Introduction

Dollar-Cost Averaging (DCA), also known as the Martingale Strategy, is a widely adopted investment technique commonly employed in the traditional financial market, particularly in the forex arena. This strategy revolves around the principle of consistently investing a fixed amount of capital into a particular asset at regular intervals, regardless of its prevailing market price.

The Martingale Strategy's underlying concept lies in placing directional bets in a double-sided market, where both long and short positions are permissible. In the event of an unfavorable outcome, the strategy dictates doubling down on the opposing direction. This process continues until the market undergoes a corrective phase, enabling investors to capitalize on the gains accrued from buying at lower prices and selling at higher ones.

Due to its inherent advantages, the Martingale Strategy has gained traction among a diverse range of investors. However, it is crucial to acknowledge, given the inherent risks associated with any market, that this strategy does not guarantee profitability. Therefore, investors must take the necessary actions towards risk management practices.

In response to evolving user demands, Toobit has introduced a groundbreaking iteration of the Martingale Strategy specifically tailored for crypto asset contract trading. Toobit's Contract Martingale Strategy empowers traders to engage in dual-directional trading, enabling users to both accumulate assets at lower prices and profit from market corrections.

Example

Let us assume that the current price of BTC is 28,000 USDT and a trader has enough margin to execute the maximum addition for this round. The trader decides to short BTCUSDT with an initial order size of 0.1 BTC, and configures the Futures Martingale with the following parameters:

Investment amount: 0.1 BTC
Trigger price：28,000 USDT
Derivatives pair: BTCUSDT
Price Increase: 2%
Position Multiplier: 1.2
Leverage: 10x
Max Addition per Round: 3
Profit Target per Round: 2%
Cycle times：3

If the market price continues to rise, for every 2% increase, the bot will automatically create another short order at the higher price point and repeat the process until the Profit Target for that round is reached. After the third round of addition, the position details are as follows:

The first cycle time:

Addition	Order Type	Order Price (USDT)	Average Holding Cost (USDT)	Order Quantity (BTC)
Initial Entry	Open Position Order	28000	28000	0.1
1	Add Position Order	28560	28306	0.12
2	Add Position Order	29132	28633	0.144
3	Add Position Order	29714	28980	0.1728

Order Quantity

Order Quantity1= 0.1*1.2 = 0.12 BTC

Order Price

Order Price1= 28000*（1+2%）= 28560 USDT

For long positions: Next order price = Average holding cost × (1 - Percentage Decrease)

For short positions: Next order price = Average holding cost × (1 + Percentage Increase)

Short Position Take-Profit Price：

Average Holding Cost*（1-Profit Target）= 28980*（1-2%）= 28400.4 USDT

For LongPosition Take-Profit Price：=Average Holding Cost*（1+Profit Target）

Scenario 1 - The current market price is 28400.4 USDT

The price has dropped back to 28400.4 USDT, the Take Profit order is triggered and executed at market price. As the trader enables the loop, when the market price reaches the Take Profit price, the bot will automatically close the current positions and start a new round of position building. Assuming the position is closed at 28400.4 USDT, the realized PnL for this round of the Martingale strategy is as follows:

PNL for this Round：（28980-28400.4）*0.1728 = 100.1548 USDT

Assume that the Funding Fees and Trading Fees are negligible.

Scenario 2 - The current market price is 28400.4 USDT

The current market price moves in the trader’s favor but remains above the Take Profit price. The bot will still be running, but it will not add any more short positions. Only when the market price reaches the Take Profit price level will the bot close existing positions and start a new round of trading.

Scenario2.1 - The current market price continues to rise.

As the current market price continues to rise, for every 2% increase, the bot will automatically buy another short contract at the higher price point and repeat the process until the Maximum Addition per round is reached. After that, the bot will still be running, but it will no longer add short positions.

	Initial Market Price	1st 2% Increase	2nd 2% Increase	3rd 2% Increase	4th 2% Increase	5th 2% Increase
Entry Price (USDT)	28000	28306	28633	28980	29560	30152
Order Size (BTC)	0.1	0.12	0.144	0.1728	0.2074	0.2488

In the worst-case scenario, assuming that the market does not reverse and continues to move in an unfavorable direction, there is a risk that the user’s position may be liquidated.

While the Martingale strategy offers simplicity and potential for recovery, it comes with inherent risks and limitations that require careful consideration. Toobit would like to advise our users to consider the risks of aiming for high profit targets within a single cycle, and instead target modest profits to reduce position risks. Implementing risk management tools like Stop Loss can further reduce liquidation risks in adverse market conditions.

Advantages and Disadvantages of the Futures Martingale Strategy

Advantages

Dual-Directional Trading

By adopting the Futures Martingale Strategy, traders gain the flexibility to capitalize on both upward and downward market movements. This strategy empowers them to pursue profitable opportunities through both long and short positions.

Personalized Risk-Managed Trading

The Futures Martingale Strategy offers traders the flexibility to customize its parameters to align with their individual trading preferences and risk tolerance. This empowers them to fine-tune the strategy to suit their unique trading style and risk appetite.

Long-Term Strategic Alignment

The Futures Martingale strategy can be a compelling choice for long-term investors with strong market convictions and significant capital. It allows them to strategically align larger positions with their long-term market outlook.

Easy to Grasp, Easy to Use

The Martingale strategy stands out for its inherent ease of understanding and implementation. This straightforward approach makes it accessible to a broad spectrum of traders, regardless of their experience level.

Disadvantages

Market Price Fluctuations

When engaging in futures trading, traders employing the Martingale strategy must carefully consider the potential impact of significant market price fluctuations. In scenarios where prices exhibit sustained one-sided movements contrary to open positions, the resulting floating losses on held positions can escalate, potentially leading to margin calls and forced liquidations.

Automatic Order Cancellations as a Risk Mitigation

In the event that the risk associated with open positions exceeds predefined thresholds within the Futures Martingale system, the system will automatically initiate order cancellations. This risk mitigation measure aims to reduce overall position risk and prevent potential margin calls or forced liquidations.

High Leverage

Although Future Martingale’s feature allows traders to set up to 50x leverage, in unfavorable market conditions, trading with high leverage can amplify losses. It is important to understand the risks associated with high-leverage trading.

Toobit Team

Download the Toobit app now

Find us:

X: https://x.com/Toobit_official

Telegram: https://t.me/Toobit_EN

Discord: https://discord.com/invite/vvxTuGTz

YouTube: https://www.youtube.com/@Toobit_official

Reddit: https://www.reddit.com/r/toobit/

Facebook: https://www.facebook.com/toobitofficial

Medium: https://medium.com/toobit-exchange

Toobit reserves the right to modify or cancel this announcement at any time and for any reason without prior notice.

Risk Warning: The prices of digital assets may fluctuate significantly. The value of your investment may increase or decrease, and you may even lose the entire amount invested. You are solely responsible for your investment decisions, and Toobit is not liable for any losses that may occur due to the use of margin trading. This information should not be considered financial or investment advice. Please refer to our Terms of Use and Risk Disclosure for more details.

투빗

Introduction to Futures Martingale Bot

Introduction

Example

Advantages and Disadvantages of the Futures Martingale Strategy

Advantages

Disadvantages

Introduction to Futures Martingale Bot

Introduction

Example

Advantages and Disadvantages of the Futures Martingale Strategy

Advantages

Disadvantages

Related Articles

Trade smarter with upgraded Event Futures

Product Weekly Report (September 8 ‒ September 14)

Toobit Product Weekly Report (September 1 ‒ September 7)

Read markets better with the upgraded Synapse AI

Trade Event Contracts risk-free with your Bonus