So what systems work ? We have what we would call "progression systems" which increase lot sizes after any loses are attained. The most popular is the Martingale strategy which doubles lot size after each loss, however, if your equity is not infinite, this trading system will wipe out your account eventually because of lot sizes becoming obscenely large. Can it be traded profitably ? Sure, you can demo trade a martingale until it collapses then enter it and withdraw your profits every week, the system will eventually collapse and wipe your whole account but luckily you have made back your account and some additional money. Then you return to demo trading, wait for another collapse, etc. This strategy works because Martingales tend to trade in cycles, they collapse, produce profits, collapse, etc.
Since what we want is a trading system that does not fail with time, we have to find a compromise between increasing lot sizes after loses to recover capital and increasing them too much as to expose us to increase our risk too much. So here comes the variations of the D'Alambert money managment system. What this system does is increase lot sizes linearly with loses and decrease them with profits, so if you have 3 loses and 3 wins and your initial lot size is 1, your traded lots would have been, 1,2,3,2,1,1 . It has been shown with automated systems that variations of the D'Alambert system work the best, that is, not decreasing lot sizes linearly but increaseing them until new all time highs are achieved. These systems give a good compromise between risk and profits.
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