Forex VPS Guide

forex vps

What is Forex VPS?

VPS stands for virtual private server. You may imagine it to be a remote computer that you can run your forex robot on it. VPS has many uses and one of it is for forex trading. Forex VPS is a VPS that allows you to do forex trading and run forex robots on it.

Why use VPS for Forex Trading?

Forex VPS are getting more and more popular with forex traders and many successful forex traders use them. It is especially useful for forex traders that make use of forex robots.

Forex robots are required to watch the market for you at all times.

But can it do that?

If you close your forex trading software such MetaTrader…

Or if you turn off your computer…

What happens?

Your forex robot also stops running!

Does that mean my computer has to be turned on 24 hours a day for my forex robot to work?

Yes, unless you are using a VPS for your forex robot.

With it, you won’t have to worry if your computer hangs or if your internet disconnects.

If you haven’t already used a VPS for forex trading, you are missing out on many exciting benefits that it has to offer.

Benefits of Forex VPS

Low Latency

When a price level is reached and your forex robot closes the order.

Does the order close immediately?

No. Time is required to for the order to be sent to your broker.

This time is called the latency.

Why does this matter?

By the time your order has reached your forex broker, the market price might have changed. Hence, your order might be executed at a worse off price.

Using a Forex VPS might be faster than using your computer. This is especially true if you are located far away from your forex broker.

Forex is a fast moving market. A small delay might cause huge losses especially for scalpers.

Stable Connection

Forex VPS are usually well maintained with minimal or no internet connection issues. This will allow your forex robot to run smoothly without facing any network errors.

Secure

Forex VPS servers usually comes with high level of protection to shield you from hackers and viruses.

Accessibility

With a Forex VPS server, it would allow you to access your trades anywhere. You are not only limited to your computer at home. If you are using a broker that do not allow mobile trading, you will still be able to access your trades with a Forex VPS.

Cost Effective

By turning on your computer 24 hours a day to run a forex robot, you would incur higher electrical bills. VPS allows you to save on those costs. The cost of Forex VPS range from few to hundreds USD per month. Depending on the trading requirements that you need, you will likely be able to find suitable Forex VPS solution.

Increase Your Computer Productivity

Running a forex robot can eat up alot of your bandwidth and it uses up alot of your computer processing power. If you are doing other work on the same computer, you may encounter delays because of that. Furthermore, by turning on your computer all day, you run the risk of computer heating up and the life span of your computer might also be affected. Making use of a Forex VPS would remove those problems. It allows you to be fully productive with your computer.

8 Important Tips on Choosing a Forex VPS

Support

Support from your Forex VPS is very important. If the provider does not have good support, it is advised to stay away from them. Since your forex robot is likely required to run 24 hours a day, it is recommended to look for a Forex VPS with 24/7 technical support. With that, you don’t have to worry that when your server is down and there is no one to help you. It is also advisable to speak to their live support to determine their response time and helpfulness before purchasing anything for the Forex VPS service provider.

Uptime

Uptime is the time that your server is functioning. When servers are down, the forex robots and EAs do not work. Hence, it is best to choose a server that has a high uptime. Stick with Forex VPS providing at least 99.9% to 100% uptime.

Backup servers

When you run forex robots or EAs at home, it is usually risky if anything happens to your computer or the connection. However, with forex VPS, there datacentres have many servers running. When one server is down, they may automatically switch you to another server. Hence, when that happens, you are not being affected at all. Check with your Forex VPS provider if they provide such a service.

Shared Server

Check with the Forex VPS if the your server is being shared. When using a shared server, your resources are shared with others. This means that if the person you are sharing with uses alot of resources, it may slow down your programs running on that shared server. Look for a independent server for yourself, to prevent such situations from happening.

Ease of setup

Make sure you understand how to setup the forex vps. Read the instructions from your VPS provider, if its not clear, don’t hesitate to speak to their support. Most Forex VPS are very simple to setup and can be done within 5 minutes.

After getting your login information from your VPS provider, the basic setup involves using remote desktop connection to connect directly to Forex VPS.

Easy access

When using your computer, you are limited to stay at home and monitor your trades. However, with a Forex VPS, you will have access to your trades by using either your phone, tablet or computer. This makes it easy for you to view your trades at anywhere and anytime.

