I noticed that many beginners in crypto ask the question: what is martingale, and how does it work in practice? So I decided to look into it properly, because there are many myths and misunderstandings around this strategy.

Martingale is essentially a strategy of increasing the size of a bet (or order) after each loss. It sounds simple, but in reality everything is more complicated. The idea originated in casinos—there, players would bet on black, lose, double their bet, and keep going until they won. Later, traders picked up the idea and started applying it to trading on crypto exchanges and stock markets.

It practically looks like this: you bought a coin for $1 at $10. The price drops to $0.95—no big deal—you open a new order for $12 (increased by 20%). It drops again to $0.90—again you open at $14.4. Every time the amount grows, and the average purchase price becomes lower. Even a small bounce up—and you’re already in profit.

In a casino, it looks exactly the same. You bet $1 on black—you lose. You bet $2—again you lose. You bet $4 —again no. You bet $8—this is where you win. Result: you recovered all the losses ($1 + $2 + $4 = $7) and earned another $1. In both cases, martingale is the same thing—increasing the bet until the win.

What attracts people to this approach? First, quick recovery of losses. Even if the price pulls back a little, you’re already back in profit. Second, you don’t need to guess where the reversal will happen—you gradually “catch up” with the price from below.

But the trouble is that there are more downsides here than upsides. The main one: a high risk of losing the entire deposit. If you don’t have enough money for the next order increase, all the previous losses will stay with you. Psychologically, it also puts pressure on you—constantly increasing bets is nerve-racking. And the most dangerous part: there are markets where the price falls without any pullbacks. Then averaging turns into a disaster.

Let’s use specific numbers. Suppose you have a $100 deposit. The starting order is $10, martingale is 20% (each next order is 20% larger). After 5 averaging entries, you’ll have spent $74.42 out of $100. That means that if the price doesn’t reverse quickly, you may not have enough money for the next order.

How to calculate the order size? The formula is simple: next order = previous order × (1 + martingale percentage / 100). Using the example (20%, starting at $10): first $10, second 10 × 1.2 = $12, third 12 × 1.2 = $14.4, fourth $17.28, fifth $20.74. Total: $74.42.

If you change the percentage, the result is completely different. With 10% over 5 orders, you need about $61. At 30%, it’s already $90. At 50%, it’s almost $131—twice as much. That’s why choosing the increase percentage is critically important.

How should you use it correctly? First—set small percentages, maximum 10–20%. Second—calculate in advance how many orders you can open with your deposit. Third—never put your entire deposit in at once; leave a buffer. Fourth—add additional filters. For example, watch the trend. If the asset keeps falling without stopping (a strong downtrend), it’s better not to average down at all.

The conclusion is simple: martingale is a powerful tool, but it requires strict control. If used incorrectly, it can quickly lead to losing all your money. It works only with proper risk calculations and discipline. For beginners, I recommend minimal values (10–20%) and definitely having a plan in case of a prolonged drop. Trade wisely, manage risks, and don’t let emotions break you. Good luck with your trading!