Why Is It Called Martingale?

The betting system is called Martingale because it is named after Paul Pierre Levy de Martingale, the person who invented the strategy back in the 18th century. For your information, the Martingale system is a negative progression betting strategy whereby you double your next bet after a loss is realized. The bet size is reduced down to the default or original stake once you eventually get a win.

For example, if you were to start betting \$10 Black on the roulette table, and you lose that bet, your next wager would be \$20. If that bet is also lost, you must double your next bet to \$40 and so on and so on. When you achieve a win, you have to dial down your next stake back to \$10 and the betting cycle starts all over again.

The reasoning behind the Martingale system is that you will eventually win the biggest bet of each wagering cycle. However, it is a negative progression betting cycle, meaning the risk you incur is way larger than the reward. Case in point: if you lose an initially \$5 bet five times, the total risk would be \$155, while the reward or profit when you win would be a mere \$5 (i.e., \$160-\$155).

All in all, the advantages of using the Martingale system are obvious…

• You will always win the greatest bet in each betting cycle
• It is easy to learn and useIt is a great system for almost any coin toss-like wagers with 50/50 odds
• You do not have to memorize or use complex equations or strategies. The Martingale system is pretty simple and straightforward.
• The Martingale system can be applied to various betting situations, including sports betting, casino betting, forex exchange investing, etc.

Unfortunately, the Martingale system does come with a number of disadvantages, as well…

• Almost all casinos set a betting maximum for all their games
• The Martingale system can exhaust your bankroll quickly, so it won’t work well for gamblers with limited budgets
• Your odds of winning are reduced the longer you bet, so the Martingale system is unlikely to work in the long term
• The Martingale system is not likely to make a profit if used with games whose odds are unfavorable to the player. Sadly, the house edge means you will not likely profit from using the Martingale system on almost all casino games.

The name Martingale we use today to refer to the negative progression trading or betting system was originally derived from the French word “Martingal.” Some French dialects just say Martinga. Either way, it refers to a horse-controlling rope system that is tied around the horse’s neck and back.

The purpose of the rope gear is to steer the horse while riding it, especially controlling its speed and nudging the horse toward the right direction.

So, what does trading or gambling have to do with horses? The French saw fit to call the new betting system Martingale to pay homage to the horse equipment. After all, the aim of the two is pretty much similar –Martingale, just like Margingal, is geared towards controlling or managing your losses by doubling your unit bet after each losing wager or trade.

Paying Homage to the French Mathematician Paul Pierre Levy de Martingale

The Martingale method dates back to the early 18th century when gambling caught on in France. It’s named after its inventor, the famous mathematician Paul Pierre Levy de Martingale, whose penchant for gambling saw him place many losing bets owing to gambler’s fallacy.

Paul argued that if a coin previously landed on Tails, it was likely to land on Heads upon being tossed again in the future. Many gamblers were sold on the concept, so they started upping their stakes after losing, hoping to increase their chances of winning money after placing higher bets.

Soon enough, the Martingale system’s popularity soared in betting markets, with players using it to play roulette, and other online casino games, including blackjack, craps, and baccarat.

Paul Martingale didn’t magic up the betting system. He was well-learned in the mathematics fields of stochastic processes and probability theory.  These mathematical backgrounds helped him make sense of a system that would eventually help players recoup their losses in a game like coin toss with 50-50 outcomes.

Lévy de Martingale’s work and concepts made sense well beyond the gambling world. His grasp and interpretation of stochastic processes and probability theory has had major influence on a wide range of fields. One particular area is finance, whereby the Martingale trading model is used to predict the patterns and behavior of trading vehicles.

What does Martingale mean in FOREX?

The Martingale refers to a cost-average, negative progression trading strategy in FOREX. Martingale strategy involves doubling the size of your Forex trade after each loss so that the first win recovers losses made from all the previous trades plus a profit equal to the original trade size.

For example, let’s assume your base stacking unit or initial bet amount is \$10. If you place the first trade and win, the next trade amount will remain \$10.