Latency

Latency stands for delay. Latency can cause your order to be delayed and executed at a different price. When sending orders, there is a lag time for the order to be sent to the broker server. Hence, the closer your Forex VPS is to the broker servers, the lower the latency. So if your broker is located in the UK, choose a Forex VPS that have datacenters in the UK. This will reduce the latency time.

Specialized in Forex

VPS are servers and you can think of them as computers. There are many VPS providers, however not all at Forex VPS. What is the difference? For a normal VPS, you will have to install all the forex trading systems for example MT4 by yourself. However, with a Forex VPS provider, forex trading softwares like MT4 are preinstalled and they have services cater specially for forex traders. Hence, for the start, I would recommend starting off with a forex VPS if you are only using the VPS for forex trading

Conclusion:

Hope this tutorial gave you a quick overview on forex vps. With this basic knowledge on forex vps and knowing how to make full use of them, you can run forex robots 24 hours a day without having your computer on.

How To BackTest On MetaTrader 4

backtest forex robots mt4

What is BackTesting?

Backtesting is the use of history data to determine how a trading strategy would perform over a specified period of time. From the results of the backtest, a trader can analyse the profitability and risk, and determines if a trading strategy works.

One of the important reasons of using forex robots is that it enables you to do backtest over years of data within minutes.

Ways To Test A Strategy

Forward testing:

Demo account:

Trading on a demo account will take alot more time as compared to backtesting. With backtesting, you would be able to test few years of data within minutes.

Live account:

Similar to demo account, it takes longer time than backtesting and this time real money is involved. Although testing on live accounts is the most accurate way of determining if a trading strategy works, it should not be the first step.

Backtesting:

Why should you backtest?

Backtesting is the fastest way to determine if a trading strategy works. It should be the very first step in testing a forex trading strategy. Since backtest is a less strict form of testing, if the forex robot fails to pass this initial test, it is very unlikely to perform well on forward tests. After getting successful results, then a trader should then consider using this trading strategy on demo or live accounts.

Ways To Backtest

Manual

Forex traders can manually look at past data as a form of backtesting to determine if a trading strategy is profitable. This might work for simple strategies, however, for more complex strategies that require alot of calculations, it will be difficult to manually backtest it over few years. Even for simple strategies, by backtesting over years of data, it will require alot of time and effort.

Using Forex Robots 

A quicker way of backtesting a strategy is making use of Forex Robots. Forex Robots would be able to swiftly run through years history data, even for complex strategies. From the results, the forex trader can accurately determine whether the trading strategy is profitable.

How To Backtest Forex Robots On MT4 Using Strategy Tester:

The first step would be to save the forex robot into the MT4 Folder.

Part 1: Saving The Forex Robot To MT4 Folder

Visual Instructions:

how to run backtest using forex robots on metatrader 4

how to run backtest using forex robots on metatrader 4

how to backtest in mt4how to backtest in mt4Written Instructions:

  1. Click on File>Open Data Folder.
  2. Then go into MQL4>Experts
  3. Save the Forex Robot/Forex Expert Advisor into the Experts Folder.

Part 2: Opening Strategy Tester for Backtesting

how to backtest in mt4

If you are able to see the Strategy Tester window in MetaTrader 4, you may skip this step.

Instructions:

Click on View > Strategy Tester and the Strategy Tester window would appear.

Part 3: Learning to use the Strategy Tester for Backtesting

How to backtest on metatrader 4 strategy tester

The Strategy Tester is a very useful tool which can help you backtest as well as optimize your trading strategies.

Settings of the different components:

Forex Robot Selection:

Choose Expert Advisor and select Forex Robot/Forex Expert Advisor you have saved in the previous part.

Symbol:

Currency pair you want to test the Forex Robot on.

Model:

Select “Every Tick” to get the most accurate results.

Use Date Checkbox:

Check it and select the date range you want to test the forex robot on.

Visual Mode Checkbox:

Enable Visual Mode if you want to see how the Forex Robot is performing on a chart. The slider on the right is the speed of the backtest, the more to the right, the faster the backtesting. If Visual Mode disabled, you will only see the trades and results.

