If the Martingale system is a joke – then the anti-Martingale is a seriously bad joke. As risk-management it leaves something to be desired.

The anti-Martingale is exactly as the name suggests, the Martingale in reverse, and again it comes out of roulette ‘theory’ – any game where there’s roughly a 50/50 win/lose. Instead of doubling up on your lot size following a losing trade, you double on a successful trade. Continue the doubling and watch the money mount up.

First, with the antimartingale set-up you have to decide when you’re going to stop the madness – because there has to be a stop, the final take-profit from that round of trades or in this case, bets… else the inevitable loss will come. Commonly, 4 successive trades are used as a stop – so that’s 1/16 probability, with everything else equal….

There’s a few added complications with withdrawing a percentage of your equity at certain points in the chain, which is essentially scaling your winners, but that’s the basic scheme.

The plus side
Using this strategy, you have the potential to make a great return from a small starting stake. With all the odds against, as mentioned above. The only logic for applying the system might be in stocks during a sustained bullish market, where successful trades are as guaranteed as they’re ever likely to be.

The minus side
What you aren’t getting are the smaller successful trades, and these tend to be what keeps an account going. You’re committing to slowly and steadily wasting your account, with the possibility that you might get the occasional huge win. So that’s using your head…

One Response to “Forex Risk Management – the Anti-Martingale system”

1. Forex Risk Management says:

   March 4, 2009 at 1:23 pm

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