Why martingale EAs look profitable… until they aren’t (especially on gold) - page 2

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Victor Paul Hamilton #:
[J]ust reverse the logic to small loss small loss small loss small loss...

That is not a true reversal of Martingale logic, but rather a minor modification. Losers are still losers regardless of the size of each loss.

For a true reversal of the Martingale strategy, use an anti-Martingale strategy that stacks winning trades in decreasing lot sizes. When the price swing inevitably ends, the largest trade will have the most profit. The smallest trade in the swing will be the one that gets stopped out.

 
Ryan L Johnson #:

That is not a true reversal of Martingale logic, but rather a minor modification. Losers are still losers regardless of the size of each loss.

For a true reversal of the Martingale strategy, use an anti-Martingale strategy that stacks winning trades in decreasing lot sizes. When the price swing inevitably ends, the largest trade will have the most profit. The smallest trade in the swing will be the one that gets stopped out.

Hmm running a demo and stepping in when you see the death spiral start  is the optimal play ,if it doesn't you have not lost much ,If it does the upside when it does is worth it . 
 
Victor Paul Hamilton #:
[T]he death spiral start is the optimal play, if it doesn't you have not lost much...
Correct. In an anti-Martingale strategy, Martingale's "death spiral" is actually a profit pyramid. No concurrent demo account required.
 
Ryan L Johnson #:
Correct. In an anti-Martingale strategy, Martingale's "death spiral" is actually a profit pyramid. No concurrent demo account required.
So we all just run anti- martingale and become rich . I'd rather take my chance on demo then step in .You see let's get to the real truth most EA's in general are trash and you will lose money , so why not just run the EA  on  a demo see when that inevitable  sting comes  and step in with real money .No because most people in retail Forex are amateurs and gamblers and that is boring and not sexy . Retail Forex does  not get to peek behind the curtain and is at the mercy of the collective elite and whatever games they decide to play . Like a casino or a bookie negative EV is the play the long term grind down . People if they choose to play a rigged game need to come up with novel ways to not buy in to the playbook. 
 
Victor Paul Hamilton #:
So we all just run anti- martingale and become rich . I'd rather take my chance on demo then step in...

Frankly, I don't see how a demo account is a fortune teller. If your demo account logic is a holy grail for entries, why not simply put that logic into your live account EA. Surely the pips or points run can be quantiified.

FYI... Price has to be confined to a narrow range for a very long time to blow up an anti-Martingale strategy. Check out this related post:

"Advantage: Unlike random scalping strategies (Z-Score ~0), this allows for aggressive Anti-Martingale money management. We can mathematically predict that a win is likely to be followed by another win, allowing us to pyramid positions safely" (

Profit Factor 4.09 & Negative Z-Score: Why I Stopped "Gambling" on M1 Scalping and Embraced the "Boring" Math of Swing Trading - Volatility Trading Strategies - Trading Systems - MQL5 programming forum).
 
Lucas Leguisamo Mallo:
Over the years, I’ve tested and observed many Expert Advisors, especially on XAUUSD.
And there’s something that keeps repeating itself again and again.
Most EAs that show amazing backtests on gold rely on some form of martingale or grid logic. At first glance, everything looks perfect: high win rate, smooth equity curve, fast growth.
The problem usually appears later.
Gold behaves differently compared to most forex pairs.
It can trend aggressively, stay volatile for longer periods, and ignore “mean reversion” much more than people expect. When that happens, recovery-based systems stop recovering.
I’ve personally seen accounts survive for months and then get wiped out in a single bad week. Not because the strategy was unlucky, but because the risk model was fragile.
Lately, my focus has shifted toward much more conservative ideas:
no position stacking
no recovery systems
accepting fewer trades if conditions are not favorable
adapting stops and targets to volatility instead of fixed values
What surprised me the most is that when you remove the pressure to “always be in the market”, the overall behavior becomes much more stable — even if trading frequency drops significantly.
I’m curious to hear other perspectives here.
Have you had better long-term experiences with aggressive systems on gold, or did you also end up moving toward more conservative approaches?

