What do a trader, a roulette gambler, and a lion trainer have in common? We have found this common trait.
A trick when a trainer puts his head inside a lion’s mouth is very popular in circuses all over the world. Even knowing that the lion is a circus animal and that it knows this trick, the audience still watch what is happening on the stage with a fainting heart.
So what if it is a circus lion? It still can bite the head off. A trader has almost no audience in the financial market. However, he has to do the trick “put your head inside the lion’s mouth” just as frequently. Martingale is a casino gambling system, in which you are supposed to double the bet each time you lose, and to continue with your plan hoping that you will suddenly win and, after all, bring back all the money you have spent with a small percentage of profit.
This system transferred from casinos to the trading sphere. If you lost 200 dollars — bet 400 on the same thing. If you lost 400 dollars — bet 800. If you lost 800 dollars — bet 1600. A moment of tension, drums rolling, you won 3200. Or you did not win. Martingale is less predictable than a circus lion. Especially because sooner or later you run out of money and have no funds to double the bet.
Life is easier for the trainer, indeed.