However, if you lose after placing the first trade, you should increase your investment to \$20 and double to \$t0 upon losing another trade. This goes on and on until you win a trade, upon which you will revert back to your original unit base trade of \$10.

How Martingale Trading Strategy Works in FOREX Markets

The Martingale betting system, which is popular, involves doubling your position after a losing trade and returning to your default unit trade price after a win. It is incredibly well-liked among players who have an edge in casinos and is also referred to as the Martingale progression or Martingale system.

Although it might make sense on paper, this is typically not a good Forex trading strategy because the risk of suffering significant losses is much higher than the risk of experiencing sizable gains.

This is due to the fact that the Martingale strategy requires an infinite amount of resources and an infinite amount of time, both of which are impractical in the real world.

The Martingale strategy exposes traders to a great deal of risk as well because the size of the trades can grow quickly and a single losing trade can completely deplete the trader’s capital. Last but not least, the Martingale strategy is inappropriate for all market circumstances and can be risky in a market with quick price changes or high volatility.

The Martingale trading method works by enabling you to rake in profits in the short-term and recoup losses in the long-term, despite placing equal or more losing wagers than winning ones. The key lies in understanding the correct sequence of actions based on the results of a particular trade, i.e. when to increase and decrease your stake.

So, as aforementioned, you’re supposed to double your trade amount with a starting one base unit upon losing and decrease to the default unit trade after winning.

For instance, let’s assume your base trading unit or initial trade amount is \$100. If you invest the first trade and win, the next trade amount will remain \$100.

However, if you lose after placing the first trade, you should increase your investment to \$200 and double to \$400 upon losing another trade. This goes on and on until you win a trade, upon which you will revert back to your original unit base trade of \$100.

Does the Forex Martingale trading strategy work?

The Martingale strategy is a widely-used negative progression betting system that entails doubling your position after a losing trade and going back to a default unit trade price following a win. It’s also known as the Martingale progression or the Martingale system and is incredibly popular among casino advantage players.

While this may seem like a good idea on paper, it is generally not a practical Forex trading strategy, as the potential for significant losses is much greater than the potential for large gains. That’s because the Martingale strategy relies on an infinite amount of capital and an endless amount of time to eventually achieve a win, which is impossible in the real world.

Additionally, the Martingale strategy exposes traders to an enormous amount of risk, as the size of the trades can quickly become huge, and a single losing trade can wipe out all of the trader’s capital. Finally, the Martingale strategy is unsuitable for all market conditions, and it can be perilous in a market experiencing rapid price movements or high volatility.

The Benefits – Why Martingale Works Better With Forex

• You will always win the greatest trade in each FOREX trading cycle
• It is easy to learn and use
• It is a superb trading system for almost any FOREX markets with 50/50 odds like currency pairs
• You do not have to memorize or use complex equations or strategies. The Martingale system is pretty simple and straightforward.
• The Martingale system can be applied to various gambling or investing situations, including sports betting, stock markets, forex exchange investing, etc.

The Drawbacks – Why Martingale Strategy May Fail as a FOREX Trading Method

• The Martingale system can exhaust your capital quickly, so it won’t work well for FOREX traders with limited budgets
• Your odds of profiting are reduced the longer you trade, so the Martingale system is unlikely to work in the long term
• The Martingale system is not likely to make a profit if used with FOREX trades whose odds are unfavorable to the trader.

Why is it called a Martingale?

It is called a Martingale because it is named after an 18th-century famous French mathematician Paul Pierre Levy de Martingale, the inventor of the betting strategy. It involves doubling your trading position size after losing trades and reverting to base unit trade size after a winning trade.

The trading strategy shares its core elements with the D’Alembert principle since both are negative progression betting systems.

However, it comes with a more reasonable betting curve than the latter, making it a safer option for FOREX traders.

Since the process of increasing stakes when using the Martingale system is fast, it’s also advantageous because the likelihood of recouping losses is reasonably high. Still, the steady recovery procedure means players need more time to increase their profits.