Sunday, 25 June 2017

Explanation of 1-3-2 System

This is a positive betting progression as opposed to the Martingale, which is a negative betting progression.

What that means is that with a positive betting progression like the 1-3-2 System, we are increasing our trade size after a win and staying with a base trade of 1 unit after a loss.

This is the opposite to the Martingale negative betting progression, where we are increasing our trade size after a loss and staying with a base trade of 1 unit after a win.

How the 1-3-2 System works is the following:

Start with 1 unit and win.
Next trade we trade with 3 units and win.
Then next trade is 2 units.

Win this one and the progression is completed and we start again with 1 unit.

Anytime, we have a losing trade, we go back to 1 unit and stay with 1 unit per trade until we have a winner and then we move to 3  units and so on.

As an example, we will use $100 as our base unit per trade with an 80% payout and win all three trades.

First trade: $100 and win $80
Second trade: $300 and win $240 (3x80)
Third trade: $200 and win $160 (2x80)
Total winnings for completing a progression is 6 units = $480

Next example; win first trade but lose second.

First trade: $100 and win $80
Second trade: $300 and lose = $300
Go back to  1 unit trade.
Total for losing the second trade in a progression is +$80-$300= -$220

Next example; win first trade and win second trade, but lose third trade.

First trade: $100 and win $80
Second trade: $300 and win $240 (3x80)
Third trade: $200 and lose $200 
Go back to  1 unit trade.
Total for losing on the third trade is $80+$240-$200=+$120

As you can see, it is losing on that second trade is where you lose. 

If you win your first two trades, then you can not lose anything on the third trade, regardless of the result.

This is quite an aggressive trading approach, but the key is that it will protect you in a losing sequence compared to a Martingale which can kill you.

My recommended settings are still; 2% of your account balance and 2 x Martingale levels deep and then when you are in profit a little change to this system.

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