"That is not true, I would never do that. I think that would be very negative. If you do that could you imagine the last two months for that player?," Martinez told British media.
"He would never put a leg in or never challenge for the ball. I don't agree with doing that.
"I know you can do that to keep a player for another 12 months but if you're not going to have a player 12 months down the line you need to start replacing him to have a stronger team."
Everton confirmed the signing of Shani Tarashaj, who was immediately loaned back to Grasshoppers Zurich, on Thursday and Martinez said he was excited by the Switzerland under-21 international's potential.
"Shani is an enormous young talent in Swiss football who, without a doubt, will have a great future. He fits in really well to our style and the way we want to play the game," Martinez said.
"He is a family boy, hungry and he is desperate to fight for his place in our talented young squad."
The Toffees, who are 11th in the Premier League, kick off their FA Cup campaign against four tier side Dagenham and Redbridge on Saturday.
(Reporting by Shravanth Vijayakumar in Bengaluru. Editing by Patrick Johnston.)
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