The martingale strategy
10/25/12
Hello everyone! So today I have included a shot of some of my days trades, and want to explain a betting strategy I am a fan of.. This is the “Martingale” method of trade size amounts.
A martingale is any of a class of betting strategies that originated from and were popular in 18th century France. The simplest of these strategies was designed for a game in which the gambler wins his stake if a coin comes up heads and loses it if the coin comes up tails. The strategy had the gambler double his bet after every loss, so that the first win would recover all previous losses plus win a profit equal to the original stake. The martingale strategy has been applied to roulette as well, as the probability of hitting either red or black is close to 50%.
The idea behind the martingale is a simple one: Double your previous loss until you eventually win, resulting in profit no matter what, as long as you are capable of going the distance of course. So generally speaking, if one is capable of maintaining a 70 percent in the money accuracy rate, and on their worst day they lose 4-5 in a row, as long as they have the funds to make it to the 6th trade they hypothetically would never have a losing day again.
I will admit that the martingale system seems much more fail-safe than it actually is and it can be quite dangerous if not used correctly, as it could quickly compound ones losses. However, I do use a variance of the Martingale system myself, and I am a strong believer that if it is used in the proper manner it can be a quite profitable and fantastic tool for a trader to add to their “trading arsenal” so to speak. My recommendations are to either try it out on a demo account (as one should always do with any new type of trading method) or to start with extremely small bet sizes such as one or two dollars. Remember, each trade is a decision made by that individual trader and the level of success achieved with any method is solely based on the skill level of the user. Have fun and happy trading!