Guide

Grid and martingale in Forex: how they work and what the risks are

Many copy trading strategies show very smooth curves, with almost every month in profit. Behind them, there is often a grid, sometimes with a martingale. This guide explains these two mechanisms in plain words, why they produce such curves, and why the risk lies somewhere other than in the return shown.

The grid: not accepting the loss straight away

A conventional strategy opens a position and closes it with a stop loss if the price goes the wrong way. A grid works differently: when the price moves away, it opens new positions in the same direction, at regular intervals (for example every 30 pips). Together, these positions form a basket, closed as a whole.

The basket's average entry price thus moves closer to the market price. A partial return of the price is then enough for the whole basket to close in profit.

The martingale: making the next positions larger

The martingale adds a rule: each new position in the grid is larger than the previous one. The average price moves even faster towards the market, and a small return is enough to exit in profit.

The downside is immediate: the total size of the basket, and therefore the possible loss, grows much faster than the price gap.

A worked example

To keep it simple: a starting position of 0.01 lot, a new position every 30 pips, each one 1.5 times larger than the previous one.

Illustrative figures, rounded. They do not describe the settings of a real strategy.
Price gap	Open positions	Total basket size
0 pips	1	0.01 lot
90 pips	4	about 0.08 lot
180 pips	7	about 0.32 lot
270 pips	10	about 1.13 lot

The price travelled three times as far between the 1^st and the 10^th position as between the 1^st and the 4^th, but the basket is fourteen times larger. That is what makes the martingale strong when the price comes back, and dangerous when it does not.

Why these strategies often win

The price often comes back. On pairs that move within ranges, a partial return happens in the vast majority of cases.
Losses stay open. As long as the basket is not closed, its loss is only unrealised: it does not appear in the closed results.

Hence very smooth curves and many months in profit. It is not a lie, but it is not the whole story.

The risks

A long trend. If the price moves far in one direction and does not come back, the grid keeps opening larger and larger positions. The loss can then become very large, up to the entire capital.
An unrealised loss that does not show. The worst drawdown shown on closed trades can be small, while the account went through a much larger fall along the way. See our guide on floating drawdown.
Margin. The larger the basket, the more margin it ties up. If margin runs out, the broker closes positions itself, at the worst moment.
Leverage. It lets you open positions much larger than the capital, and therefore amplifies everything above.
A track record without accidents proves nothing. A grid can string together years of months in profit, then suffer within a few days the trend it has never encountered.

What to look at before copying such a strategy

The worst floating drawdown, not just the worst drawdown shown.
The pairs traded and their behaviour over a long period: do they really move within ranges?
The share of your wealth: only a sum whose total loss would not change your life.
Your global stop loss: it should remain a last safety net, not a tight setting that would cut the copy at the bottom of a fall. See our guide on the global stop loss.

And at PlanetFinance?

The PlanetFinance strategy uses a grid with a martingale, on AUDCAD and NZDCAD only. A new grid position opens every 35 pips. These two pairs usually move within price ranges (see both pairs over 30 years on the Risks page). Nothing guarantees this will always be the case. The worst estimated floating drawdown is about 75%, in April 2025, and position sizes have been reduced since. The strategy is adapted to market conditions. A loss of the entire capital invested remains possible.