Applying gambling strategies to trading? Does it really work?
Well yes it does, but often what looks good on paper may not play out into your trading success. All too common is the desire to use an 'anti-martingale' position size where you exponentially increase your position with the market. But even with a trending market like Forex, this ideal probably won't play out more than once in a blue moon. You may just 2% your account away with these idealized betting systems.
Do 4 to 1, 3 to 1 or higher reward/risk ratios really play out? I haven't found too many of these that are worth the effort, yes you should keep 1/1 reward to risk at the very least but it may be difficult to see success when you're trying to get the market to work for you with a 5 to 1 or 8 to 1 reward to risk ratio..it could be months before your first winning trade.
Successful traders tend to use a flexible form of anti-martingale (betting more on winners and riding the trend), and cut losses from further bleeding as much as they can. But being too strict about anti-martingale can hurt your account after just 2 or 3 losing trades..most amateurs may increase their leverage and strongly desire to make up for that losing trade going against their trading plan.