Martingale vs Anti-Martingale: Position Sizing Showdown
Martingale doubles down after losses; anti-martingale doubles down after wins. Learn which approach actually works. Why doubling down blows accounts — and.
What Is Martingale?
The Martingale system doubles position size after each loss. Starting with $100: lose → bet $200 → lose → bet $400 → lose → bet $800. The theory: one win recovers all losses plus the original $100 profit. Origin: 18th-century French gambling.
Why Martingale Fails in Trading
- Exponential losses: 6 consecutive losses (common in trading) = $100 + $200 + $400 + $800 + $1,600 + $3,200 = $6,300 risked to win $100
- Account limits: Your account can't sustain the doubling — you hit margin limits before recovering
- Spread costs: Each doubling also doubles spread/commission cost
- Markets aren't fair coins: Price can move against you for extended periods
What Is Anti-Martingale?
Anti-Martingale (also called 'pressing your advantage') increases position size after wins and decreases after losses. The logic: ride winning streaks and minimise exposure during losing streaks. This matches the reality of trending markets.
Practical Anti-Martingale
(1) Start with 1% risk per trade. (2) After each win, increase risk by 0.25% (max 2%). (3) After each loss, decrease risk by 0.25% (min 0.5%). (4) This compounds gains during streaks and protects capital during drawdowns. It's how professional traders scale up.
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Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70-80% of retail investor accounts lose money when trading CFDs. Backtesting does not guarantee future results. Always consider whether you can afford the potential loss of your capital.