Beginner's guide
A Comprehensive Guide to the Martingale Strategy
Beginner
2023-11-07 | 5m
TL;DR
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The Martingale strategy is a popular investment strategy in the crypto market but is also often used in traditional investment and risk management.
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Bitget has taken the core concept of the Martingale strategy and combined it with the characteristics of the crypto industry, leveraging automated trading tools and AI bots to create a Martingale bot that is more suitable for the crypto market.
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Bitget provides spot Martingale and futures Martingale trading bots in various AI modes that users can access with just one click.
Historical Background of the Martingale Strategy
This strategy was originally used in speculative games, such as the higher-lower guessing game. If you lose a round, you bet double the chips that you bet for the previous round and keep increasing the bet until you win.
Let's say a player has lost US$1 in the first round of the game. They then double the chips for the next round to US$2. If the player wins in the second round, their next bet is “reset” to US$1, and if the player loses, their next bet is doubled to US$4. No matter how much is lost in the last round, as long as the next round is won, the player will recover all previous losses and make a profit. In other words, using this strategy will theoretically result in a 100% win rate.
However, it also has some obvious drawbacks. First, the strategy assumes that the player has unlimited money and time, which is obviously not the case. Second, the strategy ignores risk and probability in the game. Even if a player increases the amount of their bets with the Martingale strategy, it is still possible to lose several rounds in a row and eventually run out of money.
Nonetheless, the Martingale strategy still offers some valuable ideas for risk management, and its high win rate expectation is favored by professional investors.
Introducing the Bitget Martingale Bot
Bitget has taken the core concept of the Martingale strategy and combined it with the characteristics of the crypto industry, leveraging automated trading tools and AI strategies to create a Martingale bot that is more suitable for the crypto market.
Bitget is dedicated to helping investors realize the maximum returns on investment with a guaranteed user experience.
We will now go over the Bitget Martingale bot in detail to help you understand how it works.
Let’s take the spot Martingale bot as an example. It executes a
buy order every time the coin price drops by a certain percentage. The buy order size increases geometrically (1, 2, 4, 8, 16...). If the bot is set to buy when the price drops by 1%, batch purchases are made when the price drops to 99%, 98%, 97%, 96%, 95%... of the entry price. After the price has dropped by 5%, the average price of the position is 95.97% of the entry price. Then, a moderate price increase of 1.02% would be enough to cover costs, significantly reducing the risk.
Simply put, the Martingale strategy significantly reduces the average cost of a position by buying in batches at low price points and investing more money in each point so that when the price rebounds, traders can make a profit from this market reversal.
The Benefits of Using Bitget Martingale Bots
Accessible AI mode
Bitget offers three different types of AI bots for different investor portfolios and risk appetites:
Conservative,
Balanced, and
Aggressive. The parameters recommended by the AI bots are calculated based on market history and price volatility with Bitget's backend algorithm, an authoritative and reliable reference to help maximize trader profits. Refer to
Crypto Investments Made Easy: Bitget's AI-Powered Trading Bots for more information about AI bots.
The infinite loop model seizes every opportunity to make a profit
Bitget's Martingale bots can be used in
Infinite Loop mode, meaning the bot will automatically move to the next sell order after each sale without you needing to reset the parameters. The bot will run in perpetuity as long as there are sufficient funds. If users want to customize the number of cycles, they can manually set the parameters to customize the number of times the bot runs. For example, if the number of cycles is set to 5, the bot stops after the fifth time it takes profit.
Seize oversell opportunities with triggers and accurately take advantage of any market
Thanks to its strong technical indicator research and development capability, Bitget offers exclusive features such as conditional entry and alert triggers to allow users to effectively seize market rebound opportunities and achieve greater profits.
How to Use the Bitget Martingale Bot
Bitget Martingale bots are currently supported in both the spot and
futures markets.
Spot Martingale bot
Bitget offers
Normal and
Reverse spot Martingale bots. Normal spot Martingale bots are suited for users who are bullish on the market but expect the price to drop before rising. After placing the base order, more safety orders can be placed at the pre-set intervals and multipliers. Reverse spot Martingale bots are suited for coin holders who are bearish on the market but worried that the market may rebound first. They can sell part of their holdings and continue to sell if the price increases to maximize their profit.
Follow the steps below to start trading with a Martingale bot:
Log in to your Bitget account and select
Bots from the top navigation.
Select
Spot Martingale, then select your desired trading pair, such as
BTCUSDT"> BTC/USDT.
Users can select the parameters recommended by the AI to get started with ease. AI mode provides three different strategies:
Conservative, Balanced, and
Aggressive. Users can choose the appropriate bot according to their asset allocation and risk appetite, enter their investment amount, and select
Use to start running the bot.
If you are familiar with the crypto market and crypto investing and prefer to customize the parameters, you can select
Manual to adjust your Martingale bot parameters. We offer the following basic parameter settings:
Price action (up/down): After the base order is filled, the first safety order will be placed once the price increases or drops by a certain amount or percentage. Users can input a percentage or a value in this field. The percentage represents the price change percentage as against the base order, while the value represents a price difference as against the base order.
Max safety orders: The max number of safety orders for a position (excluding the base order).
Base order size: The amount of your first order when opening a position. This value and the base order amount multiplier will affect the price of subsequent orders.
Target profit: When you have achieved your target profit after buying the dip and seeing the market reverse, you will take profit at this point and sell your position out.
Sell at termination: When a normal Martingale bot is terminated, the base currency bought by the bot will be sold for the stablecoin.
Buy at termination: When a reverse Martingale bot is terminated, the stablecoin bought by the bot will be sold for the base currency.
Of course, you can also use more complex configurations by enabling advanced settings. We offer the following advanced parameter settings:
Trigger price: Spot Martingale will be enabled when the marke t price reaches this preset price.
TP calculation: You can take profit when your tota l trading volume or your base order trading volume reaches the corresponding target profit.
Safety order price interval: Used to multiply the deviation percentage of the last safety order to calculate the deviation percentage of the new safety order. A higher value may lower capital utilization but may cover a larger price movement.
Safety order multiplier: Used to multiply the trading value of the last order. For example, if the multiplier is 1.5, the new safety order amount will be 1.5 times the amount of the last safety order, and so on.
Stop-loss: The price of the last stop-loss order.
Cycles: The number of cycles the bot will run to take profit. For example, if the number of cycles is set to 5, then the bot stops after it takes profit for the fifth time. If set to infinite loop, the bot will run in perpetuity as long as there are sufficient funds.
Select
Create once you have set all the parameters. Your Martingale bot will be up and running right away!
Futures Martingale bot
Bitget offers
Long Futures and
Short Futures Martingale bots. Long futures Martingale bots are suited for users who are bullish on after-market but expect the price to drop before rising. After opening long for the base order, margin for long positions will be implemented at the pre-set intervals and multipliers. Short futures Martingale bots are suited for users who are bearish for after-market but expect the price may rebound first. After opening short for the base order, the margin for short positions will be supplemented at the pre-set intervals and multipliers.
Futures Martingale bots provide three different strategies:
Conservative,
Balanced, and
Aggressive. Users can choose the appropriate strategy according to their asset status and risk appetite. After making their selection, users can adjust the leverage and margin (the highest leverage currently supported is up to 125X) to satisfy their different risk appetites. After entering the required margin for the bot, select
Create to start running the bot.
You can also select
Manual to enjoy a customized trading experience. Make sure you fully understand all the parameters. Keep an eye on your leverage multiplier and margin to avoid liquidation.
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