Martingale or d'Alembert systems seem to be in high favor with some traders, so let's just estimate after how many trades a martingale system will blow your account. The system increases - usually doubles - your stake after every loss. The theory is that you can not lose, as after so many losses eventually you'll win and get all your money back.

Assume a system with a 50% win rate. You invest 1% of your equity per trade. After every loss you double your investment: 1%, 2%, 4%, 8%, 16%, 32%... that's a total 63% after 5 losses, so the sixth loss will give you the margin call.

With a 50% win rate, the probability of 6 consecutive losses is

The estimated number of trades until the margin call likeliness exceeds 50% is

(precisely it's log(0.5)/log(1-0.015625), but that needs not bother us here). With one trade per day, your account will last about 2 months. A higher win rate, such as 75% or 90%, won't help because then the average trade loss would be accordingly higher and the required loss streak shorter.

By the way, if someone wants to sell you his system or EA, you can often see from the equity curve if it's a martingale system. The equity curves of martingale systems have telltale sawtooth dents.

Assume a system with a 50% win rate. You invest 1% of your equity per trade. After every loss you double your investment: 1%, 2%, 4%, 8%, 16%, 32%... that's a total 63% after 5 losses, so the sixth loss will give you the margin call.

With a 50% win rate, the probability of 6 consecutive losses is

**0.5^6 = 0.015625**The estimated number of trades until the margin call likeliness exceeds 50% is

**0.5/0.015625 = 32**(precisely it's log(0.5)/log(1-0.015625), but that needs not bother us here). With one trade per day, your account will last about 2 months. A higher win rate, such as 75% or 90%, won't help because then the average trade loss would be accordingly higher and the required loss streak shorter.

By the way, if someone wants to sell you his system or EA, you can often see from the equity curve if it's a martingale system. The equity curves of martingale systems have telltale sawtooth dents.