That makes all the difference in the world. I think that's why this is so confusing. I caught that on page 2 when he said that with $25 in hand and a bet of $25 you end up with $75. I thought I was just going crazy.
To clarify: you double you bet if you win. So, if you bet $50, and you win, you get back $100. If you lose, you get back nothing. Another way to look at it is, if you have $100 and you bet $50, your cash will be $150 you win and $50 if you lose. I keep switching between the two forms of notation. Maybe that's why it's confusing to a few people.
you'd need to have something so that if you have lost the first two, you can still win. so in this case, you'd have X (first round) +2x (second) +4X (third round) = 200. so your max drawdown can be to about 29. and that would mean open bet about 35.
I'm not sure the betting math is right here. In round two, you have $50 on hand. You bet $25. You win. You back back $50. But since you paid $25 to make this bet, your total cash on hand is $75, not $100.
First true break-thru insight!: you'd need to have something so that if you have lost the first two, you can still win. the second point is some what off the mark and the third point completely. But the first point you made is big conceptual step.
Sorry if I didn't make that clear. Essentially, the payoff of each bet is actuarially fair to the probability of those payoffs. So HINT #3 this should rule out both simple martingale and anti-martingale strategies (but not all complex strategies that are either martingale or anti-martingale like)
oops, yeh, i calculated wrong. i'll let others go along with this...thanks for making me put on my thinking cap for a little bit on a non-trading day before dinner...
Ok my last guess. 37.50 37.50 If you win first 2 flips or lose first 2 flips continue with 25 50 100. If you win ONLY 1 of first 2 flips, continue with 50 50 100.