Grid and martingale get lumped together because both keep trading into a losing position instead of taking a stop. They are not the same thing, and the difference is the whole story. A grid adds the same size at each step. A martingale increases the size after every loss. One grows your exposure in a straight line; the other grows it on a curve — and the curve is what empties accounts.
What a grid does
A grid places orders at fixed price intervals, usually the same lot size each time, above and below a starting point. As price moves, more orders fill. The idea is to profit from a market that swings back and forth, banking a small gain each time price reverts to a level.
Example. £10,000 account, 0.10 lots every 20 pips. Price falls 100 pips against you and five orders are now open — 0.50 lots, all underwater. At £8 per pip per lot, that stack is losing roughly £240 floating (100 + 80 + 60 + 40 + 20 pips across the five legs, at £0.80 a pip each), and it climbs by £4 for every further pip against you. The exposure grows in a straight line with the number of levels.
What a martingale does
A martingale multiplies the size after each loss — classically doubling — so a single winner recovers every prior loss plus a profit. The maths is seductive: you "must" eventually win, and when you do, you are green.
The problem is the bet you need to survive a losing run. Start at 0.10 lots and double each time:
0.10 → 0.20 → 0.40 → 0.80 → 1.60 → 3.20 → 6.40
Seven trades in, the position is 6.40 lots — 64 times the first — and the combined loss on the way there has already passed what a £10,000 account can hold. The winner that recovers everything is real; the account rarely lasts long enough to see it.
The dangerous EAs combine both: a grid that also doubles size at each level. The equity curve looks beautiful for months — small, steady gains — because the tail risk only shows up on the one trend day that doesn't revert. Then it shows up all at once.
The risk each carries
- Grid — risk grows with the number of open levels. A ranging market feeds it; a trending market runs the grid over. The loss is roughly linear in how far price travels.
- Martingale — risk grows with the length of the losing streak, and it grows exponentially. The loss is geometric. A run of six or seven against you is not rare over enough trades, and that is all it takes.
Neither uses a conventional stop-loss per trade, which is why both can post high win rates and smooth curves right up until the day they don't. A 95% win rate means nothing when the 5% is uncapped.
What to watch for
- Positions stacking in one direction with no stop.
- Lot sizes escalating trade to trade — the martingale tell.
- A curve that only ever ticks up, broken by occasional deep, fast drawdowns.
Common misconceptions
- "They're basically the same." Fixed size versus doubling size is the difference between linear and exponential risk. It decides how you die.
- "A high win rate means it's safe." Both are built to win often and lose rarely and large. The win rate hides the tail.
- "The backtest proves it." A martingale backtest that never hit its worst streak in-sample tells you nothing about the streak still coming.
The Karnek note
Karnek reads every open position from your terminal, so an escalating lot size or a stack of orders with no stop is visible as it happens, not after the margin call. It monitors live and read-only, and it can never open, close or alter a trade on the account.
Written and reviewed by the Karnek Research team. Last updated August 2026.
Educational content only - not financial advice. Past performance does not predict future results. Trading carries significant risk.