In its simplest form, the Martingale trading system involves a doubling their every time they experience a losing trade.
The idea is that when the traderWhat is a trader? A trader is a person who buys and sells... More does eventually win, the winning trade will be big enough to cancel out any previous losses and make moneyMoney is a generally accepted medium of exchange to buy and... More on their initial investmentInvestment is the commitment of money or capital to purchase... More.
Does the strategy work?
The Martingale system fails to take into account the very real possibility that a trader will experience a string of losses – each one double the size of the previous one – until their is completely wiped out.
For this reason, the Martingale systemIn its simplest form, the Martingale trading system involv... More can only work in the real world if a trader has access to infinite wealth, as there is no telling when a winning trade will come along. Having access to infinite wealth is near impossible. This is an extremely risky strategy and not to be recommended.
Learn more about managing risk and proper money managementMoney management refers to one of the most important concep... More skills:
What is the Anti-Martingale trading system?
In contrast to the traditional Martingale system, the Anti-Martingale system involves a trader doubling their position sizeIn online trading, the position size is the volume of a tr... More after a winning trade and halving it when they experience a loss.
The idea with this is that there is less involved in increasing position size during a winning streak, therefore enabling the trader to make the most of a winning period while also limiting losses during a losing streak.
In reality, however, it’s important to remember that you run the risk of incurring a big loss on a losing trade immediately following a winning trade.
The Anti-Martingale system is also known as the “reverse Martingale”.
