Martingale

The Martingale strategy involves increasing the size of a trade after a loss. For example, if a trader loses on a 1-lot trade, the next trade would be 2 lots. If that also loses, the subsequent trade would be 4 lots, and so on. The goal is that a single winning trade, regardless of how deep into the sequence it occurs, will recoup all prior accumulated losses and yield a small profit. This method assumes an eventual winning trade.

For retail traders, Martingale presents significant risk due to the rapid escalation of required capital. A long losing streak can quickly lead to margin calls or account depletion, as each subsequent trade requires substantially more margin. While theoretically guaranteeing a win, the financial capacity to sustain losses is finite, making extended losing sequences catastrophic. It often encourages over-leveraging and poor risk management.