Period:

Period is the timeframe you like to use, for example M1 = 1 minute, M15 = 15 minute, H4 = 4 Hour.

Spread:

Spread is fixed, but do note that for live trading spread might not be fixed, hence this is one of the factors that makes backtesting different for live trading. The value for spread depends on the broker. For 4 digit brokers, spread is the number of pips, for setting of 3 means a spread of 3 pips. For 5 digits broker, the setting of 3 is 0.3 pips, hence to set it to 3 pips, the setting has to be changed to 30 instead. To determine whether your broker is a 4 digit or 5 digit one, count the number of digits after the decimal of the price. If price shows 0.98235, it is a 5 digit broker. For japanese yen pairs, a 4 digit broker will show 2 digits, and a 5 digit broker will show 3 digits. Another way you can find out is to click on the Symbol properties button.

Optimization Checkbox:

Do not check optimization if you are just doing a backtest of a particular strategy.

Symbol Properties:

Symbol properties shows some information about the Symbol (Currency pair) you have selected.

Settings in Expert properties:

how to backtest mt4

how to backtest in mt4

Testing Tab:

Set amount of money to start with. Positions are the type of trades you want to take, for example if you only want the Forex Robot to place buy trades, then only select “Long”. Most of the time, the Forex Robot is programmed to match your trading strategy so “Long & Short” works for most cases.

Inputs Tab:

These are the variables you can change, change the values to match your requirements. Ignore the last 3 columns on the right as they are for optimization use. After you are done with the settings, click “OK.

Finally, click start at the bottom right corner to run the backtest!

Results:

After the backtest is complete, you will be able to see the results of your backtest in the strategy tester.

In Strategy Tester:

Results Tab:

Trades that the forex robot has taken.

Graph Tab:

Overall picture of your account balance.

Journal Tab:

Display of almost everything that the forex robot does. It also shows any alerts and errors that has taken place.

Ultimate Forex Robots Guide

Types of Forex Trading

Manual Trading

The Forex trader do not use forex robots, he places trade manually.

Fully Automated Trading

This involves the use of forex robots. The forex robot is programmed to react to certain trading conditions. When trading conditions are met, the forex robot may place trades on behalf of the trader.

Semi Automated Trading

A mix of using forex robots and manual trading. The trader may get signals from the forex robot when trading conditions are met, but it would not place trades for the trader. Instead, after receiving the signals from the forex robot, the trader would check for other conditions which the forex robot might not be able to do such as news reports before placing the trade manually.

What Are Forex Robots?

Forex Robots allows forex traders to perform automated/algorithm trading. It used to be used alot only by huge trading firms but nowadays it is getting more and more popular among individual forex traders as well.

Is it a metallic human structure that trades the market for you?

No, that is far from reality!

Forex robot is a program that can be run with the forex software that you use. The most common software for forex trading is MetaTrader. Hence, most of the forex robots are made for Metatrader 4/5. There are also other forex software that forex robots can run on such as NinjaTrader, TradeStation and many others.

The term forex robots can be used interchangeably with forex expert advisors and forex eas. Eas is the short form of expert advisors.

What can the Forex Robot Do?

Automate almost any trading strategy

Forex robots trade mainly on technical analysis. For example, a trader can set the forex robot to open a buy trade when there is a moving average crossover. Forex robots can automate almost any strategy that the forex trader wish to use. As long a trading strategy can be properly defined, it is very likely to be able to be programmed into the forex robot, reason why it is “almost” is because there are some fundamental analysis that a forex robot might not be able to analyse as well as a human. For example, reading and analysing the news.

Watch the Market 24 Hours

No one can watch the market 24 hours a day. When a trader is away from the screen, he might miss trades. But with the forex robot, the forex trader just needs to run it on his forex trading software, and it would watch the market and place trades on behalf of the trader. Even when the trader is asleep, the forex robot is still running and Other than placing trades, the forex robots can also give alerts to the trader whenever a trading condition is met.

Swift Calculations

Forex robots can be very useful for scalping and for certain forex strategies that require very fast reactions and quick calculations. In a volatile market, forex robots are able to execute certain forex strategies that traders cannot manually trade.