I mostly agree. Gold is very unforgiving when the risk model is weak, especially during strong trends. A lot of systems look perfect until volatility changes and then things break fast.

That said, I did manage to have some success using martingale-style logic in the past, but it required very strict controls and constant adjustments. Even then, it was clear how fragile it can become if conditions shift.

Over time I also moved toward fewer trades, adapting risk to volatility, and not forcing market exposure. It is less exciting, but much more stable and easier to manage long term.

 

I mostly agree, but I think it is important to seperate objectives before judging the strategy.

Martingale or ultra agressive grid systems on gold are not long term trading systems in the classical sense. They are capital acceleration systems. The philosophy is totaly different.

If I run an agressive grid on XAUUSD, my mindset is not “this account must survive forever”.
My mindset is closer to:

  • I accept a very high probablity of ruin over time

  • I target extreme growth over a limited window

  • I size the account as disposable capital

For example, I can realisticly say:
“I have 99,9% probability to make +300% to +500% in 5 or 6 months, but I accept a small probability of loosing everything.”

That is not a bug of the system. That is the design.

This is why risk management is external to the EA logic.

One rule I consider mandatory for agressive systems is:

  • As soon as the account is doubled, withdraw the initial capital

From that point, you are trading with “house money”.
If the account blows up later, the worst case result is zero, not negative.

 
Ryan L Johnson #:

Frankly, I don't see how a demo account is a fortune teller. If your demo account logic is a holy grail for entries, why not simply put that logic into your live account EA. Surely the pips or points run can be quantiified.

FYI... Price has to be confined to a narrow range for a very long time to blow up an anti-Martingale strategy. Check out this related post:

"Advantage: Unlike random scalping strategies (Z-Score ~0), this allows for aggressive Anti-Martingale money management. We can mathematically predict that a win is likely to be followed by another win, allowing us to pyramid positions safely" (

Profit Factor 4.09 & Negative Z-Score: Why I Stopped "Gambling" on M1 Scalping and Embraced the "Boring" Math of Swing Trading - Volatility Trading Strategies - Trading Systems - MQL5 programming forum).
Demos don't acquire losses , demos don't get ate up EV with spreads etc . Step in when you feel the spot is sweet . Less time exposed , very simple really !! 
 
Lucas Leguisamo Mallo:
Over the years, I’ve tested and observed many Expert Advisors, especially on XAUUSD.
And there’s something that keeps repeating itself again and again.
Most EAs that show amazing backtests on gold rely on some form of martingale or grid logic. At first glance, everything looks perfect: high win rate, smooth equity curve, fast growth.
The problem usually appears later.
Gold behaves differently compared to most forex pairs.
It can trend aggressively, stay volatile for longer periods, and ignore “mean reversion” much more than people expect. When that happens, recovery-based systems stop recovering.
I’ve personally seen accounts survive for months and then get wiped out in a single bad week. Not because the strategy was unlucky, but because the risk model was fragile.
Lately, my focus has shifted toward much more conservative ideas:
no position stacking
no recovery systems
accepting fewer trades if conditions are not favorable
adapting stops and targets to volatility instead of fixed values
What surprised me the most is that when you remove the pressure to “always be in the market”, the overall behavior becomes much more stable — even if trading frequency drops significantly.
I’m curious to hear other perspectives here.
Have you had better long-term experiences with aggressive systems on gold, or did you also end up moving toward more conservative approaches?
I had learned that being aggressive on gold even with cent account ended up on losing my balance… it’s a martingale and hedging setup. I found out that long position is far better than hedging… i just keep the spacing and lot sizes to almost minimum when the price is at all time highs. Set hard stop loss to 30 percent from my equity not from the balance. 

Its survived the last shakeout or pullback. 
 
Victor Paul Hamilton #:
Step in when you feel the spot is sweet...

Personally, I don't trade based on feelings nor emotions. I trade based on statistics.

To each their own, I suppose. 

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