Anti-Martingale
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The Anti-Martingale betting strategy is the opposite of the better known Martingale approach. In a classic Martingale betting style, gamblers will increase their bets after each loss in hopes that an eventual win will recover all previous losses. The Anti-Martingale approach instead increases bets after wins, while reducing them after a loss. In this manner, the gambler will benefit from a winning streak or a "hot hand", while reducing the losses while "cold" or otherwise having a losing streak.
One activity where money management based on an Anti-Martingale approach has a recognized value [1] is speculation and trading. Many markets have some cyclical component to them, and the approach of an individual speculator or trader may only be appropriate for one portion of that cycle. Using an anti-martingale risk management scheme will increase profits during time periods when a trading approach is working well, while automatically decreasing exposure during portions of the cycle where trading is unprofitable. This is believed to decrease the risk of ruin for trading.
[edit] Notes and References
- ^ See Van K. Tharp's "Trade Your Way to Financial Freedom" or K. Tharp's investing rules
