Martingale system This system is based on the another gamblers fallacy. During times of losses it increases the position size, doubling the size of the trade after each successive loss. This system convinces the traders/investors that they have a chance of making money through money management. Based on the assumption that after a string of losses you will eventually have a win and when you do win you will recover your losses and make a profit equal to the size of the original trade. Unfortunately two points are against this system: - Statistically long string of losses is possible. - If you start with a trade of $1 and double it at each loss by the time you get to the 10-th trade, you are risking $1,024 to make $1. If you lose again you need to risk $2,048 to make $1. In this case risk/reward ratio is 2048 :1. Martingale system do not work - so never add to a losing position.