Recently, I found myself thinking about a strategy that many traders use but few truly understand. So I decided to break it down: what is a martingale and how to apply it without breaking the bank in the process.

Basically, a martingale is increasing your order size after each loss. It comes from casinos, but traders adopted it to average prices. The logic is simple: you lose, double (or increase), and wait for a small retracement to turn you green. It sounds good in theory, but here’s the real problem.

In practice, it works like this: you buy at $1, the price drops to $0.95, you open another order with 20% more. It drops to $0.90, you open another with 20% more. Each new purchase lowers your average price. If the price rises even a little, you close everything in profit. The trick is that you need enough capital to withstand several consecutive drops.

The important question is: what is a truly useful martingale? One where the percentages are realistic. I’m not talking about doubling each time (that’s suicide), but about increases of 10-20%. With a deposit of $100 y, increases of 20%, after 5 orders you’ve already spent $74.42. If the price keeps falling without retracement, you run out of ammunition.

The advantages are clear: you recover losses quickly if the market bounces, you don’t need to predict the exact bottom, just buy downward. But the disadvantages are brutal. If the market enters a sustained decline (strong downtrend), the martingale becomes your worst enemy. You lose everything fast.

Let’s look at real numbers. If you apply what is a martingale with a 10% increase, you need $61 for 5 orders. With 20%, $74. With 30%, $90. With 50%, $131. The difference is huge. That’s why beginners should start with a maximum of 10-20%.

The formula is straightforward: next order = previous order × (1 + percentage). If you start with $10 y and apply 20%, the sequence is $10, $12, $14.4, $17.28, $20.74. Total sum $74.42.

My advice after years of seeing this: use martingale only with small percentages, plan in advance how many orders you can open, never bet your entire deposit in a series, and quit if the market enters free fall. It’s a powerful tool, but it requires brutal discipline.

Right now, the market looks interesting. BTC is around $67.34K (+0.87%), ETH is at $2.04K (+1.90%), and BNB at $615.80 (+0.29%). If you decide to try these strategies, do so with money you can really afford to lose. Martingale isn’t magic; it’s math with risk. Use it wisely.