The Dangers of the Martingale Betting SystemPublished on March 20th, 2016 3:30 pm EST
With the "Martingale" betting system, gamblers will make increasingly large bets on 50/50 propositions in order to eventually earn a small profit.
So, let's say that you decide to put down $5 worth of chips on "red" while you are playing roulette. If you lose the bet, you would then place $10 of chips for your next bet. Assuming you win that bet, you would walk away with a total profit of $5 ($5 lost from first bet, $10 won from second bet). Under the "Martingale" system, you would place increasingly larger bets until you manage to win, thus securing a small gain.
So, let's say that you have $500 in your pocket and decide to employ the Martingale system at the roulette table.
You lose your first $5 bet, so you place a bet for $10.
You lose that $10 bet, so you place a bet for $20.
You lose that $20 bet, so you place a bet for $40.
You lose that $40 bet, so you place a bet for $80. You finally win, meaning that your total profit is ($80 - $40 - $20 - $10 - $5 = $5).
The problem, of course, is what happens if you eventually exhaust your $500 bankroll? Even if comes down to you betting $320, you will be busted if you the 50/50 coin flip doesn't go in your direction.
Over time, the return for the Martingale strategy will always be zero. Eventually you will have a string of "bad luck" (or variance) and lose your bankroll. This is a certainty - even if you need to guess wrong on 30 straight coin flips, eventually you will guess wrong on 30 straight coin flips.
There are many trading systems that will advocate a "Martingale betting system" or something similar to it. Don't listen - at the end of the day, all Martingale betting systems will eventually fail. It's a mathematical certainty.