Advantages Of Using Forex Robots:

More and more people are relying on forex robots to perform automated trading as it has better performance than humans in many scenarios.

Automated Trading

Forex automated trading was used to be only for large trading firms, but these days more and more retail traders are able to take advantage of forex robots for automated trading, Forex robots can be used to complement your trading strategies or even take over all your trades. Almost any trading strategy can be automated with forex robots.

Saves Time

Everyone has a limited amount of time to watch the market. Manually trading the market would take alot of effort and time.

If the trading strategy is placed into a forex robot, all the trader has to do is to launch the forex robot onto the chart. The forex robot will watch the market in place of the trader. It would be able to give alerts or even place trades for the trader when trading conditions are met.

Do Not Miss Opportunities

Have you ever woked up in the morning, and realised that there was a trading opportunity that happened last night while you were asleep?

When you are away from the screen you might miss out many trade opportunities.

The advantage of using a forex robot is that it does not sleep. Instead, it keeps watch at the market at all times.

Take Away Emotions

Have you ever had a trading plan, but find it very hard to follow?

Whenever the market moves, your emotions move with the market. When you should be closing trades to get the profit based on your trading plan, you are greedy and do not follow as planned. Instead you wait and expect it to rise higher, in the end, you might result in a lower profit or even a loss although your trading plan was right.

Whenever you face a loss, you should cut loss according to the trading plan. However, you do not want to be wrong and wait for the market reverse its direction. In the end, you are forced to close the trade facing a huge loss when the market did not reverse.

Does all the above happen to you?

Even if you end up eventually with a larger profit by not following the trading plan, it is largely due to luck. It is unlikely to be able to last in the long run.

We cannot blame this on anyone but ourselves, and it happens at times even for experienced forex traders. This all due to our emotions. By taking advantage of forex robots, a trader is able to follow exactly to the trading plan as it is programmed into the forex robot.

Faster Execution

Execution of trade by the Forex Robot/ Forex Expert Advisor is much quicker than any manually executed trade.

Forex Robots, however, can do calculations in the backend in milliseconds and would not make any calculations errors. For trading strategy uses many indicators, it would take quite some time for a trader to manually calculate. That would cause delays in the trades being placed. As a result, the market price might have already changed by the time calculations was done.

Backtesting

This is perhaps one of the most useful features of forex robots. Backtesting is making use of past data to determine the results of a trading strategy. It can be done manually or by using forex robots. With the use of forex robots, you will be able to quickly test a strategy over years of history data within minutes.

forex robot scams

Warning: Forex Scams Alert!

If you look on the internet, there are many websites and companies selling ready-made forex robots. They will promote it such that its a holy grail method and show you all how profitable the forex robot is over the past few years. Since it has shown such good results, when I get this forex robot, I am sure to profit from it, is that right?

Think again! Let me explain why this is not necessarily true.

Losing All The Money

Getting a forex robot to perform trades for you while you are asleep is good way to make passive income. There are many successful forex traders that uses only automated trading systems to make money.

But why are so many people buying forex automated trading robots and see their money in their account disappear?

“99% win rate Forex Robot!”

“200% gain in one week!”

How true are these statements?

High Risk Strategies

A forex trader has to be cautious when purchasing ready-made robots as many of them do not disclose the exact risks to their customers. Many people has fell victims to these forex robots that these companies and websites promote. They hope for quick cash without putting in any effort. In the end, they lose their trading account.

So why does this happen?

An example of this is that some forex robots do not place a stop loss for its trades, it would only close a trade in a profit. The profit level is set such that it is easy to hit. Since most of the time the market would hit the small profit target, the forex robot would show a nice profit graph. However, this is a high risk strategy as it means that if the market unexpectedly starts trending in the opposite direction, the trader will lose a huge sum of money. Hence, it is important to find out how your forex robot actually works.

How To Be Safe

To determine if a forex robot is profitable, the forex robot has to be repeatability tested, over history data, demo accounts and also live accounts. Since every forex trader has different risk tolerance, it is recommended that they find a forex robot suitable for their risk appetite or create a forex robot according to their own trading strategy.

Traders have to be aware that markets are always changing, although what has happened in the past can on a certain extent give some insights into the future, it is not 100% that the future will be the same as the past results.

