In the price of stocks, to earn profit on basis of small movements, the action of buying and selling stocks is called active trading. The technical analysts adopt several types of trading strategies in active trading. Many investors trade based on news while others analyzes prices of stock by applying technical indicators and some recognized trading strategies to earn fat profit. Various trading strategies like First Hour Breakout strategy, Martingale Strategy, Anti martingale Strategy, Grid Strategy and Range trading strategy are known to be implemented in active trading. Here you will get to know more about one of the complex trading strategies, known as Martingale strategy.
This trading strategy was originated from France in 18th century. Investors toss the coin in this strategy. The trade is in his favor if a coin comes up heads and loses it if the coin comes up tails, according to the strategy. It is one of the oldest trading systems as many investors use the martingale strategy universally. This ideology is quite trouble-free and easy to implement by the traders and technical analysts. Here traders put their bet on one of the outside trades. It is simple as it says that after every turn you lose, you have to double your amount. The process continues and the traders keep doing this until they win. Here you will find that as soon as the trader will win for the first time, he will recover all his lost money in one single chance with the profit. As soon as you get to win first, you will recover all previous losses, and get a profit equal to your original amount. Now, at this point you start all over again with your original trade, which you double again until your next win. You can understand the working of martingale strategy with the following example, if you want to generate accurate intraday cash tips. If you make a standard trade, say Rs10. Whenever you win, you make the same trade for the next hand. On the other hand, if you lose, you double your trade for the next turn. If you eventually have a winning hand after a series of losing hands, your net win will be Rs10. Whenever you win a trade, you will be up another Rs10, in spite of past losses.
Consequently, the Martingale Strategy is said to be risky and this is the reason why martingale is practiced only for short term investing. When you lose an adequate amount of times, then you will break. Now, you will not have sufficient money to make the next trade. The risk of losing the money gets high and higher, as long as you play. At first, the martingale strategy was only developed for games and betting but later the technical analysts modified this strategy and started implementing in stock trading to generate accurate stock market tips.