It's no secret that the operating result of trade - is a function of position size. That is the amount of open contracts determines the scale of fluctuations in the trading account, and therefore the risks. This issue is a science, as a capital management (Money Management). Like any discipline, the science of money management has several lines, each of which has its supporters and critics.
Among others there are two fundamental concepts. This is a money management method martingale and anti-martingale. Martingale system is known from the eighteenth century. At the time, it appeared as bid management tactics in gambling, and in our time has been widely adopted as one of the high-risk systems management. Advisor Martingale - a generic name for automated trading systems in the market FOREX, money management which is based on the method of martingale.
The essence of this method is quite simple. Initially, the position is opened certain minimum lot. If the result is negative transaction, opening a new position lot size is doubled. And so long as there is no profit to make the transaction. Once the deal is closed above zero, the trader must return again to the use of minimum lot. Advisor Martingejl can be constructed as using one or more indicators, and without their involvement.
The main disadvantage of strategies that work on the principle of the Martingale is the risk of huge and sudden drawdown of capital, up to a total loss. This may occur with long strips of losing trades. Therefore, to somehow reduce this risk, some traders use indicators that increase the chances for a deal in the right direction. Because of this, the adviser martingale under certain conditions, can be a tool of aggressive capital expansion. Despite the fact that the algorithm of this kind of advisors is simple, this method has a huge number of enemies.
Without going into the mathematics that serve as arguments to the critics of the Martingale method, we note only that the whole operation of such policies - is very risky. Comfortable for a trader needs to have solid financial resources and be prepared to part with the entire amount at any time. The experts in asset management is not recommended for use in practice martingale strategy when trading the financial markets, and to be limited only familiarity with the theory, in order to study on the basis of this "right" and a reliable system of money management.
While testing the system, based on the method of martingale, traders are constantly trying to find the weakest spots and somehow optimize algorithms. Adjustments are made to the tactics of managing positions in the methods for selecting the lots and the like. Below a look at the main types of trading advisors that are based on the principle of the Martingale.
Trend Advisor Martingale. This is a whole class of algorithms that are used in his work concepts under consideration in this article such as money management. In order to ensure a higher probability of concluding a profitable transaction, used in the EA trend indicators. It's generally moving averages and instruments to measure torque. This may also include trading systems and running on the oscillators. Time frames, there may be any ranging from a 5 minute and ending weekly.
Net Advisor Martingale. The algorithms in this category are called "clean" because it does not involve the use of tools to increase the likelihood of winning. Operation of the system in this case is an implementation of schemes to open/close positions or levels of support and resistance, or at random.Social button for Joomla