## What is a Martingale Betting System?

The Martingale Betting System originated from France in the 18th century. It most probably started with coin flipping but remains popular till today. In the realm of forex trading, the Martingale System has been applied to design of EA or expert advisors. It is highly likely that individuals have improvised such a method for their own discretionary trading as well.

### How does the Martingale Betting System work?

It works like this: an individual starts with a small bet in a game of odds. Each time he loses, he doubles the bet. Since a long string of consecutive losses is unthinkable, any person could theoretically win back all his losses plus a small profit on his last trade.

For a person with sufficient capital, the game must be sure-win since the odds of running into that consecutive losing string must be virtually zero.

I wonder then: How many consecutive losses will knock out an individual forex trader if he had a 10k trading capital and started with an initial bet -ahem – trade of \$1?

## So how many losses to lose his money?

2. Initial bet -ahem – trade of \$1
3. After each loss, multiple the bet by 2
Bet (\$) placedCumulative Bets (Losses)OutcomeConsecutive # of LossesCapital left (\$)
11Loss19999
23Loss29997
47Loss39993
815Loss49985
1631Loss59969
3263Loss69937
64127Loss79873
128255Loss89745
256511Loss99489
5121023Loss108977
10242047Loss117953
20484095Loss125905
40968191Loss131809
819216383Loss14-6383

Cumulative losses go parabolic

I was sort of hoping that the answer might be unlucky 13 but no, he losses all his trading capital on trade #14. And Number 14 is also bad because in Mandarin, 4 sounds like ‘死 die’ and is considered unlucky by some Chinese.

BUT BUT if he had more than \$10k trading capital, he can continue betting right? And its impossible to encounter that high number of consecutive losses right? I don’t know the probability of losing more than 13 times in a row but my simple layman logic says – the odds no matter how small are greater than zero (>0) and on a long enough time line – oh well.

## A Martingale Betting System will not work

Because:

1. If you won every time conceivably you will never stop playing.
2. Then no matter how small the odds of losing more than N times in a row might be, if you play infinitely, there will be ONE TIME IT WILL HAPPEN.

But I lie. Because since 13 IS an unlucky number, the trader using this set of trading rules will run out of trading capital to place bet #14. Epic fail.

Finally if you like games of chance, here is another one: Can I become millionaire in 1 month with \$10k forex trading capital?