Most algorithmic trading systems are not fully automated due to the nature of the markets, but the Martingale trading system is one that you can run fully automated, this is because of the nature of the strategy.
What is a Martingale Strategy?
The Martingale Strategy strategies started in 18th-century France, the most basic form is when a person wins the stake if a coin comes up heads and loses if it comes up tails. The system became popular in 1891 when a well-known person called Charles De Ville Wells, typically known as the Man who Broke the Bank at Monte Carlo, won over 1,000,000 francs playing roulette using the Martingale Strategy, in today's money this is about $13,000,000. He needed deep pockets and help from the banks to make it happen.
A Martingale Trading Strategy works much better in Forex trading because it lowers your average entry price.
The problem with this type of strategy is that you need a large supply of money to achieve 100% profitability. It's also important to understand that the amount you risk on a trade will be far higher than any potential gain, but there are also methods to improve the martingale strategy to increase the chances of winning.
Problems Using Martingale
A major problem using the Martingale Strategy is that you will need a pretty big account balance to make it financially viable, you will lose, so even with a £100,000 account size, you will experience at least one big loss scenario during your first year. Using this method of trading your account balance will be at stake just to keep the big wins going.
Can You Optimise The Settings?
Yes, it is possible to data-fit the settings to show good results in a backtest like below for EURUSD, but due to the nature of the strategy, it is not recommended. The backtest statistics below show a 60% Net Profit with a 12.23% Equity Drawdown using 1-year of historical data from 31.08.2021 to 31.08.2022, the settings used are below. Optimise the following settings only: Leave lot size to 0.01
- Stop loss
- Take profit
- Number of candles
- candle Size
- Minutes between trades
- Cycle period
These results were obtained in 5-minutes of optimisation.
do not expect the same results on live data.
How Does This Strategy Work?
At its core, this is your typical Martingale strategy where it submits a new order double the bet size after a losing trade, but it has some major differences to increase the odds of winning by using price action and risk management.
The system will only start trading in the direction of the trend where there are (x) consecutive bullish or bearish candles, this helps identify a solid trend direction, also the last candle that formed must be in the same direction and (x) pips in size.
There are many risk management features that include, a stop loss and take profit, an equity stop that will stop the robot and close trades when your equity drops below a certain value, and a maximum drawdown stop, so when the equity drawdown of your account drops a set percentage. Also, some additional features like a Friday stop so no trades run over the weekend.
The list of settings for this trading robot is shown below together with an explanation of the ones that are not obvious.
- Initial Quantity - this is the starting trade size in lots before it is increased in value.
- Lots Multiplier - the value that is multiplied by the initial quantity on each losing trade.
- Equity Stop - when you are losing below or equal to this value all orders are closed and the robot stops.
- Max Drawdown % - when you are losing (x) % of your equity all orders are closed and the robot stops.
- Number of Candles - the number of bullish or bearish candles to start trading in the same direction.
- Candle Size - the size in pips of the last candle.
- Minutes between trades - the number of minutes to wait before opening another trade.
- Cycle Period - the number of minutes to wait after each trade closes before opening another one.
- Cycle Reset -if set to NO, the Cycle period is disabled and the system will trade 24/7
Source Code Included
This project can be downloaded as a cTrader cBot that includes the full source code so you can make changes yourself or use our custom development service.
Our Development Service
We provide professional & user-friendly development services to help traders build their automated trading robots or custom indicators, we can also help you by adding additional features to the Martingale Strategy or making any changes to the way it works, so you can use this project as a base-line to build a profitable trading robot.
No specific requirements, this cBot should work with all versions of the cTrader Desktop platform.
How To Install & Remove
First, make sure you have the cTrader trading platform installed and then simply unzip the file and double-click on it to automatically install it onto the platform.
If you have any questions, please first search our product help forum for the answer, if you cannot find it, post a new question.
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