Do Profitable Forex Robots Exist?

You want to get rick quick.

A forex robot that could automatically earn passive income without doing anything.

That would be a dream come true for you!

But does it exist?

If a Forex Robot was so successful, why would the creator/developer of the system need to sell it?

The creator might not have that much funds in his trading account. For example, a forex robot might be profitable by attaining a 4% return every month. But assuming if the creator has only $1000 in his account, that will make him only 4% of $1000 which is $40. But if he sells the forex robot, he might make much more than that. It is a guaranteed profit as here is little cost involved in selling a system once a system has been made. Its another way that the trader can make his money, and he can place his profits into the robot to make him even more money.

Above is the ideal scenario why forex robots are released, but many times it is not the case!

Many of the forex robots in the market are not profitable. The reason why there are so many non profitable forex robots is that it is not easy to make a profitable forex robot. The creator will make use of all kinds of promotion and marketing techniques to promote this useless robot and he makes alot of money from the sales. Since people are expecting to see the results as promised, many of them purchase it and suffer when they see their account balance on the decline and have no means of getting back the money.

Profitable forex robots do exist but they are not easy to find. Many profitable forex robots are kept secret by the companies and traders themselves as they have no reason to release them to the market when they can achieve enough profit from it.

What Are Truely Profitable Robots? 

Win/Loss Rate

There is no 100% profitable forex robot. A profitable forex robot can be defined as one that wins more than it loses.

Risk

The forex robot has to have tight stop losses. Ideally, the reward to risk ratio has to be more than above 1. A forex robot that wins consistently because of a small profit target and a huge stop loss cannot be determined as a truely profitable trading robot.

Adaptability

For a forex robot to be profitable in the long run, it has to adapt to the changing market conditions. Either the forex robot automatically adapts, or the trader can also adjust the settings for the forex robot when market conditions change.

Many forex robots are not programmed the adapt to changing market conditions as it is not easy to do so. Hence, a forex robot might be profitable for some time, and it becomes not profitable afterwards.

100% Win Rate Forex Robots

When a website promotes a 100% guaranteed win robot, you got to be skeptical. There is no trading system that will wins 100% of the time, there will be times when it wins and times it loses.

Double Martingale Strategy:

Double Martingale is a very popular strategy used by many forex robot creators.

Why Double Martingale?

It makes 100% wins almost all the time. From the trading results, forex robot promoters can you a 100% win rate.

It is true that it wins 100% of the time, but how long can that last?

If you decide on buy such trading robots, you have got to have a high risk tolerance. Although the chance of losing is small, but once the forex robot loses, you would lose the whole account. Find out more about the Double Martingale Strategy.

Past do not determine future

Even if a website shows that it is profitable in the past, it does not determine the future and no one can predict with 100% accuracy how the market will move in the future.

Forex Robots in the Market:

Forex robots can come in two forms:

100% Automated Trading Robots

This allows for 100% hands free trading. Forex robot would determine trading conditions and place trades on behalf of the trader.

Forex Indicators / Forex Signals / Forex Alerts

These is considered semi automated trading. Instead of placing trades when trading conditions are met, it gives alerts to the trader. By using these robots, it will only tell you when trading conditions are met. You will still have the final option to decide whether you want to take the trade.

Free Forex Robots

free forex robot

 

Why should you use them?

Free forex robots provides you a quick way to try and test out different strategies. You wont have to spend anything. By trying out these free forex robots, you can have a good idea what type of strategies suits you better. It also enhances your knowledge on using forex robots.

 

Where To Free Download Forex Robots?

CreateForexRobots.com

With our knowledge and experience in the forex robot industry, our free forex robots are of top quality. These free forex robots are created specially by our experienced team of forex programmers. The list can be found here.

Risks:

Please read and understand the risks of forex robots before using them. If risks are not stated, talk to the developer of the robot to find out. After downloading, make sure to do enough tests on the forex robots before trading them on live account.

How To Run Forex Robots (MetaTrader 4):

Although forex robots may sound complicated..

Running forex robots / forex expert advisors on MetaTrader 4 is very simple!

It can be launched in just a few clicks!

