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Posted by 1stepforex on January 2, 2008, 4:59 am
Many would have heard of or known of the double up Martingale
strategy.
Originally, Martingale referred to a class of betting strategies that
was
popular in 18th century France. The simplest of these strategies was
designed
for a game in which the gambler wins his stake if a coin comes up
heads and
loses it if the coin comes up tails. The strategy had the gambler
double his
bet after every loss, so that the first win would recover all previous
losses
plus win a profit equal to the original stake.
The problem with this strategy is if one loses too many times in a
row, it would
break down when the bankroll gets depleted as the losses grow
expotentially.
This changes somewhat if the payout was not 1 : 1 but let's say 1 : 2
In such a scenario, it is then not necessary to double up after each
loss.
Such a situation where the outcome is 50-50 but the payout is 1 : 2 is
unheard of
but can be found with http://www.simple-forex.biz
You could buy or you could sell a FOREX pair with www.simple-forex.biz
and it would
either go up or it would go down and depending on how you are
positioned, you could
win or you could lose.
Now come the interesting part. The payout is uneven. If you lose, you
lose $100 but
if you win, you win $200
Now, let's look at how you could use this to your advantage.
By doing a random pick, you could have a 50% chance of picking the
right direction
the market is headed. If it is a carefully considered pick, you could
have a higher
probability of being right.
Let's say you pick EUR/JPY to be going up and bought one position. If
you were right,
you would gain $200 for a total return of $300. If you were wrong, you
lose the $100
paid for the position.
Let's say you were wrong and the market came down instead and you lost
$100, now you
set up 2 positions for $200 and your total stake is now $200 plus $100
lost earlier,
a total of $300. If you were wrong, your total loss is $300 but if you
were right,
you collect $600 which means a grand total profit of $300
If you were wrong again, being wrong twice now, you increase your next
stake to $300
holding 3 positions now and making $300 in total if you were right and
to be wrong,
you would now need to be wrong 3 times in a row.
Here is what you could do with a $2500 bankroll.
Initiate 1 position $100 if loss -$100 total if win +$200 total
Initiate 2 positions $200 if loss -$300 total if win +$300 total
Initiate 3 position $300 if loss -$600 total if win +$300 total
Initiate 4 positions $400 if loss -$1000 total if win +$200 total
Initiate 6 position $600 if loss -$1600 total if win +$200 total
Initiate 9 positions $900 if loss -$2500 total if win +$200 total
Note that you would need to be making a wrong call on the direction of
the market 6 times
in a row to be completely wrong. If that does not happen, you will be
profitable.
This is a powerful strategy for those smart enough to recognise it. It
is almost impossible
to be wrong 6 times in a row with a random call. What more if you made
a careful study before
picking the direction.
Use this strategy here.
http://www.simple-forex.biz
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