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 FOREX.
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.
