The strategy of Martingale system is used to increase the value of each new trading after the loss.
This trading technique was first conceived in the 18th century in France and it was based on the operative part, that trader can not lose all the time. This system was originally used in casinos, gamblers were after each losing bet double the next bet, assuming that they would win at the end.
The Martingale system concept is also used in forex in a similar way. Traders open up their trades (long or short). if they lose they start the next trade like the first time, but with double input. In that way they ensure a profit that covers the previous loses.
However, the price of currencies rarely moves constantly in the loss and it can completely exhaust the traders account. So all Martingale’s systems usually fail, because traders don’t have infinite resources. In addition, the Martingale system can be profitable only if the ratio between the win and loss is at least 0.5.
The Martingale system is very popular among forex automation trading systems, because it is very interesting and lucrative at first sight, especially for beginner in forex trading. This does not mean that there is no profitable Martingales systems, but everyone should be aware of the risk.