A real life example of how scary Martingale based EA’s can be

[PipCop]

In case you have not been paying attention, Martingale is a system that “doubles up” your next order when you lose on a previous order. In the case you lose twice in a row, then it “doubles up” again - on the already doubled order. The third time around you’re now 8x as large, and so on and so forth until your account balance is massively hit - and you perhaps suffer a margin call as a result.


Taking a look at the Universum 100/100 EA, you can see how that can quickly wipe out your account if you are not using proper money management skills and are not entering the market when it is safe to do so.





The Universum 100/100 is currently experiencing a pull down of nearly $7500 due to three bad positions, and has a 4th position open right now for 8.5 lots! If this order is wrong, it will pretty much wipe out most of the account.


The other issue to look out for here is slippage overnight. If the closing price tonight varies more than 100 pips from the open price tomorrow, it could be a disaster. Just Friday to Monday there a nearly 200 pip slippage (gap) between the closing price of the EURUSD and the subsequent open price on Monday. Even with a SL in place, you would have taken a very large hit (or very large gain, had you been short .)


Personally, looking at where it entered the market, I would not have placed a buy order.

[BarrowBoy]

I agree completely
Martingale plus leverage (in Forex) equals disaster waiting to happen
Even proportional lot sizing (where a percentage of the account is used rather than a fixed lotsize) is a very high risk strategy
Martingale is financial suicide

[Batchboy]

My past excperience with martingales was FXPROmaker, cost me $400 and $800 out of my Thou$ account got shot soon after purcahse, no waiting needed, my "luck of the draw" to have worst worst case scenerio occur promptly!
And if that wasn't enough, then many months later y-oww comes along, never had I seen an EA that looked so wonderfullky perfect little steps of gain, 'cept one thing, those little increases of lot size like to 2X or 3X etc, etc...... one day is dynamite! Yep, one trend that doesn't let-up occurs within couple of weeks and again a fairly large chunk of my $500 account is blown to smithereens! (fortunately they had let me have my $500 back early-on)
Recently a internet associate wanted me to take a look at an e_Ad for a Pro-EA, I was impressed.....UNTIL I saw the warning signs of it "compensating" for losing times with a 17X increase in lot size on 4 different days after the losing one, Wo!!!!!!
So beware of the warning signs, martingale mechanisms can even be hidden traights of an EA!
jb