Do you know if the anti-martingale strategy makes money in trading?
Well, I made a trading simulator to find out!
I tested the Martingale strategy in a video a while back.
Even though it grew the trading account really fast, it was a stupid strategy.
I mean, it blew up the account 100% of the time in the long run.
Even though we can quickly grow the account more than 10 times in the short term, we will lose everything eventually with Martingale.
But what if you do Anti Martingale or Reverse Martingale?
Does anti-Martingale make more money without blowing the account?
Well, I tested it in this video to find out.
You see, in a normal Martingale strategy, you basically double down every time you lose.
If you risk $10 on a trade and you lose, no problem.
On the next trade, the normal Martingale says to risk $20.
If you lose that one, too, now you risk $40.
You keep doubling and doubling your trade size with every single loss.
The idea is that eventually, you’ll get a winning trade.
And when that one win finally hits, it’s big enough to cover all your previous losses and still make your original profit.
It sounds good in theory, but as we saw in the testing video, it’s a guaranteed way to go to zero in the long run.
The anti-Martingale strategy, on the other hand, does the opposite.
Instead of doubling down when you lose, you double down when you win.
So, if you risk $10 on a trade and you win, on the next trade, you risk $20.
If you win that too, now you risk $40.
You keep doubling your size on every single win.
But the moment you get a losing trade, you immediately reset.
So if that $40 trade loses, your very next trade goes right back down to your original $10 risk.
The whole idea is to keep your losses small while trying to ride a winning streak to massively grow the account.
But to test if this actually works, I made a trading simulator.
It will make 1,000 trading bots take 1,000 trades at the same time.
But first, we need a baseline, something we can compare the results to.
So, in the first test, I ran a simulation without any Martingale or other growth rules.
I just used a 1-to-1 reward-risk ratio.
I set the starting account balance to $1,000.
I risked 1% of the starting account balance per trade and used a 55% win rate.
When I ran the first baseline test, this is what the account growth looked like.
The blue lines are the account growth of the 1,000 individual trading bots.
And the red line is the median line.
It shows the true middle of all these blue lines.
We will use this median line to see whether the growth strategy is working or not.
In the first test, it looks pretty good.
The account grew linearly in the long run.
In test 2, I ran the normal martingale strategy.
This time as well, the account was growing nicely.
But this is how it fools beginner traders.
As you can see, even though the normal Martingale made money initially, it lost money eventually.
So in test 3, I ran the anti Martingale.
But the funny thing is, it pretty much immediately started to make a loss.
Some trading bots were making a lot of money, but the median line was showing the reality.
Anti-Martingale’s profit line moves opposite to the normal Martingale strategy.
Its median continuously moves in the downward direction.
In fact, anti-Martingale might be worse than the normal Martingale.
At least the normal Martingale has a decent probability of making money initially.
This anti-Martingale has a higher probability of losing money.
So, don’t use this stupid Martingale system.
Both Martingale growth methods suck.
Just use normal compounding methods.
The compounding method I personally use right now is risking a percentage of the current account on each trade.
It also performed the best when I tested it in a previous video.
Check it out if you want to learn more.
Thanks for watching.