The Martingale and anti-martingale strategy
It's very important to understand these 2 strategies.
-Martingale rule = increasing your risk when losing !
This's a startegy adopted by gamblers which claims that you should increase the size of you trades when losing. It's applied in gambling in the following way Bet 10$,if you lose bet 20$,if you lose bet 40$,if you lose bet 80$,if you lose bet 160$..etc
This strategy assumes that after 4 or 5 losing trades, your chance to win is bigger so you should add more money to recover your loss! The truth is that the odds are same in spite of your previous loss! If you have 5 losses in a row ,still your odds for 6th bet 50:50! The same fatal mistake can be made by some novice traders. For example, if a trader started with a a balance of 10,000$ and after 4 losing trades (each is 1,000$) his balance is 6000$. The trader will think that he has higher chances of winning the 5th trade then he will increase the size of his position 4 times to recover his loss. If he lose, his balance will be 2,000$!! He will never recover from 2,000$ to his starting balance 10,000$. A disciplined trader should never use such gambling method unless he wants to lose his money in a short time.
-Anti-martingale rule = increase your risk when winning& decrease your risk when losing
It means that the trader should adjust the size of his positions according to his new gains or losses.
Example: Trader A starts with a balance of 10,000$. His standard trade size is 1,000$ After 6 months,his balance is 15,000$. He should adjust his trade size to 1,500$
Trader B starts with 10,000$.His standard trade size is 1,000$ After 6 months his balance is 8,000$. He should adjust his trade size to 800$
-Martingale rule = increasing your risk when losing !
This's a startegy adopted by gamblers which claims that you should increase the size of you trades when losing. It's applied in gambling in the following way Bet 10$,if you lose bet 20$,if you lose bet 40$,if you lose bet 80$,if you lose bet 160$..etc
This strategy assumes that after 4 or 5 losing trades, your chance to win is bigger so you should add more money to recover your loss! The truth is that the odds are same in spite of your previous loss! If you have 5 losses in a row ,still your odds for 6th bet 50:50! The same fatal mistake can be made by some novice traders. For example, if a trader started with a a balance of 10,000$ and after 4 losing trades (each is 1,000$) his balance is 6000$. The trader will think that he has higher chances of winning the 5th trade then he will increase the size of his position 4 times to recover his loss. If he lose, his balance will be 2,000$!! He will never recover from 2,000$ to his starting balance 10,000$. A disciplined trader should never use such gambling method unless he wants to lose his money in a short time.
-Anti-martingale rule = increase your risk when winning& decrease your risk when losing
It means that the trader should adjust the size of his positions according to his new gains or losses.
Example: Trader A starts with a balance of 10,000$. His standard trade size is 1,000$ After 6 months,his balance is 15,000$. He should adjust his trade size to 1,500$
Trader B starts with 10,000$.His standard trade size is 1,000$ After 6 months his balance is 8,000$. He should adjust his trade size to 800$
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