What is the Martingale Strategy? The “100% Profitable” Crypto Trading Trick
The Martingale strategy or Martingale system is a method of betting or trading for both crypto and traditional financial assets.
Martingale employs a key rule and leverages probability to deliver profits on an investment or stake — but as with any crypto trading strategy, it is high risk.
What Is the Martingale Strategy?
The Martingale strategy originated in the nineteenth century, long before modern stock markets and consumer investment opportunities — let alone Bitcoin and crypto.
It revolves around a simple premise: if a player makes a losing bet, they should double down on the same bet next time. Sooner or later, they should get lucky, recouping their previous losses while making a profit on top thanks to the size of the winning stake compared to the losing ones.
This is possible by constantly doubling the stake size. All things being equal, including 50/50 odds of winning or losing, the winning bet will net the player a handsome profit.
Martingale can be applied just as easily to crypto trading as gambling or stock market betting.
What Is the Martingale Trading Strategy in Crypto?
Crypto trading using Martingale differs little from the latter’s application to other asset classes — only the terms involved are different.
When using Martingale to bet on the price of a cryptoasset, traders are unlikely to find 50/50 odds of winning or losing. This differs from gambling, for example a roulette game, where there are two betting choices — red and black — and each has equal odds of being the winning bet.
Crypto traders thus bet against a trend instead — they place sell orders during an uptrend or buy orders during a downtrend.
Despite losing money at first, the increasing size of their orders means that once the trend moves in their favor, they get back their investment and profit on top.
Is Martingale Crypto Trading Profitable?
Martingale may immediately strike crypto traders as too high-risk to put into practice thanks to its simplicity and inability to adjust to different markets or volatility.
However, this one-size-fits-all approach is not without its benefits, as can be seen from Martingale’s longevity and popularity.
Nevertheless, the concept remains highly contentious and subject to heated debate among crypto traders, influencers and other market participants. With Martingale, the stakes are high, and only get higher until luck takes over.
With enough capital and time, however, it is possible to establish reasonable odds when it comes to beating the trend.
Crypto Martingale Trading Pros
Trading crypto using the Martingale strategy may seem overly straightforward as a modus operandi, but it offers some benefits which might not be immediately apparent.
Martingale demands that a trader execute the same move repeatedly, with only the amount involved changing. This has the effect of removing impulse trades, otherwise known as trading “on emotion” — a key barrier to success for entry-level crypto market participants.
Similarly, beginners need not consult extensive complex trading instruments and theories while using Martingale — they follow a set rule which is easy to understand and remains constant throughout.
For a look at a much more involved crypto trading strategy, learn about the Wyckoff method at the TabTrader Academy here.
Martingale’s simplicity meanwhile removes other considerations as well, such as the size of an entry, how to time the market and how to manage an asset’s trend. It is suitable for both rangebound markets and those prone to short-term trend reversals.
Crypto Martingale Trading Cons
It goes without saying that no crypto trading strategy is without considerable risk, and Martingale is no exception.
Volatile crypto markets provide plenty of opportunities to make considerable profits, often in a short period, but the chances of the opposite outcome are constantly present.
Martingale’s specific risks are self-evident — doubling down on a loss engenders the risk of even bigger losses from which a trader may never recover. In addition to the financial aspect, the psychological resilience required to go against the gut feeling which may come from losing a considerable amount of capital should not be taken lightly.
Martingale may also be unsuitable for many retail traders thanks to its reliance on unlimited capital in order to succeed. If funds run out while finding the winning trade, the trader is helpless. There is an especially large risk when trading using leverage — an already highly risky practice, more information about which can be found in the TabTrader Academy guide here.
Martingale Trading in Crypto Example
What does the Martingale strategy look like in practice when trading Bitcoin or crypto? The method applies to any token, regardless of the market specifics at hand at the time.
A trader with $1,000 starting capital decides to long BTC with a $100 position. Here, when BTC/USD goes down and the trader loses, they must follow up with a $200 long and so on until they get lucky.
In this example, the trader could lose the $200 as well as the $100, but then make up the losses to at least break even. The exact sums involved depend on what BTC/USD does, and also assumes that the trader sets suitable Stop-Loss parameters to avoid losing all their capital in a fit of volatility.
More information about different order types, such as Stop-Loss, can be found here.
Reverse Martingale Strategy
A spin-off of Martingale, known as “reverse Martingale,” employs a similar modus operandi but changes the instructions for traders.
Here, a winning bet demands doubling down on the trade amount, while a loss requires halving the amount of capital involved.
This has the potential to increase a trader’s capital within a short space of time, but also requires discipline — profits need to be realized instead of either lying dormant or being reinvested to increase risk.
Conclusion: Is the Martingale Strategy Worth Trying?
Crypto traders can win big using the Martingale strategy, as its simplicity lends itself well to a wide variety of markets.
Volatility is no problem, while even a “choppy” crypto market, such as a sideways period on Bitcoin, can afford Martingale users some comparatively easy profits.
That said, there is no free lunch when it comes to trading notoriously unpredictable crypto markets, and anyone planning to use Martingale as part of their crypto trading strategy needs to be aware of the inherent risks involved from the outset.
The main hurdle to overcome is the fact that most traders’ funds will be finite compared to the size of the initial trade involved, meaning that without suitable precautions, they stand to lose their entire capital to chance. This is especially true when using leverage, as the consequences of a loss multiply instantly.
Traders likewise need to ensure that they limit the potential for loss on a given trade by setting suitable parameters as security.
Crypto and Martingale can be a suitable combination for experienced market participants, but for those just starting out in the Bitcoin and altcoin arena, there are less risky options. Applying a one-size-fits-all style of executing trades carries tangible risk for everyone.
Conversely, those who already possess considerable skill in navigating the unique environments that crypto, DeFi and related markets offer can leverage Martingale to make the most of conditions which would otherwise afford few genuinely profitable trading opportunities.
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Want to understand more about crypto and how trading works under the hood? The TabTrader Academy has the answers to all your most burning questions.
FAQ
Does Martingale work in crypto?
Crypto traders can benefit from deploying the Martingale strategy as part of their wider trading activities — provided that they understand and manage its inherent risks. The simplicity of Martingale in its purest form takes away some of the complexity of attempting to “time the market” to eke out a profit, particularly in sideways or less volatile trading conditions.
Is Martingale good for trading?
Whether a crypto trader wins big or loses it all from Martingale very depends on their individual circumstances and the precautions taken to limit losses. Martingale assumes that starting capital is limitless, and those with a small amount available to deploy to the market can quickly find themselves at zero after a series of losing Martingale trades. Removing leverage from the equation serves to increase a trader’s control of their positions if their actual capital is finite.
How risky is Martingale?
Crypto is volatile by nature, and adding a blanket trading style to the mix can produce extreme results — not always to the trader’s benefit. Martingale demands doubling the position after each losing, not winning, trade — capital available can be quickly consumed in the process of finding that winning move which compensates all previous losses. As such, crypto trading with Martingale can be considered one of the highest-risk methods of gaining crypto market exposure. For beginners with limited funds, Martingale is an unlikely fit.
