No, I wouldn't say that. You actively shift the probabilities by explicitly dealing with the 5 IF's above, among other things, during your testing. You need to find and use what fits you... don't underestimate the importance of that first "IF". If anything, experimenting with finite martingale is going to raise one's skill level in recognizing, understanding and exploiting episodes of a currency's mean reversion behavior. I've incorporated some of its elements into my everyday trading. I believe professional bank currency traders employ conceptually similar techniques routinely. Well, let's take your example. Your position and WAP progress like this: Position @WAP ____________ short 1 lot @50 2 @46 4 @40 8 @33 16 @25.5 Check: (25.5-10)x$160 = $2,480, as before. Since you mentioned Oanda, "Positions" tab shows your WAP, as do many, but not all, other platforms. As the price is declining, your position size and therefore risk exposure / Unrealized Loss are growing exponentially, while the probability of reaching the original TP of 58 is decreasing. You need to be thinking "defense"; "fear over greed"; "making money over being right"; EXIT. This is no time to stubbornly / greedily / offensively hold out for that 58 TP. Remember, the viability of this method depends on a deliberate, calculated trade-off: maximizing the probability of a win for 1) its average size (small, in pips) and 2) sufficiently small initial position size. Not maximizing the size of a win, or the ratio of your win to MFE, or any other efficiency measure. The finite martingale method is, by its very design and nature, not particularly efficient at capturing the price waves. Now, the moment the price retraces to your current WAP, you're already at break-even. If you're a discretionary trader, you'd better start looking for an exit opportunity now, if the retracement is showing any signs of exhaustion. If you're a mechanical trader, you will have worked out and tested a framework for an exit into that (retracement) strength, slightly above BE. Your possible sequence of TPs might look like this: Position @WAP ... TP ________________________ 1 @50 ... TP1 = 58 2 @46 ... 46 < TP2 < 58 4 @40 ... 40 < TP3 < TP2 8 @33 ... 33 < TP4 < TP3 16 @25.5 ... 25.5 < TP5 < TP4 In his book "Technical Analysis of the Currency Market", Boris Schlossberg goes over examples of different forex MM methods and their variations, from the most conservative to sensible to far-out aggressive (try combining 100:1 leverage and using margin call as the only stop... if you dare). A finite martingale is in there, too. Nicely done, that chapter. (It was also excerpted in "Currency Trader", May and June 2006 issues.) If you're looking for a variety of MM scenarios to feed your mind, that material might keep you busy playing with price charts and spreadsheets for a while.
As an alternative to simply doubling or pyramiding in, (in the same direction at least) i think it has a lot of merit-on longer time frames at least. As far as increasing odds of making money goes, legitimately spreading risk is the only way to go (jmo) -treating sets of trades as a basket, treating them as one trade.