Martingale Betting
Increasing bet size after a loss is known as a Martingale system. It only works if we have unlimited capital.
One of the worst Martingale examples is flipping coins and doubling bet size after each loss. This is a game with zero expectancy.
It supposedly works like this. Bet $1 on the flip of a coin. After each win there is profit of $1. After each loss the bet size is doubled so when the next win comes there is a profit on the series of bets of $1. It seems like a sure method.
The problem comes when there is a long series of losses, the amount risked becomes very large - after 10 losses in a row $1,024 is the next bet and $1,023 has already been lost. The risk can be enormous and the return is only the original bet - $1.
This is a game that is only successful if the player has infinite capital and if you have that why are you reading this?
Copyright 2002, Larry C. Sanders
Last update 2002.04.12