Imagine being able to maximise the potential to multiply profits with successful trades. Enter the Reverse Martingale strategy.
With the aim of helping to secure potential profits from consecutive successful trades, this trading strategy increases your stake after each successful trade and resets to the initial stake for every losing trade.
In this article, we explore the Reverse Martingale strategy available on Deriv Bot, a versatile trading bot designed to trade assets such as forex, commodities, and derived indices. We will delve into the strategy’s core parameters and its application and provide essential takeaways for traders looking to use the bot effectively.
Key parameters
These are the trade parameters used in Deriv Bot with the Reverse Martingale strategy.
Initial stake: The amount that you are willing to place as a stake to enter a trade. This is the starting point for any changes in stake depending on the dynamic of the strategy being used.
Multiplier: The multiplier used to increase your stake if your trade is successful. The value must be greater than 1.
Profit threshold: The bot will stop trading if your total profit exceeds this amount.
Loss threshold: The bot will stop trading if your total loss exceeds this amount.
Maximum stake: The maximum amount you are willing to pay to enter a single trade. The stake for your next trade will reset to the initial stake if it exceeds this value. This is an optional risk management parameter.
How the Reverse Martingale strategy works
- Start with the initial stake. Let’s say 1 USD.
- Select your multiplier. In this example, it is 2.
- If the first trade is a successful trade, Deriv Bot will automatically double your stake for the next trade to 2 USD. Deriv Bot will continue to double the stake after every successful trade.
- If a trade ends in a loss, the stake for the following trade will be reset to the initial stake amount of 1 USD.
The objective of the Reverse Martingale strategy is to take advantage of consecutive successful trades and maximise potential profits from them. This strategy is beneficial only if there are consecutive successful trades.
Therefore, it is important to set a maximum stake to secure all the potential profits gained from a number of consecutive successful trades. If there is no maximum stake set, you could lose all the profits you have accumulated, including your initial stake. For example, if your goal is to maximise profits within 2 consecutive successful trades, you set a maximum stake of 2 USD, given your initial stake is 1 USD. Similarly, if your goal is to maximise profits within 3 consecutive successful trades, you set a maximum stake of 4 USD, given your initial stake is 1 USD.
Profit and loss thresholds
Deriv Bot allows setting profit and loss thresholds to manage risk. A profit threshold will automatically stop trading after reaching a preset amount to lock your profits. A loss threshold will stop trading after accumulating a preset loss amount. These thresholds secure profits and limit losses as part of your risk management. For example, with a 100 USD profit threshold, the bot will stop after exceeding 100 USD in total profit.
Summary
The Reverse Martingale strategy in trading may offer substantial gains but also comes with significant risks. With your selected strategy, Deriv Bot provides automated trading with risk management measures like setting initial stake, stake size, maximum stake, profit threshold and loss threshold. It’s crucial for traders to assess their risk tolerance, practise in a demo account, and understand the strategy before trading with real money.
Sign up for a free Deriv demo account and try out this strategy on Deriv Bot. You’ll be able to practise risk-free with virtual funds. Once you’re ready to trade with real money, upgrade your demo account to a real Deriv account.
Disclaimer:
Please be aware that while we may use rounded figures for illustration, a stake of a specific amount does not guarantee an exact amount in successful trades. For example, a 1 USD stake does not necessarily equate to a 1 USD profit in successful trades.
Trading inherently involves risks, and actual profits can fluctuate due to various factors, including market volatility and other unforeseen variables. As such, exercise caution and conduct thorough research before engaging in any trading activities.
The information contained in this blog article is for educational purposes only and is not intended as financial or investment advice.
Deriv Bot is unavailable to clients residing within the EU.