The reverse martingale strategy actually works well in both casinos and markets (from The Psychology of Magicians).

「The reverse Martingale strategy seeks bigger risks while you are on a winning streak, but it actually works well in both casinos and markets.A smart gambler knows to increase his stake within a certain limit while winning consistently. The same applies to trading and investing. A functional position-sizing system demands increasing position size when you are making money. This applies to betting, trading, and investing alike.”

I had always found the word “Martingale” a bit terrifying and disliked it.

Oh, so reverse Martingale is acceptable after all!.

By the way, here are the results of the pure Martingale EA I released last year (lol)

If not for two consecutive initial drawdowns...

It feels like it takes about six months to recover one drawdown.

The fate of small gains and large losses... sigh

Still, “cut losses, let profits run” is perhaps the golden rule of the market.

In that sense, reverse Martingale limits losses, so it adheres to the golden rule.

The author strongly endorses reverse Martingale,

and I thought I might give it a try.

For example...

・Deposit only 10,000 yen into an FX company with 100% deposit bonus.

・Enter a trade with a risk-reward ratio of 3. If you lose, force a stop-out → re-deposit.

First win: 20,000 yen (balance + bonus) + 60,000 yen (profit) = 80,000 yen

Second win: 80,000 yen (balance + bonus) + 240,000 yen (profit) = 320,000 yen

Third win: 320,000 yen (balance + bonus) + 960,000 yen (profit) = 1,280,000 yen

・Withdrawal: 1,280,000 yen − 10,000 yen (bonus) =1,270,000 yen

What are the odds of three consecutive wins with a risk-reward of 3?

Could one endure the long losing streaks that lead up to it mentally?

Would you be able to calmly perform trades with a slot-machine-like mindset?

These are concerns, among others.

But it seems a little interesting (laughs)