If you’ve been involved in forex trading for any time the chances are you’ve heard of What is maximum drawdown forex. But what is it and how does it work?
In this post, I’m going to talk about the strategy, it’s strengths, risks and how it’s best used in the real world. There are a few reasons why this strategy is attractive to currency traders. Firstly it can, under certain conditions give a predictable outcome in terms of profits. It’s not a sure bet, but it’s about as close as you can get. Secondly it doesn’t rely on an ability to predict absolute market direction. This is useful given the dynamic and volatile nature of foreign exchange.
It yields a better return the more skillful you are. But it can still work when your trade picking skills are no better than chance. As with grid trading, that behavior suits this strategy. This results in lowering of your average entry price. The important thing to know about Martingale is that it doesn’t increase your odds of winning.