The Martingale Strategy is a classic trading strategy originating from casinos. The core logic is 'fixed direction + doubling down on losses + one-time profit-taking on rebounds.' Essentially, it reduces the average cost through 'geometric multiples for replenishing positions,' relying on a single rebound to cover multiple losses and make a profit.
In simple terms, the operation logic is 3 steps:
1. First, determine a one-sided direction (only go long or only go short, without changing direction midway);
2. After a loss on the first order, double the replenishment according to the geometric multiples of '2, 4, 8, 16...' (for example, if the first order is 10 USDT and it loses, replenish with 20 USDT, if it loses again, replenish with 40 USDT);
3. As long as the market rebounds to the 'average cost line of all orders', closing the position can break even; a little more increase is pure profit.
For a straightforward example (BTC long position):
- First order: Open long 10USDT at 20000USDT (1 time);
- Add order 1: If it drops 5% to 19000USDT, add 20USDT (2 times);
- Add order 2: If it drops another 5% to 18050USDT, add 40USDT (4 times);
- Rebound: As long as the price returns to about 18300USDT (average cost), closing the position will break even, and any further increase will be profit.
