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Next: when margin runs out
The last step your balance can carry is the end of the plan. Read what a margin call and a stop out do to a ladder.
What is included
- The calculator, with your own numbers
- The formula written out
- A worked example you can reproduce
- Where grid, martingale and DCA bots break the maths
Who it is for
- People running or testing a trading bot
- Anyone sizing a position or checking costs
- Readers learning how the numbers work
- Not advice, and not for placing trades
Key facts
- A martingale ladder adds to a losing position at lower prices, usually doubling the size each step, so one bounce recovers the earlier adds.
- Units grow as start x multiplier ^ (step - 1). With a multiplier of 2, step 6 is 32 times step 1, and the total after six steps is 63 times the first position.
- Margin used = (sum of units x price paid) / leverage. It is the money the account must hold, before any floating loss is counted.
- The break-even price of the stack is the average entry. Price must rise back to it for the whole ladder to close without a loss.
- The calculator is the long side only, with the price falling by a fixed percent of the previous step. Fees, funding and slippage are not included.
- Every number on this page is a made-up example or comes from the inputs. It is a model of the arithmetic, not of any named bot.
How the martingale calculator works
A martingale ladder is a plan, written in advance, to buy more as price falls. Step 1 opens the starting position. Each later step is triggered when price has fallen a set percent from the previous step, and it adds the previous size times the multiplier. With a multiplier of 2 the adds run 1, 2, 4, 8, 16, 32 and so on.
Units added at step k = start x multiplier ^ (k - 1)
Average entry = sum of (units x price) / total units
Margin used = sum of (units x price) / leverage
Share of balance = margin used / balance
The average entry is the break-even price of the whole stack. Because the bigger adds are bought lower, the average is pulled down toward the latest price, and that is the point of the method: a smaller bounce gets the whole stack back to even.
A worked example
Take a made-up ladder: 1 unit at 100, a 5 percent fall between steps, a multiplier of 2, six steps, leverage of 5 and a $1,000 balance. The prices are 100.00, 95.00, 90.25, 85.74, 81.45 and 77.38. The units added are 1, 2, 4, 8, 16 and 32.
At step 5 the stack holds 31 units. It cost $2640.11, so the average entry is 85.16 and the margin at 5 to 1 is $528.02, which is 52.8 percent of the balance. Price is then 81.45, which is 18.5 percent below the entry, and the stack shows a floating loss of $115.14. That loss is not in the margin figure. Equity is the balance less that loss, so the account at step 5 is closer to a margin call than the margin share suggests.
Step 6 would take the stack to 63 units and $1023.24 of margin, 102.3 percent of the balance. The account cannot open it. The calculator marks the row amber.
What the numbers say about the doubling ladder
- The price needed to recover shrinks, the size grows faster. At step 5 the stack breaks even at 85.16, only 4.6 percent above the current price of 81.45. The cost is a position of 31 units, 31 times where it began.
- The ladder is a bet on a bounce. It wins the small recovery very often and loses the whole stack when price keeps falling past the last step. The calculator shows the size of that loss, not how likely it is. See martingale trading for how often long losing runs happen.
- Leverage hides the size. Margin is cost divided by leverage, so a high leverage lets a large ladder look small on the margin line while the floating loss is unchanged. Floating loss is the same at 5 to 1 or 50 to 1.
- The balance sets the last step, the broker sets the stop. The margin call and stop out levels vary by broker. Read margin call for how they work, and check your own broker's levels.
Where bots break the model
A real martingale bot differs from this table in ways that make it worse. Fills slip when price gaps through a step, so adds are bought lower than planned. Funding or swap is charged on the growing stack for as long as it stays open. A step the bot cannot afford is rejected, which leaves the bot sitting on a large position with no recovery plan. Some bots then add an opposite position or a stop, which is a different method: see zone recovery.
How to use the result
Change the spacing and the multiplier and watch two things: the step where the margin passes the balance, and the price drop at that step. If the ladder runs out of money after a fall that the market has made before, the bot's recovery plan has a limit and the limit is the fall shown in the tile. The calculator does not say where price will go.
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FAQ
Frequently Asked Questions
Why is the maximum 12 steps?
Past 12 steps with a multiplier of 2 the last add is 2,048 times the first, and almost any account runs out well before. The cap keeps the table readable. If your plan uses more steps, the early part of the table still shows the same pattern.
Does margin used include the floating loss?
No. Margin used is the money held against the open positions. The floating loss comes off equity separately. The tile for the floating loss shows it for the last step that fits, and it is why a margin call can arrive before margin used passes the balance.
How is the step spacing applied?
Each step is the stated percent below the previous step, not below the entry. A 5 percent spacing gives 100, 95, 90.25 and so on. Some bots use a fixed price gap instead, which makes the later steps closer together in percent terms.
Can this show a short ladder?
Not directly, because it assumes a long ladder where price falls. A short ladder is the mirror image, with price rising between adds, and the margin and the size grow the same way.
What does the break-even price mean?
It is the average entry of all the units, without fees or funding. Price must rise back to it for the whole stack to close level. A bot that targets a small profit above it must see a bounce that large.
Are the numbers on this page real?
Example numbers are made up to show how the maths works, and the page says so. A figure only counts as exact when the page says it was calculated on a stated date. Nothing you enter in a calculator leaves your browser.
Can I use this to decide whether to run a bot?
It can show whether a bot's numbers hold together and how much an account can lose. It cannot say what the market will do, and it is not advice. Use it to ask better questions, then read the terms of your own broker or exchange.
Is this financial advice?
No. It is a calculator and general education. It does not consider your situation, and its answers are only as good as the numbers you enter.
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