Every trader wants to be profitable in every trade that they make, and this is especially true in the world of gambling. Even though the world of 100% success in every trade or bet may not be practically possible, one can substantially increase the success rate using a strategy that has been around for more than two centuries. Known as the Martingale way, punters and traders can use this strategy for substantial success.
Basics of Martingale Strategy
The origins of the Martingale strategy go back to the 18th century, but it was made prevalent during the glory days of the Las Vegas casinos. Now, it is possible to find almost every gambler use the Martingale strategy for success at online casinos. One of the prerequisites for applying this strategy is to have deep pockets. Martingale way is all about doubling the bet after a loss.
The French mathematician, Paul Pierre Levy, introduced the system whereby a punter/trader needs to double the stake each time a bet ends up on the losing side. If the trader has deep enough pockets to withstand consecutive failures and be able to double the stake in the subsequent occasion, this strategy can be rewarding as one successful trade will be able to recover all of the previous losses and will be able to provide a profit.
Some believe that the strategy is so successful that the roulette wheel has 0 and 00 introduced so as to counter the system and other variations of the game now available. Despite being one of the popular table games at online casinos, roulette manages to counter the strategy by offering an alternative to its two major combinations – odds/evens and red/black.
Does Martingale Strategy Work all the Time?
A real world application of the Martingale strategy requires deep pockets. On paper, the system happens to work extremely well as there has to be a reversal in fortunes at least once. If such an event happens, the trader would be looking at a handsome profit. However, there is little chance of the Martingale system being successful in the real world, as traders simply do not have the unlimited time or money that is required for the system to be 100% successful.
In order to succeed as a trader in real life, it is important to draw a line – even when it comes to the Martingale system. At this limit, the trader will close the sequence as a loss and prepares for a new one. The process of applying a stop loss is one of the basic lessons for any trader. Even though the basics of Martingale system is to do away with this stop loss and just double the stake after every loss, majority of the traders will find it impossible to apply for a long time.
Martingale System or Taking Losses
The dilemma for any trader searching for a great strategy is to go with a pure Martingale system or take the losses on the chin and move onto the next trade. Small traders may find it difficult to opt for the Martingale system, as they must realise that the possibility of losses can be immense – especially if they exit the system much earlier. They would have effectively doubled up the stakes in the first couple of bets and would have lost a huge sum. Looking at the system in a positive way, traders can be looking at a substantial increase in profits from a winning trade as they progress further into the Martingale system. It is common for traders to experience a 50% success rate in terms of the picks. In such a condition, the Martingale system returns can be calculated using the formula:
Expected returns = (N/2) X B
Here, ‘N’ is used to denote the total number of trades while ‘B’ is the amount of profit from a trade.
Advantages of Martingale System:
- Market trend prediction is not required
- Under correct application, it is possible to get incremental profit rise
- The outcome can be computed with regard to profits and drawdowns
- Easy for beginners
Disadvantages of Martingale System:
- The trader is at the risk of a huge risk
- There is a greater possibility of losing big sums of money in the case of a small trader
- The risk to reward ratio is not good for small and medium traders