Martingale and Anti-Martingale Trading Systems
Both martingale and anti-martingale are position sizing strategies, which can be used to win trades and/or to maximize profit from trades. Remember both are high-risky trading strategies, are not at all suited for inexperienced traders and traders with low risk tolerance, and need very strict money management.
Martingale is the position sizing system that includes doubling position sizes after each loses. The idea behind it is no trader can lose a series of consecutive trades as the market will reverse at any time. By doubling the position size, a winning trade can thus recover previous loses and can yield profit. In a falling market the average entry price for entering trades also falls because of falling stock, equity or currency prices. Martingale trader must ensure virtually unlimited supply of money so that he/she can remain alive in market till he/she wins. Also there is chance of margin call if trades are done using burrowed money.
Anti-martingale is just opposite to martingale system. Here the trader doubles his position size after every trade he wins. The idea is to maximize the chance of profit in a bullish market. Like martingale it is also a risky practice as traders can lose more than the accumulated profit amount by losing only one trade.
Martingale is the position sizing system that includes doubling position sizes after each loses. The idea behind it is no trader can lose a series of consecutive trades as the market will reverse at any time. By doubling the position size, a winning trade can thus recover previous loses and can yield profit. In a falling market the average entry price for entering trades also falls because of falling stock, equity or currency prices. Martingale trader must ensure virtually unlimited supply of money so that he/she can remain alive in market till he/she wins. Also there is chance of margin call if trades are done using burrowed money.
Anti-martingale is just opposite to martingale system. Here the trader doubles his position size after every trade he wins. The idea is to maximize the chance of profit in a bullish market. Like martingale it is also a risky practice as traders can lose more than the accumulated profit amount by losing only one trade.
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posted by Daniel Pipitone at
5:25 AM
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