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# How does the Martingale betting progression

Discussion in 'Trading' started by Ricter, Jul 30, 2005.

1. ### Ricter

look when you're in a positive expectancy environment? Say you've found a way to "cheat" and can get even money payouts with a 60% expectation to win...

2. ### gotmessner

Martingale works when you have:

Unlimited bankroll
Unlimited betting limits

3. ### Remiraz

if u have positive expectancy you don't even need martingale.

Positive Expectancy means your (Win Size x Win%) - (Lose Size - Lose%) is positive.

This number means with every trade, over a large number of trades (100+) you WILL win a certain amount.

Armed with that i don't see why u need martingale which can and will blow out your account.

4. ### gotmessner

I was trying to type what Remiraz has said pretty much. The 2nd part of my message was lost somehow.

Anyway, if consistently win 60%, and you're point up/point down. All you have to do is trade all those opportunties and compound profits.

5. ### nononsense

And you know when to stop.
Don't forget it can be used to rake in big profits AS WELL AS to chalk up tremendous losses.
It's up to you to choose.

6. ### Ricter

Hehe, please pardon me for even posting this. Got into the sauce a bit overmuch last night.

The way I see it, if you have a better than even chance of winning, then in this case the important thing is that you're a bit less likely to see a ruinous string of losses.

Am I correct here, the odds for a string of 5 straight losses?

Even odds
.5 ^ 5 = .0031

60% favored
.4 ^ 5 = .0010

7. ### Remiraz

I once wrote a Roulette RED/BLACK betting simulator to test Martingale on it.

Probability of winning (minus the house edge of 2.7%) is 48.65% (0.4865) and 51.35% (0.5135) of losing.

0.5135 ^ 6 = 0.01833
1.833 percentage chance of having 6 or more losers in a row. Guess what, 10-12 string of losers is common! :eek:

The problem of martingale is not how often u win or how many ur string of losses are. The big big BIG problem is the eventual long chain that will wipe out ur account.

Watch Rogue Trader starring Ewen MaGregor. Nick Leeson was worshipped like a trading superstar because his martingale raked in big bucks. But one long chain took him out.

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