The Martingale strategy's method of doubling your investment after each loss ensures that successful investments cover previous losses. This technique has worked so well that it's been used by gamblers for centuries, and in modern times, it works just as well for crypto investors. As long as you approach it logically and have plenty of funds, this strategy can be very useful.
What Is the Martingale Strategy? The Martingale strategy states that betters should double their next bet every time they take a loss. This strategy theoretically works well for investing, but it requires deep pockets and careful decision-making.
When used in crypto investing, the Martingale strategy is very simple: An investor decides whether they think a crypto’s price will go up or down and invests a set sum of money accordingly. If they lose this money, they double the amount they invested and try again.
As probability theory shows, you can recover all your losses as long as you keep betting until a win. When you eventually do win, you make back all the money you lost, plus extra on top. The Martingale strategy works best when the odds of a crypto going up or down are at 50/50, but as long as you keep going, it even works in situations with very imbalanced odds.
The main challenge is simply that you have to have essentially unlimited funds. If you’re not able to constantly place new investments, it can be hard to recover after a series of losses.
History of the Martingale Strategy This trading strategy gets its name from 18th-century betting games in France. The strategy was initially used for succeeding at a game where a gambler would flip a coin and win if the coin came up heads. It became very popular among gamblers, and eventually, the strategy reached the attention of mathematicians.
In 1934, Paul Pierre Lévy used newfound probability theory concepts to analyze the strategy. Lévy found that with infinite wealth, this strategy would always result in profit for a gambler. Statistician Jean Ville then coined the name "Martingale Strategy" in 1939.
How Does the Martingale Strategy Work? So how does a probability theory originally used for coin tosses work for crypto? Of course, crypto isn't gambling, because an informed investor has a reasonable certainty as to how their money will work. However, the Martingale trading strategy can still be a useful way of handling money.
It starts with the investor selecting the amount of money they want to invest over a certain period of time. This money functions as your initial bet. At the end of the time period, you analyze your profits and losses. If you gain money, you invest the same amount of funds all over again. If you lose money, you double the amount of money you invest, wait for the same time period and assess your funds.
For it to work, the Martingale strategy involves doubling your investment every time you have a loss, instead of only doubling your initial bet. So if you lost your first $100 investment, you would invest $200, and if you lost that investment, you would double again and invest $400.
The Martingale strategy is useful for a variety of types of crypto investment. Some people use it simply to buy a cryptocurrency, and see how the crypto's value changes. Others use it while day trading, and count an entire series of buys and sells as a single "win" or "loss." You can even use it when trading crypto options.
Benefits of Using the Martingale Strategy Why is the Martingale strategy so popular even though it requires huge sums of money? The answer lies in the fact that it comes with many advantages for the savvy investor.
Takes Emotion Out of Investing One of the helpful things about working with a trading strategy is that it keeps your emotions from affecting your investing. In many crypto trading situations, getting scared by a market downturn or jumping on a trend due to fear of missing out (FOMO) can cause financial problems. Sticking with a clear, simple and easy-to-use rule lets you make choices based on logic, not feelings.
Flexible Unlike other crypto trading techniques, you don't necessarily have to work with a certain exchange or buy a certain type of crypto when using the Martingale strategy. It’s essentially a money management strategy, so it can work in just about every situation: You can apply it to purchasing a meme coin, or you can use it while shorting a crypto with options.
Break Even After Major Losses The Martingale strategy is one of the most reassuring strategies available. In theory, by repeatedly doubling down on losing bets, you will eventually even out a win. This is because the size of the winning trade will be more than enough to cover the combined losses of all the previous trades. This strategy aims to promote a loss-averse mentality and tries to improve the chances of you breaking even. As long as you have plenty of funds, you can reassure yourself that you'll eventually break even. The strategy performs particularly well in choppy markets because it helps you make back money to cover occasional crypto price drops.
Risks of Using the Martingale Strategy Though this strategy has promise, it's also classified as high-risk. There are several potential problems associated with using it.
Exponential Losses The investment amounts used in the Martingale strategy follow an exponential growth pattern. You have to double your investment every time you take a loss, so you quickly end up handling major amounts of money. For example, if you started with $1,000, ten losses in a row would require you to invest $1,024,000 in the following bet. This can result in disastrous losses which usually cause a trader to quit investing before they can make their money back.
MCOEX Innovation Martingale Strategy Hedging Strategy Trading Agreement
The main reason why MCOEX is popular with the public is that it simplifies the previously seemingly complicated and difficult transactions into a multiple choice question. Investors do not need to consider closing positions, but only need to buy up and buy down. Therefore, it is very easy to operate in option hedging transactions, and only need to connect computers to trade, which satisfies the pleasure of instant trading for retail investors.
Unlike futures, MCOEX options have a mechanism of fluctuation pin leading to position explosion, so the risk of MCOEX options is lower, which is more suitable for the current unpredictable market.
In the past, financial transactions seemed to be high, and the threshold seemed to be high, requiring high-end people to contact. However, the simplicity of MCOEX attracted a large number of ordinary investors, and anyone could enter the market to trade.
Hedging Strategy Trading Agreement
Leverage Options Hedge Fund and Martingale Trading Strategy
Principle of MCOEX Option Hedge Fund:
Suppose Mike spent $100.000 on a new sports car. If he crashes his new car, it will bring him a lot of losses. To pass on this risk, Mike bought an option hedge fund for his car at an insurance company for $150 a month. In this way, after the accident, the risk of paying to repair the car is transferred to the option hedge fund company. No one in the world is willing to take risks for no reason. This option hedge fund platform will take this risk and get corresponding benefits.
MCOEX adopts the six times Martingale strategy, allowing option hedge funds to take only the remaining 1.5625% of the risk. While MCOEX option hedge funds are all executed by chain contracts, as long as you follow the Martingale strategy Order, when the sixth order loses money, the contract automatically executes compensation on the chain.
The profit probability is 98.4375% According to the mathematical probability theory, if the winning rate of each exercise is an independent event, then it will ultimately be profitable.
martingale trading strategy monthly gain of 23.8%
The platform does not touch user assets, so all asset permissions are executed by the chain contract. The platform is developed based on the underlying technology of public chain ETH, which has the strongest security and widest application in the world, to ensure network security, continuity and expansion. As long as the ETH network does not collapse, funds will always be safe!
Make trading easier——MCOEX