Originally Posted by

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Even if a trader has a high win rate like 60 percent, the martingale would nevertheless finally wipe out the account. The reason is that for any finite account fairness, there's maximum number of instances you're able to double the transaction amount before you bankrupt the account. And that series of losses isn't as uncommon as people think.

Suppose you have $1000 and you begin with a $1 commerce. How many times can you shed, before running out of funds doubling the amount of the next transaction every time? Let us see...

1, 2, 4, 8, 16, 32, 64, 128, 256, 512, 1024, uh ohhhh!

10 losses in a row and you are done.

But you think, But how likely is it that I will get 10 losses in a row? I've got a 60% win rate after all.

Well, let's see. The likelihood of 10 losses is 0.40 to the tenth power. That is a pretty modest number: 0.0000105. That is roughly 1 time in every 9,500 trades. Or roughly 9-1/2 1KT traders. : So for every 10 1KT traders who use martingales, odds are, one has really gone bankrupt doing it.

Another way to check at is if you are a scalper and perform 100 transactions a week, you are going to go bankrupt about after every 95 weeks, or about once every couple of years.

This isn't accurate of course, but it provides a fantastic idea of the realities involved.