Martingale
Doubling position size after a loss to recover it in one trade — a sizing pattern most firms restrict, and one that the math itself argues against.
Martingale is a sizing method borrowed from casino betting: after a loss, double the next position so a single winner recovers everything plus the original profit. Lose again, double again. On paper it looks like a machine that can’t lose. In a prop account with a fixed drawdown, the arithmetic tells a different story.
Run the numbers on a $50K account with a $2,500 drawdown, starting at 2 MNQ with a 20-point ($0.50/tick, 80-tick) stop:
| Trade | Contracts | Loss if stopped | Cumulative loss | Drawdown room left |
|---|---|---|---|---|
| 1 | 2 | $80 | $80 | $2,420 |
| 2 | 4 | $160 | $240 | $2,260 |
| 3 | 8 | $320 | $560 | $1,940 |
| 4 | 16 | $640 | $1,200 | $1,300 |
| 5 | 32 | $1,280 | $2,480 | $20 |
Five losing trades in a row — which any honest trader has had — and the account is out of room. The doubling has consumed the entire cushion, and the sixth trade would need 64 contracts, which the firm’s contract cap wouldn’t even permit. The strategy’s core flaw isn’t the win rate; it’s that it requires unlimited capital and unlimited size, and a funded account gives you neither.
That’s why many firms restrict martingale and aggressive averaging-down patterns outright, especially in automated strategies. It isn’t arbitrary — it’s the firm protecting the account you worked to earn.
The professional alternative is the opposite instinct: size down after losses, not up. Cut to your smallest size, get one clean win to steady the equity curve, then rebuild. Traders who protect their buffer through a losing streak are the ones still trading — and still getting paid — the following month.
Master fixed-fractional sizing instead. Start with max contracts and position sizing, and check firm-specific rules in our directory.