bankrupt, but nations cannot ever. The value of a currency may slide and plummet, but it never reaches a zero stage. It is not impossible, but is considered somewhat the same. This strategy is for traders looking to risk a high amount and its offers ability to earn interest too, which flows in as a substantial quantity.
Therefore, its best advised when using this, a Forex trader must trade on currencies that are moving in the positive carry direction only. It means, the trader can buy a currency with a higher rate of interest and sell the one with a lower rate. The income as interest is significant and can help in reducing the average price entry.
Understanding the Martingale Way
A trader can do so by studying the effect on variance. A position with consistent losing streaks has a larger size and one winning can remove all the past losses. It is now a popular strategy among forex robots, but still traders are cautious in using the same. The institutional traders in the equity market increasingly use the basic kind by combining the same with more advanced tools. The best example for this is- scalping plus martingale.