Analysis of a Real Case
The Illusion of Rise: Optimism Driven by Commissions
The protagonist of the story is a team with strong marketing capabilities. Motivated by a generous commission system, their agent network grew rapidly, the entire team was filled with optimism, and the managed fund size quickly reached millions of US dollars.Their core promise to clients was "stable monthly profit of 5%." However, this public confidence masked the deep anxiety of the leader. He privately admitted that he was very fearful of the strategy's risks because the actual account performance could not consistently meet the promoted targets.
Seeking Solutions: An Impossible Request
As market risks accumulated, the team reached out to our technical department. During communication, they showed great uncertainty and urgently hoped to find a solution. They posed a direct question: "Can you develop a 'Martingale strategy that never loses to zero'?"This question reflected that the team was trapped by high commission income and clients' excessive expectations, unable to stop using this high-risk strategy. Our response was very clear: "This is impossible because the underlying logic of the Martingale strategy has fundamental flaws." The strategy is based on two incorrect assumptions: that the trader's capital is unlimited, and that the market's one-sided trend is limited. Any attempt to "improve" the Martingale strategy only delays the occurrence of the next major loss. Based on professional responsibility, we declined this cooperation.
The Final Outcome: A Predictable Failure
Shortly after, through industry information channels, we confirmed the team's outcome—during a severe one-sided market movement, their account funds were completely lost, and the team disbanded.This result was not surprising. Similar incidents are common in the industry. The Martingale strategy is highly attractive to newcomers promoting in this industry, as it easily creates a false perception of "stable profits" for both promoters and end users. When this perception is shattered by market reality, everything ends.
This case also reinforces our core business principle: we never adopt shortcuts that may harm clients' long-term interests. Because we deeply understand that once a company's reputation, brand value, and client trust are lost, they are extremely difficult to rebuild.
Practical Action Guide for Traders
From this real case, traders can learn how to protect themselves.How to Identify High-Risk Martingale Strategies
When evaluating a trading strategy, pay attention to the following danger signals and promotional rhetoric:- Claiming extremely high win rates: If advertisements boast a win rate above 95%, this itself is a highly alarming signal. Normal trading strategies inevitably have reasonable losses; excessively high win rates often mean the strategy is holding losing orders and unwilling to cut losses.
- Promising stable monthly profits: Martingale strategies can indeed maintain positive returns month after month before a major loss occurs. If a strategy overemphasizes this while avoiding discussion of potential large capital drawdown risks, special caution is needed.
- High trading frequency: To generate more commissions and give clients the impression that the account is "active," many Martingale strategies usually have higher trading frequency.
How to Choose a More Reliable Broker
Directly judging A/B book models is extremely difficult for beginners. You need to investigate from the following two levels to make the safest choice:-
Understand theory but face reality:
Theoretically, pure A-book (agency model) brokers mainly profit from charging "commissions," with spreads determined by real market volatility. Pure B-book (market maker model) brokers usually feature no commissions, reflecting trading costs directly in wider "spreads."
However, you must understand an industry reality: nowadays, the vast majority of brokers use a hybrid A+B book model. This means they may offer account types that appear to be A-book, but internally classify clients into B-book based on trading behavior. Therefore, distinguishing purely based on cost structure becomes very difficult and can only serve as a very preliminary reference. -
Make regulatory investigation a top priority:
Since cost structure is hard to fully identify, the most reliable method is to thoroughly investigate regulatory licenses.- Step 1: Check the level of the regulatory authority.
Prioritize brokers strictly regulated by top-tier authorities such as the UK Financial Conduct Authority (FCA) and the Australian Securities and Investments Commission (ASIC). - Step 2: [Key] Delve into the specific type of license.
Within the same regulatory authority, there are many types of licenses that clearly indicate whether a broker is legally allowed to act as a counterparty to clients' trades.- Market Maker License: If a broker holds this license, it means the regulator permits it to legally operate a B-book model.
- Matched Principal / STP License: If a broker only holds this license, it means it is required to send client orders to the market and can only operate as an agent (A-book model).
- Step 3: Confirm your account classification.
Finally, confirm that the account you open is indeed protected by the high-level, specific type of regulatory license you found, rather than being opened in loosely regulated offshore jurisdictions.
- Step 1: Check the level of the regulatory authority.
Three Core Recommendations to Avoid Traps
- Manage losses, not avoid losses: Part of trading is dealing with losses. Using stop loss orders is an active risk management approach. Martingale strategies try to avoid acknowledging losses, which is a passive accumulation of risk. The former helps you survive long-term; the latter may lead to catastrophic single-event failure.
- Question seemingly "perfect" data: When evaluating any trading strategy, always prioritize reviewing its max drawdown indicator rather than just total returns. In financial markets, perfection usually means some key information is hidden.
- Prioritize long-term survival: When entering the market, the first consideration should not be how much money you can make, but how to survive long-term. When you focus on long-term survival, you naturally avoid high-risk strategies like Martingale.
Conclusion
This million-dollar team case is a microcosm of many failures in the market. It clearly demonstrates that in financial trading, violating basic risk management principles and pursuing unrealistic perfect strategies ultimately only leads to failure.For us, this is also a story about business choices. We choose to reject short-term gains and insist on professionalism and integrity. Because we firmly believe that only enterprises built on client trust and long-term value can achieve sustainable success in an ever-changing market.
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Let more people learn about Forex trading knowledge together!
Let more people learn about Forex trading knowledge together!
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