Unveiling NovaStake Trading Strategies: Martingale Techniques for Monthly Income!
- Writer
- Mar 7
- 5 min read
One of the key strategies for managing risk is diversifying investment assets. It's likely that many of you already have core currency pairs like EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, USD/CAD, and NZD/USD in your forex portfolio.
Today, the team at Discipline2Freedom would like to introduce an alternative currency pair: NZD/CAD. This pair is known for its low volatility and tends to exhibit sideways movement, making it perfect for a reversal trading strategy supported by Martingale money management.
The NovaStake trading system operates on 100% real tick data, allowing its EA (Expert Advisor) to consistently generate profits using back-tested information spanning over a decade, from 2015 to January 2025. This system executes trades almost daily and stands out as a viable option for asset diversification and risk management.
The backtesting results for NovaStake on the NZD/CAD pair (M15 timeframe) with Vantage MT5 broker using a Standard Raw account reveal that starting with a capital of $10,000 would yield total profits of $258,725. This encompasses 4,190 trades, averaging around 35 trades per month.
Due to the higher capital requirements for this system, we recommend users trade with a cent account, initiating with a trading capital of 10,000 US cents (equivalent to $100).
For AutoLot_BasePercentOfBalance set to 10:
When investors start with a balance of 10,000 US cents, the NovaStake system will initiate its first order at 0.01 lots. If the market moves favorably, the EA will immediately close the first order based on a predetermined pip target (42 pips). Conversely, if the market does not reverse as anticipated, the EA will place a second order with double the volume of the first. Each subsequent order will have a volume twice that of the previous one. When the market finally reverses and the average pips of each order reach 38, the EA will automatically close all orders. However, if the market continues in the same direction and the EA has executed a total of seven orders, the system will close all orders as soon as the portfolio returns to break-even, thereby minimizing portfolio risk. The EA will then wait for a new signal to enter trading anew and generate profits in the next cycle.
For AutoLot_BasePercentOfBalance set to 15:
In this scenario, the EA will trade with greater volume. Based on detailed backtesting data over the past ten years, starting with a capital of $10,000 could potentially generate a compounded profit of $1,736,986. Notably, the equity drawdown relative to the portfolio has experienced a maximum dip of 44.88%.
For AutoLot_BasePercentOfBalance set to 20:
This Setting will initiate the EA with a starting lot size of 0.02 for a capital of 10,000 USD. According to a detailed backtest over the past 10 years, this would lead to a compounded profit of 2,522,430 USD. However, it is important to note that the Equity Drawdown Relative indicates that the portfolio has been down to 87.81% of the initial capital at some point.
On closer examination, the EA experienced a cut loss only once in 2018 due to the initial settings which establish a stop loss at 70%. After the cut loss, the EA resumed trading based on the remaining balance and managed to continuously generate profits until the end of 2024.
The Psychological Impact of Trading
In real situations, such events can have a significant psychological effect. Many traders desire high returns, leading them to take on greater risk. When faced with unexpected market conditions resulting in a cut loss, they may stop using the EA immediately. Some even develop a fear of using EAs altogether, while others hold biases against the Martingale system without fully understanding its mechanics. Many traders exit the forex market due to substantial losses. However, if one chooses to trade with lower risk, they can ensure a steady cash flow, even if the returns are not spectacular.
The main concern regarding the Martingale system that many people hear about is the risk of account wipeout. This system often operates on a "fight or flight" principle, continually doubling the lot size. If the market does not behave as anticipated, losses can accumulate quickly.
Stop Loss Considerations
Many Martingale EAs on the market are built from short backtest data, typically ranging from 1-3 years. When faced with market conditions that differ significantly from those tested, they often lead to losses. A common flaw in many Martingale systems developed by creators is the lack of a stop loss. While this strategy does allow the entire capital to be used for trading, reducing the likelihood of the account reaching zero, it also comes with the risk of experiencing early cut losses.
For this reason, many Martingale EAs on the market do not incorporate a stop loss mechanism. However, in the case of our EA NovaStake, users have the option to disable the stop loss mode (users can set a specific stop loss percentage or choose to turn off the stop loss feature entirely).
Practical Insights
From the graph, we observe that the EA has been able to generate consistent profits since it began trading in 2015. However, nearly $200,000 in profit vanished almost instantly during a trending market phase in 2018.
If users systematically withdraw profits, they may avoid significant losses. However, if someone were to start using this EA during the challenging market conditions of 2018, they could face almost total capital depletion simply by opting for high-risk trading without implementing sound money management practices like setting a stop loss.
In summary, understanding the Martingale system's behavior, incorporating risk management strategies, and recognizing the psychological elements of trading are crucial for traders using EA NovaStake. With careful planning, traders can avoid substantial losses while striving for consistent profits.
NovaStake Trading Strategy
NovaStake enters trades when the chart shows reversal signals, utilizing the Bollinger Bands indicator as the primary signal, while the Stochastic indicator serves to filter out false signals.
A Buy order will be opened when the price chart is below the Bollinger Bands Lower, and the Stochastic indicator must be in the oversold zone. Conversely, a Sell order will be opened when the price chart is above the Bollinger Bands Upper, and the Stochastic indicator must be in the overbought zone.
The sets of Buy and Sell orders operate independently. Both order types can be opened simultaneously but will close their profits separately for Buy and Sell orders. If the EA opens an order and the chart moves in the opposite direction, money management will employ the Martingale technique to recover the situation, aiming to bring the overall profit back into positive territory. Each order will be executed dynamically only when the price chart shows reversal signals.
Recommendations for Using EA NovaStake
Account Type: It is recommended to use accounts with low spreads, such as ECN, Raw, or Pro accounts.
Leverage: Set from 1:100 and higher.
Initial Capital: $10,000 for a standard account or 10,000 US Cent for a cent account (10,000 US Cent = $100).
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