New article Statistical Verification of the Labouchere Money Management System has been published on mql5.com:
In this article, we test the statistical properties of the Labouchere
money management system. It is considered to be a less aggressive kind
of Martingale, since bets are not doubled, but are raised by a certain
While surfing the depths of the Internet during the weekends, I stumbled
upon a money management system I had never heard of before. It is
called the Labouchere, or Cancellation system (Forex Vacuum Cleaner System using the Labouchere, in Russian). The English description of the system can be found here.
The system is a variation of Martingale, since you need to raise your
bet after you lose and minimize it after you win. However, it is a less
aggressive version, since bets are not doubled, but are raised by a
certain amount instead.
In fact, the mentioned article states that you need a trading system
where wins are equal to losses and the win probability is 50% (or even
"more than 33%"). If you have such a system, the Labouchere method can
easily make it profitable! So, do we even have to look for a system with
a positive mathematical expectation, since there is a way to shift it
into positive territory? After all, it is not too difficult to develop a
trading system featuring, say, 47% of wins...
Let's display the results of the Labouchere and fixed-bet systems on a single chart:
The deposit lifetime chart for Labouchere and fixed-bet systems:
Author: Alexander Dubovik