Is Martingale really dangerous? - Page 2
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Thread: Is Martingale really dangerous?

  1. #11
    Quote Originally Posted by ;
    1. Not at all. It could come anywhere. It could be the very first trade, the sixth trade, the middle trade or the last trade. But normally, there will be approximately one enormous loss in every 9,500 trades. Of course they will be clustered. If they really came just at the end of each series of 9500 transactions that would be a really non-random event. I wouldn't assume such a strange thing, at least not while sober.

    2. Right, the gain at the conclusion of any successful martingale cycle is simply one unit because:

    2^x = (1 2 4 ... 2^(x-1)) one
    You're right, I didn't read your post correctly!

  2. #12
    Is the sky blue? Is grass green?

    Buddy: not much of a sample size there.... Let's see it more than 5 decades....

    Quote Originally Posted by ;
    Martingle or anti-martingle - Risk Management is key. That determines the achievement of a egy. Having a restricted maxloss cutoff, this monster can be tamed. This can be a 4 pair test with max -5% open position!

  3. #13
    Quote Originally Posted by ;
    : not a great deal of sample size there.... Let's see it over 5 decades....
    You're correct. My plan would be to rake in 10% a month. So even with a few -5% cease outs - it will not be too bad!

  4. #14
    Thank you men. All of you made some interesting points. I am gonna research the topic deeper, particularly on a intraday/volatility basis...

  5. #15
    Quote Originally Posted by ;
    Ummm, you forgot to lay down your $640 bet.

    Your actual cash flow looks like this:

    Bet $10, shed it, complete loss = $10
    Bet $20, lose it, complete loss = $30
    Bet $40, lose it, total loss = $70
    Bet $80, lose it, total loss = $150
    Bet $160, lose it, total loss = $310
    Bet $320, lose it, total loss = $630

    At this point your wallet is lighter by $630. Now wager $640 and you decide to double. So you lay down this wager. Your wallet is currently lighter by $1270.

    Now if you win, you get your original $640 back plus an additional $640 in winnings. The dealer hands you $1280.

    You are now ahead by only $10, or just one unit. To observe the equation for why this can be obviously so, see my post right before this one.

    Not correct.

    I didn't neglect to lay down the 640 wager and my wallet is not milder by 1270.

    It is only POTENTIALLY lighter, (see floating P/L) until the wager has concluded.

    Although I've made bets in some sequence, Martingale has the purpose to observe the whole previous sequence as a single wager versus the current wager.

    I.e.: I'm down 630 (regardless of the number of previous bets) and the potential profit of my current wager (640 X2 = 1280) will erase all of the prior losses and place me profit by: complete profit of current wager devided by 2 plus ten. (650)

    The potential loss is only 640 which I add to the lost 630 and the next bet size will take care of the combined loss. The outcome is always the exact same relative to wager size.

    It isn't important how long the sequence is, whether two bets or 100 bets.

    Should I wager 10 and I shed, I'm down 10. I win the next wager at 20, I receive 40 less the 10 I dropped on the initial wager, I'm better off by 30 and not 10 as you say.

    Should I bet and lose 3 occasions, I'm down 70 (-10, -20, -40). I make the next wager with 80 and triumph, I'm up 160 not as what I dropped in the prev. Sequence (-70) and that I leave with 90 better off (not 10)

    I think no one would even consider talking about Martingale if one had to install 640 to win 10....and please, where down the line has the risk/reward ratio shifted from 1:2??

    The entire idea about Martingale would be to maintain the r/r steady throughout the match, however many losing bets in a sequence.


  6. #16
    ...I should mention since you statet Cap,

    on a winning wager the result is always 1 unit - but not the very first unit (10)that you state, but the current wager unit - in - instance 640....or whatever the (unit)size of the winning wager.


  7. #17

    .. .actually, please take my apologies - you're correct. I employed a rew. /risk ratio of 3:1 rather than the given 2:1 that is the underlying standard.

    Nevertheless, the appliion of this egy in the right environment (i.e. a game with 50% likelihood and sufficient capital, chips, etc.) can allow you to come out on top.

    Of course, casinos have taken care of that by putting an ever so slight margin in their favour (green ) in addition to limiting the bet size.

    In trading, however, the trader has some more influence in putting their particular parameters in place according to his/her research of chances, r/r pos. Size, limits and stops.

    So, if for example R1 (your risk per trade) is constant, your odds of winning is 50% along with your trade frequency is high (in order to capitalize on initially compact bet sizes) and a constant R-multiple of 3 percent winning trade, employing Martingale will have a beneficial impact on your bottom line.


  8. #18
    Quote Originally Posted by ;

    .. .actually, please accept my apologies - you are correct. I always applied a rew. /risk ratio of 3:1 instead of the given 2:1 that is the underlying norm.

    Nevertheless, the appliion of the egy in the ideal environment (i.e. a game with 50% probability and sufficient funds, chips, etc.) can let you come out on top.

    Obviously, casinos have taken care of that by putting an ever so slight margin in their favor (green zero) in addition to restricting the bet size.
    They do limit the bet size for that reason, but they would still win in spite of an unlimited bet size provided that they maintain a little edge (the 0,00 as you said). No finite account size on the player's part will probably be sufficient to beat it. You are likely to find a hundred different mathematical proofs of the round the web, but I think they're all based on the comparitive probabilities that the player will double the account size vs. going broke. For any restricted account value, the probability of decreasing the account size is equal to the probability of losing it all (at a fair game with no edge to side).

    Quote Originally Posted by ;
    In trading, however, the trader has some more sway in putting his/her own parameters in place based on his/her research of opportunities, r/r pos. Size, stops and limits.
    I concur; this really is the secret. In case you've got a positive edge then it is possible to come out ahead. But that isn't due to the martingale, it's due to the edge.

  9. #19
    I concur, Cap88 -

    The border is the nearest thing to a grail, provided all other elements such as capitalisation and money-management are managed apprpriately.

    There's a range of new talks within this one....

    I go for a math lesson now, haha


  10. #20
    Quote Originally Posted by ;
    I concur, Cap88 -

    The edge is the nearest thing to a grail, provided all other elements such as capitalisation and money-management are managed apprpriately.

    There is an array of new talks within this one....

    I better go for a mathematics lesson now, haha

    as you're doing that, I will go take a trading lesson. You would probably laugh in the event that you saw a few of common things I mess up. On the martingale, I actually learned about the mathematics behind it . . .you guessed it! I dropped a bunch of money years ago trying to use it. I eventually got so frued once I couldn't know why it didn't work I sat down and worked it out for myself.

    On a more general note regarding this thread, I would encourage anybody who's interested in egies like this, and is not convinced by (or interested in) the mathematics, to try out the egies on a demo account. That way they could learn the drawbacks and hard lessons without losing real money like I did.

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