Martingale Strategy¶
A martingale strategy is a position-sizing method that doubles the bet after every loss so that the first win recovers all prior losses plus one unit of profit. The approach originates in 18th-century French gambling and requires an unlimited bankroll and no position-size ceiling to function with mathematical certainty. In real markets neither condition holds, making martingale a high-probability-of-small-gains system that carries a small but compounding probability of total account ruin.
HOW IT WORKS¶
Starting from a base stake B, the required position size after n consecutive losses is B × 2ⁿ. Cumulative capital at risk after those losses is B × (2^(n+1) − 1), which grows exponentially. A $100 base stake surviving 10 straight losses demands an $102,400 next position and $204,700 in total committed capital—all to net $100 on the eventual win. Because losing streaks become near-certain over hundreds of repeated attempts, the strategy redistributes expectancy rather than creating it: doubling the stake changes the outcome distribution, not the underlying edge, which remains negative whenever per-trade expectancy is zero or worse after costs.
IN TAPEBOARD¶
Tapeboard's paper trading simulator lets you run martingale sizing against real market data without risking capital. Load a mean-reversion strategy, set a doubling rule on each stopped-out loss, and the equity curve will show the characteristic long flat periods interrupted by steep drawdowns as losing streaks extend. The position-size calculator in the trade ticket accepts manual lot entries, so you can verify each doubling step before sending a live order. Tapeboard does not enforce a martingale preset because the strategy conflicts with sound position sizing principles; the tools are there to model and stress-test it, not to automate it.