What You Will Need:

  1. An account with a forex broker that allows automated trading
  2. MetaTrader 4 downloaded
  3. Internet connection

Steps:

Open Metatrader 4:

  • On the left top corner, click on File > Open Data Folder

how to run forex robots on metatrader 4

  • In the folder, click on MQL4 > Expert Advisors. This is the location that you will save the Forex Robot.
  • Download the Forex Robot and save it into that folder.

how to run forex robots on metatrader 4

how to backtest in mt4

  • At the top left, click on View > Navigator. A window would appear. In this window, search for the Forex Robot that you have downloaded, it will be under the Expert Advisors section. If the Forex Robot is not found, restart Metatrader by closing the Metatrader window and reopening it again.

metatrader 4 navigator window

metatrader 4 navigator window

  • Once the Expert Advisor is found, enable auto trading by clicking on the Auto Trading button. Alternatively hit Ctrl + E.

enable autotrading mt4

  • Finally, you may run the Forex Robot by dragging it onto the chart.

What happens when my computer is turned off?

The forex robot will run as long as you do not remove it from the chart.

It can also be automatically removed if it was programmed to be removed automatically after certain time or when certain trading conditions are met.

The forex robot will only run if MetaTrader 4 was open. If you close MetaTrader 4 or turn off your computer, the forex robot will stop running. Hence, if you require the forex robots to run 24 hours a day, you have to leave your computer on for the whole time. Alternatively you may consider to use a Forex VPS service which allows you to run your forex robot on a private server.

Conclusion:

Hope this tutorial gave you an overview of forex robots. With this basic knowledge on forex robots and knowing how to make full use of them, you have higher chance of achieving greater success in forex trading.

Does Forex Double Martingale Work?

forex casino double martingale

A Short History of Double Martingale

 

The Double Martingale Strategy has it origins from the casinos. Every time a player loses a bet, he doubles the bet until he wins. He only has to win once the cover all his losses.

Example: A player bets $1 and he loses, he then doubles his bet to $2 in hope to cover his $1 loss. At the same time gains a profit of $1 when he wins this round. If he loses the round, he continues to double his bet to $4. He continues to double to $8, $16, $32, as so on every time he loses a round.

If the player has unlimited amount of money, he would have a 100% winning rate. However, most players have limited amount of money. When a player faces too many consecutive losses, he will reach a point where he will not be able to double his bet. Eventually he will be faced with a huge loss or loses all his money.

In this short article, I will show you the 2 most popular ways how the Double Martingale Strategy can be applied to forex trading. Double Martingale Strategies can be used together with an existing strategy or it can also used by it own.

 

Double Martingale Strategy

 

Going Long

Trader enters a buy order and defines how many pips he intend to win.

Price Moves Up

Trader takes profit of the number of pips he intend to win.

Price Moves Down

The trader doubles the lotsize of the trade, hoping it will eventually go up and will make a profit.

When the price moves up and the profit for all the trades reaches the number of pips he intend to win. The trader will then close all trades for the profit.

Example

Trader buys 0.01 lots of EURUSD at 1.2220 and intends to have a profit of $1 USD. The PipValue of each pip (0.0001) is 0.1 USD for the EURUSD pair at 0.01 lots. To have a profit of $1 USD, the price has to move up by 10 pips (0.0010) to 1.2230.

We assume spread to be 0 for easier explanation of how this Double Martingale Strategy works. If price moves up to 1.2230, the trader would close the trade for the desired profit of $1.

However, if price moves to 1.2210, the trader would face a loss of $1 and closes the trade. He would then place another buy order at 1.2210 for 0.02 lots. Price would have to go up by 10 pips back to 1.2220 for him to win $2 and cover his original loss of $1.

If price continues to go down, he continues to double his lotsize in the similar fashion.

 

Going Short

The opposite is true for using Double Martingale strategy on short trades.

 

Double Martingale Strategy (Hedge)

 

The player can start by choosing whether he wants to place a buy or sell order.

In this Double Martingale Hedging Strategy, the trader would make a profit when the price moves in either direction!

Does this sound too good to be true?

Lets find out..

 

Going Long

Trader enters a buy order and defines how much pips he intend to win.

Price moves up

Trader closes with the profit intended.

