Increasing lot size after each loss (martingale) / adding positions at intervals into a floating loss (grid/averaging). Win rate and PF can look great, but tail risk (account blow-up) is large.
Martingale doubles the lot after each loss to recover with a single win; grid / averaging-down adds positions at fixed intervals into a losing direction to lower the average price and take profit on a bounce. Both are very common in EAs.
Why the "appearance" looks good
- Win rate and PF tend to look high. Small take-profits stack up, so calm periods produce long winning streaks.
- The equity curve looks smooth. Floating losses don't appear as a loss until closed, so balance-based max DD looks small.
The real risk
- A strong adverse trend turns the stacked positions into losses all at once, and a falling margin level can trigger a stop-out = account blow-up.
- When evaluating, always check how lot size grows, the number of simultaneous positions, equity-based DD, and max consecutive losses. Be wary of results that capture only a "calm few weeks."
See also how to compare EAs.
