In short. Grids and martingale win often and lose rarely, but very hard. Their risk does not show on the balance curve — only in the floating loss during the worst price move. To calculate it you need the grid step, the lot multiplier, the maximum number of levels and the total volume at the last level. The example below: 10 levels every 20 pips on EURUSD from 0.01 lot — with a multiplier of 1.0 a 200-pip move against you means $110 of floating loss, with 2.0 it is $4,072 and 10.23 lots of open volume.
How grids and martingale work
- An averaging grid: when the price goes against the position, another one in the same direction opens every N pips, with the same or a larger lot. All levels close together once the total result is positive.
- Martingale: after a losing trade the next one opens with a doubled lot — so that one winner covers all previous losses.
Both schemes almost always close in profit — hence 90% winning trades and a smooth balance curve. The bill comes in one move that does not turn around.
Grid: what a move against you costs
EURUSD, the first level is 0.01 lot, a new level every 20 pips against the price (200 MetaTrader points on a five-digit quote), 10 levels in total. The price has moved 200 pips against the first position:
| Lot multiplier | 10th level lot | Total volume | Floating loss | Back to breakeven | Margin at 1:100 |
|---|---|---|---|---|---|
| 1.0 | 0.01 | 0.10 lot | $110 | 110 pips | $108 |
| 1.5 | 0.38 | 1.13 lots | $640 | 57 pips | $1,220 |
| 2.0 | 5.12 | 10.23 lots | $4,072 | 40 pips | $11,048 |
«Back to breakeven» is how many pips the price has to return from the worst point, ignoring spread and fees. The bigger the multiplier, the closer the breakeven — the grid closes in profit on a small pullback. But volume grows as a power of the multiplier: on a $2,000 account with a multiplier of 2.0 the eighth level will not even open — there is not enough free margin — and a 50% stop out comes about 205 pips against the first position. How margin and stop out depend on volume — in «Margin, leverage, margin call and stop out».
Martingale: what a losing streak does
First trade 0.01 lot, stop and target 20 pips each, the lot doubles after every loss:
| Losses in a row | Total loss | Next trade lot |
|---|---|---|
| 5 | $62 | 0.32 |
| 8 | $510 | 2.56 |
| 10 | $2,046 | 10.24 |
| 12 | $8,190 | 40.96 |
Such streaks are not rare. If a trade wins half the time, the chance of at least one streak of 8 losses in a row within 1,000 trades is 86%, of 10 losses — 38.5%. The risk of ruin calculator gives the chance of ruin for your numbers, and the drawdown calculator the recovery.
How to calculate the risk of your grid
- Find the maximum number of levels, the step and the multiplier in the EA settings.
- Calculate the last level's volume and the total volume of all levels.
- Take the instrument's worst move against the position over the years — and calculate the floating loss for such a move, as in the table above.
- Compare it with the deposit and the broker's stop out level: which comes first?
- Check whether the EA has an overall equity stop and what it does after the last level.
If the seller shows only a balance curve, ask for equity drawdown — the gap between the two is exactly the grid. More in «How to check an EA before buying».
How to reduce the risk
- a multiplier close to 1, a limit on the number of levels and an overall equity drawdown stop;
- a small starting lot relative to the deposit — so the worst move does not reach stop out;
- a separate account for the grid EA — its drawdown should not hit the rest of your trading;
- no grid trading against a strong trend or on major news days.
What Davinchu does
- Reports every level. The monitor sends «Averaging #N» to Telegram, with a chart screenshot if you like.
- Grid alerts: number of orders, volume in lots and grid age in hours — at your thresholds.
- Drawdown and margin are critical alerts that arrive during quiet hours too; if the connection drops — «Account connection lost» after 10 minutes.
- An «Active grids» panel on the chart: number of orders, volume, age and the worst floating drawdown per magic number.
- Equity drawdown in account analytics — from hourly snapshots including floating losses, not only the balance.
You see every level and every alert the moment they happen — and decide what to do with the grid while there is still time. What else there is for robots — on «Davinchu for algo traders».