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When should I use Martingale?

Can someone please clarify when it is profitable to use the Martingale strategy (assuming it's used as 1 step Martingale only).

I think I read in Blackjack that if you have any positive win-rate (e.g. 52%+) then Martingale increases your long-term profits and it's +EV (assuming you have the capital to do so).

So in as short and simple an answer as possible, if all trades have an equal 61% probability of winning, will using a 1 step martingale make me more profit then no Margingale at all? Is there any reason or situation where I should use Martingale or avoid it?

For arguments sake, I want to ignore emotional trading and assume all trades are independant (i.e. not doubling up on the same trade in different positions).

Thanks.

Comments

  • BryanMacBryanMac Posts: 851 ✭✭✭
    I am doing a webinar on money management tomorrow might watch that.
    Bryan Mcafee
    Hit me up on skype at Brymcafee (McAllen TX)
    www.tradingaxis.com
  • JensenXJensenX Posts: 4
    edited September 2015
    mosesbet said:

    Can someone please clarify when it is profitable to use the Martingale strategy (assuming it's used as 1 step Martingale only).

    I think I read in Blackjack that if you have any positive win-rate (e.g. 52%+) then Martingale increases your long-term profits and it's +EV (assuming you have the capital to do so).

    So in as short and simple an answer as possible, if all trades have an equal 61% probability of winning, will using a 1 step martingale make me more profit then no Margingale at all? Is there any reason or situation where I should use Martingale or avoid it?

    For arguments sake, I want to ignore emotional trading and assume all trades are independant (i.e. not doubling up on the same trade in different positions).

    Thanks.

    I think the main problem with this question is a calculation of the ITM. How does anyone come up with a reliable ITM number? That would require millions of trades over many years using one strategy (that's never going to happen). Because the ITM can never be reliable, any probability calculations based on it are meaningless.

    Having said that, if we did assume an ITM of 61%, I don't think a 1-step Martingale offers any mathematical advantage or disadvantage over straight trades. 39% of the time you will be wagering a higher amount. 61% of the time you will win those trades. You may as well just keep it simple and bet higher straight amounts.

    Imagine though - you have a bad run and lose most of the martingales. It could lead to inappropriate trading due to emotions. e.g. revenge trading. I wouldn't be surprised in such a scenario that the trader starts taking 2, 3 or 4 (and more) step Martingales, which will most certainly lead to account ruin.

    In this example there's a 15.21% change of 2 consecutive losing trades (a losing martingale). A 23.79% change of a losing then a winning trade (a winning martingale). A 37.21% chance of 2 consecutive winning trades.
  • dear123dear123 Posts: 83
    I think martingale strategy can be riskier in the long term trading. Every google on martingale shows one or two results where traders blow their accounts.
  • BryanMacBryanMac Posts: 851 ✭✭✭
    I dont know if I would call it martingale but scaling your trade sizes with wins and loss's is great way to do it. Straight marty IMO is account suicide.
    Bryan Mcafee
    Hit me up on skype at Brymcafee (McAllen TX)
    www.tradingaxis.com
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