Martingale Systems

One of the oldest strategies of betting this the Martingale system. At first, it was a 50/50 chance of winning like in roulette and can be adjusted for us in stock trading. The idea is similar to a coin toss where you will either double your money or lose it all.
Each time a player loses, he doubles his bet with the Martingale system. It doesn’t matter how many prior bets were lost, this system will produce a net profit. This sure sounds like easy money doesn’t it? In actuality, this is a betting disaster. The reward ratio is a risk because no matter how many bets are made before a winner finally arrives, all profits will be gone in the long run.
When applied to stocks, this system would keep the trader increasing with each trade with no way of predicting how many loses would take place before a win. And in the end, the reward is limited to the position size of the beginning trade. With stocks there are always fees for brokers and some taxes as well, and this is not included here.