There are many free trading advisors (experts or robots) in the trading world. Often, they are devalued, saying that if they are free, they are of poor quality. Advisors that use the martingale principle and increase the subsequent lot are particularly distrusted. But is it fair? Let’s find out. And let’s start with an understanding of what types of advisors exist.
Types of advisors: stop vs non-stop
1. Stop advisors
These advisors use stop-loss and take-profit. If the price goes against the open trade, the loss is automatically fixed. Such systems rarely get into deep drawdowns, but the profitability is usually moderate.
2. Stopless advisors
These advisors do not use stop-losses, but implement averaging. When the price moves against a trade, additional orders are opened in the same direction, creating a grid. In the event of a pullback (even a small one), the system takes profit. However, if the trend is strong and long, a complete loss of the deposit may occur.
Why is it important to distinguish between stop and non-stop advisors?
This distinction is crucial for understanding the following topic. It is stopless advisors that most often use the martingale strategy – the gradual opening of a grid of orders with increasing volume. They do not fix losses, but try to “sit out” the market, compensating for the drawdown by increasing the lot. In contrast, stop loss advisors use loss limits and are not prone to accumulating positions.
The martingale principle
The Martingale principle came to trading from gambling
The martingale principle is a casino strategy that involves doubling the bet after each loss. In trading, it means opening each subsequent order with a larger lot to cover previous losses. The martingale principle is the basis of many Expert Advisors with increasing subsequent lots.
If the price returns, the profit is even higher than originally planned. However, if the price continues to move against the trade, the risk of losing the entire deposit increases significantly.
Pros and cons of Expert Advisors with lot increment
| Advantages | Disadvantages |
|---|---|
| They work perfectly on the flat | High risk of a drain on a strong trend |
| Can give good results on a trend with pullbacks | Require a large deposit |
| Flexible settings | Emotionally difficult for beginners |
Example: how an Expert Advisor with lot increase works in real conditions
Let’s consider a conditional situation with a stopless Expert Advisor operating on the martingale principle on the EUR/USD currency pair in the flat market.
Setting up an Expert Advisor:
- Initial lot: 0.01
- Martingale coefficient: 1.5
- Grid step (distance between orders): 50 pips
- Target profit (take-profit for the entire grid): 10 USD
- Maximum number of orders: 7
- Deposit: 1000 USD
What the grid looks like in action:
| Order number of the order | Lot | Distance from the previous one (pips) | Amount invested (USD) |
|---|---|---|---|
| 1 | 0.01 | – | 1.00 |
| 2 | 0.015 | 50 | 1.50 |
| 3 | 0.0225 | 50 | 2.25 |
| 4 | 0.0337 | 50 | 3.37 |
| 5 | 0.0506 | 50 | 5.06 |
| 6 | 0.0759 | 50 | 7.59 |
| 7 | 0.1139 | 50 | 11.39 |
What happens next:
If after opening 7 orders, the price reverses even by 30-40 pips in the desired direction, the Expert Advisor can close the entire grid with a profit of 10 USD. However, if the trend continues for another 100-150 pips without a pullback, the risk of a complete loss increases. Thus:
- The Expert Advisor is potentially profitable in flat, but critically dependent on market volatility.
- Choosing the right parameters and limiting the number of orders can help reduce risks.
- It is important to calculate the “safety cushion” for a deposit – how many pips the system can withstand before reaching a critical level.
Tips for beginners to work with Expert Advisors with an increase in the subsequent lot
- Do not start with a live account – first test the Expert Advisor on a demo account.
- Use historical backtesting to check the behaviour of an Expert Advisor in different market conditions.
- Limit the lot size – do not use aggressive growth without understanding the risks.
- Choose a reliable broker with low spreads and high-quality order execution.
- Apply money management – determine in advance how much of your deposit you are ready to lose in case of failure.
- Don’t rely entirely on an Expert Advisor – automation does not eliminate the need for control and analysis.
Thus, Expert Advisors using the martingale principle can be profitable – but they are not a “magic button”. It is a complex strategy that requires:
- backtesting,
- a clear understanding of risks,
- limiting the lot size,
- competent money management.
The main thing is not to trust “miracle advisors” who promise 100% profit without drains. Even the best algorithm requires control and healthy scepticism.