Martingale
Martingale doubles position size after every loss, betting on eventual recovery - the fastest way to ruin in trading.
Martingale doubles the position after every loss so one win recovers everything. The sizes grow exponentially and one losing streak wipes the account - it is the fastest road to ruin.
Martingale is a betting system where the position size doubles after every loss, so a single win recovers all previous losses plus the original profit. It works flawlessly in theory and fails catastrophically in practice: the sizes grow exponentially, one long losing streak exhausts the account, and real markets have gaps, margin limits and broker stop-outs that the system cannot survive. It is the most common hidden logic inside failed trading systems.
How It Works
- Double size after each loss
- A single win recovers all prior losses
- Requires unlimited capital and no gaps to survive
Trading Tips
If a system or signal seller mentions doubling after losses, run
Broker margin and stop-out levels end martingale runs long before recovery
The risk is not the win rate - it is the tail of consecutive losses
Martingale Example
Say you start at $10 and double after each loss: $20, $40, $80, $160, $320. Five straight losses, utterly routine, demand a $640 sixth bet to recover $10 of profit. The sixth loss costs $1,270 chasing ten bucks.
How Traders Use Martingale
Never martingale, in any disguised form: averaging down without a plan, doubling lots after losers, recovery mode. The math guarantees eventual ruin against finite capital and table limits.
Related Terms
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