Grid Trading vs Martingale
A grid decides where positions open; a martingale decides how big they are. How the two differ, how they combine in most grid EAs, and what each does to recovery and to risk.
By the AURAX teamPublished 3 min read
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*A grid is a rule about where* positions open — at fixed price intervals. A martingale is a rule about how big they are — larger after each loss, classically doubled.** A grid with equal lots is not a martingale. A grid whose lots grow at each level is both, and that combination, often called a martingale grid, is what most "grid EAs" actually run. The multiplier is what turns a grid's slow loss curve into a steep one.
| Flat grid | Martingale grid | Classic martingale | |
|---|---|---|---|
| Entries | Fixed price intervals | Fixed price intervals | After each losing bet |
| Size | Equal | Grows by a multiplier | Doubles |
| Retrace needed to close | About half the distance travelled | A short way back from the last entry | One win recovers all losses |
| How losses grow | Roughly with distance squared | Roughly exponentially with levels | Exponentially with losses in a row |
Part of the Grid trading guide.
Where martingale comes from
The martingale is a betting system: double the stake after every loss, so that the first win recovers all previous losses plus the original stake. It appears to guarantee a profit. It does not, because the bettor runs out of money, or hits the table limit, before an unlucky streak ends — and the one losing streak that cannot be covered wipes out every small win before it.
In trading the same idea appears as adding a larger position as price moves against you. The market's version of the table limit is margin, and its losing streak is a trend.
The same grid, flat and multiplied
Eight levels, $5 apart, starting at 0.01 lot. The only difference is the multiplier:
| Flat (×1) | Martingale (×2) | |
|---|---|---|
| Last level size | 0.01 lot | 1.28 lots |
| Total lots open | 0.08 | 2.55 |
| Loss as level 8 opens ($35 away) | $140 | $1,235 |
| Loss per further $1 of move | $8 | $255 |
| Retrace from the last entry to break even | $17.50 | $4.84 |
That last row is the attraction of the multiplier: the ×2 basket needs price to come back less than $5 from its deepest point to break even, while the flat grid needs $17.50. The rows above it are the price: about 32 times the exposure — and so 32 times the loss per dollar of further movement — once the grid is full.
| Level | Lots | Relative size | Price moved | Lots open | Floating loss as it opens |
|---|---|---|---|---|---|
| 1 | 0.01 | $0.00 | 0.01 | — | |
| 2 | 0.02 | $5.00 | 0.03 | −$5 | |
| 3 | 0.04 | $10.00 | 0.07 | −$20 | |
| 4 | 0.08 | $15.00 | 0.15 | −$55 | |
| 5 | 0.16 | $20.00 | 0.31 | −$130 | |
| 6 | 0.32 | $25.00 | 0.63 | −$285 | |
| 7 | 0.64 | $30.00 | 1.27 | −$600 | |
| 8 | 1.28 | $35.00 | 2.55 | −$1,235 |
It is a spectrum, not a switch
Multipliers between 1 and 2 sit in between: faster recovery than a flat grid, less exposure than doubling. A ×1.5 grid on the same eight levels holds 0.49 lots and loses $415 as the eighth level opens. Some strategies raise the size only every few levels, or use a custom sequence. The trade-off is always the same — every step toward faster recovery is a step toward larger exposure at depth. How lot multipliers change grid risk compares them side by side.
What this means in practice
- Ask which one it is. Many products describe a martingale grid as a "grid" or "recovery" strategy. If the lots grow, it is a martingale.
- Look at the last levels, not the first. With ×2, about half of all the exposure sits in the final level.
- The account, not the strategy, sets the limit. A martingale grid is safe only as far as the drawdown limit and the margin let it go.
- Win rate tells you nothing. Both flat and martingale grids win most baskets. The difference is the size of the ones they lose.
Educational content, not financial advice. Trading gold and other leveraged products carries a high level of risk, including the possible loss of some or all of your capital. Automated strategies do not guarantee profit, and past or simulated performance is not indicative of future results. Risk disclosure.