Well said Jeff!
No Martingale!....
I am a fresh Software Engineer just approaching Trading languages...
'Martingale' is a strategy in which you continuously place order, the more orders you place, the more money you invest. This is a strategy in which you invest more and more money even if you are in loss. It means that if you lose, you increase more money to invest in the next order until you win. Of course if you win, you can also make up for all the money you lost in the last orders as well as winning some profit.
Those who play with Martingale strategy have their own reason: it just likes heads or tails. The chance of winning or losing is 50%. Their bet in the first trade is $1. If they lose, the betting money will be raised to $2. If they continue to lose, they will double the betting money for the same choice and continue to do that until they win. the reason is that the probability of continuous loss is very low. The first chance to get loss is 50% but it will fall to half in the next trade order. For example: 25% for the second order and 12.5% for the third order. As the chance of loss drops, the money to bet should be increased.
In theory, you might think Martingale strategy is right. On the aspect of probability science, yes. Since the probability is 50%, the chance of the same situation happening over again is low.
However, if you think about it in behaviorism, it’s hard for a person to bear with the strain of increasing his money in the next trading order. In some first trade orders, it’s only 1$-2$-4$-8$ ,…but the more trades is made, the more money have to be placed. That’s when a person feel strained. Players will be anxious and worried. When their sense get controlled by emotion, they will lose all they have.
To be able to use Martingale strategy, you have to keep a stable number in your account. Sometimes, you just need a few orders to win, but sometimes, it take you a lot of orders as well as money to find profit. But the profit after deducting all the expense is just small. This is really unreasonable in economics: Lot of money given, little money earned. Sometimes, those money is just for showing since it is too small to use because all of you tradings succeed in the first try. The probability for the head of the coin to appear in 10 times consecutively is not 0%, it just has not appeared yet. And when it appear, you will lose all you gave. So, is it worth trading? Once you win, you win a little money. Once you lose, you lose all.
This kind of death is just like “once and for all”. This kind of death is just like “once and for all”. You may get excited once in a while to earn money but just in one moment, you will lose all.
Jessy.
