As many experienced currency traders in the foreign exchange market know, there is a winning strategy called the Martingale System. Many casinos, including the gambling stations in Las Vegas, say that it is 100% profitable, and is actually a challenging yet fun system to employ. However, since it is based on a mean reversion theory, which means that one wrong move can equate to no longer having a good financial future, you’re better off knowing more about it before you jump ship.
The Martingale System 101
The Martingale System, introduced and developed by mathematicians Paul Pierre Levy and Joseph Leo Doob in the 1900s, has been around for over a century. Since it is focused on the theories of mean reversion and probability, it is considered as a high-risk system.
The Martingale System takes into account the popular trading approach of “doubling down”. It starts with an initial bet, and every time that initial bet becomes a loss, the wager is increased. With ample time, a single winning trade makes up for the earlier losses.
How the System Operates
If you want proof that it is a profitable system, know that the effectiveness of the Martingale System is the chief reason why the wheel of the roulette has 2 markers, in addition to odd/even bets; it has a 0 marker on one end and a 00 marker on the other. For instance, if you begin betting with 1.805 with the CHF/USD pair, you can “double down” by adding a 0.001 wager with every loss. If you “doubled down” 10 times, for instance, you can achieve a 1.815 win.
Free Reports:
The Martingale System works in the favor of the currency trader since the value of currencies rarely reaches anywhere near 0; a country cannot easily go bankrupt. Also, currencies tend to follow a trend, and usually, trends last a long time. Therefore, if he wins at one point, he’s looking at a streak of wins for a long time.
The Final Word
The Martingale System may be a profitable system for a currency trader, but he needs to take matters seriously. He has to remember that with the system’s employment, the risk for a loss is far greater than the risk for a win. Granted that he’s extra cautious, and has an infinite (or almost infinite) stream of financial backup, why not give it a try?
By MTrading.ph – a Forex company from Philippines.