Price moves down

Trader will close the buy trade for a loss. Next, he places a sell order right at the point of the close trade, hoping for the price to go down further. The lot size for the sell trade would be double the initial lotsize to cover the loss.

Price continues to go down, he will close the trade for the intended profit (trader is now in a sell trade). However if goes in the opposite direction, he will close the sell trade for a loss and double the lot size opening a buy order.

In other words, he alternates buy and sell orders every time he loses. This goes on till the trader wins, and one win will cover up all his losses.

Example

Trader buys 0.01 lots of EURUSD at 1.2220 and intends to have a profit of $1 USD. The PipValue of each pip (0.0001) is 0.1 USD for the EURUSD pair at 0.01 lots, hence have a profit of $1 USD, the price has to move up by 10 pips (0.0010) to 1.2230.

We assume spread to be 0 for easier explanation of how this Double Martingale Strategy works. If price moves up to 1.2230, the trader would close the trade for the desired profit of $1.

However, if price moves to 1.2210, the trader would face a loss of $1. He will then place 0.02 lotsize sell order at 1.2210, in hope that the price would go down by 10 pips to 1.2200 and he would win $2, covering his initial loss of $1.

If the price moves in the opposite direction he will double his lotsize again to 0.04 and place a buy order. He alternates buy and sell orders every time he loses until he eventually wins.

 

Going Short

The opposite is true for using Double Martingale strategy when starting with a short trade.

For starting with buy trade, the order type will be in this order: buy, sell, buy, sell… and so on. If a trader starts with a sell trade, the order type will be sell, buy, sell, buy… and so on.

 

Double Martingale Strategy Risks:

 

These strategies sound like they are bulletproof, but they might not be. If trades do not go in the trader’s favor for many rounds, the lot size being used will be so huge. The account would not have enough money and it would face a margin call.

Even with a large account size, there are trade limitations set by brokers. For example, there is max lot size given by brokers. Double Martingale Strategy would not work at that point as lot size cannot be doubled when that limit is reached.

The percentage of losing is small but a single lost would wipe out the whole account, hence it is usually not recommended to use only the Double Martingale strategies for trading.

The Double Martingale Strategy can be considered a high risk and with a low return strategy as the trader would risk alot more than what he is about to gain. However, with the right timing and proper analysis, this strategy might work for you.

 

Forex Double Martingale Analysis

Now you should have a better understanding of how the Double Martingale Strategy works in forex trading. For strategies like the Double Martingale, is not recommended to be executed by you manually. It requires alot of time and effort. Even if you watch the price very carefully and execute the trades manually, you would perform as well as a Forex Robot. Forex robots are programmed initially and can do many calculations at the backend in milliseconds. It has the ability to execute trades at the exact point in time and price whenever trading conditions are met.

Does the double martingale strategy work in forex trading?

Let find out!

 

Results on the EURUSD pair for whole year of 2017:

Settings:

  • Starting lots of 0.01
  • $2 USD profit
  • Stop trades at 8pm on Friday
    • The reason for stopping trades on friday is to minimize risk over the weekend.
  • Account balance of 10K

 

Double Martingale Results

Results:
forex double martingale results

As we can see there is a huge drawn down. If there was not enough money in the account, the account would not be able to open next position at that point in time and would have blown the account. But since there was sufficient funds, the account was able to make a win after that, covering the loss. Hence, it was still profitable to use the double martingale over the year of 2017 with these settings.

double martingale results

 

The maximum drawdown was $3687.30. Net profit was $1480.49 in one year. That is about 15% gains, but the risk is very high.

Double Martingale (Hedge)

Using the similar settings, we tested out the double martingale hedging method.

double martingale forex

We can see that in this case, the account is blown. You may be wondering why is it a straight line at the start. It is because the profits are so little that it looks like a straight line compared to the huge loss on the right!

Results:

double martingale forex

Does this make this method worse than the one before?

No. It depends on the time period as well as the settings. When different settings are set, the results will be different.

Speak to us if you like to see more test results of this strategy on other periods or currency pairs.

Do you have other strategies you would like to see results of?

We can run tests so you will know the results immediately. This save you alot time to manually test out your strategies.

 

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