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1989issue C031-7

Scale-in-on-loss on a tempered-martingale-series with a fixed unit-factor

The procedure pairs a tempered-martingale-series that sets unit size with a point-spread pair of limits that sets when to buy or sell. Required holdings equal a fixed unit-factor times the first and last remaining series numbers, and a cycle-close arrives only after every series number is gone.

  • The procedure pairs a tempered-martingale-series that sets unit size with a point-spread pair of limits that sets when to buy or sell.
  • Required holdings equal a fixed unit-factor times the sum of the first and last remaining series numbers, and scale-in-on-loss appends a new series value after a downside fill.
  • A cycle-close arrives only after the two-off-on-gain and one-on-on-loss updates have eliminated every series number.
  • Peak capital can exceed twice the opening outlay because a losing run can lengthen the series without a stated theoretical bound, which is why an exposure-brake is documented.
Entries in this reading3 entries
Current trackMartingale sizing system9 readingsScale-in position adding10 readingsFixed contract sizing29 readings

How the series and the limits work

The procedure pairs a tempered-martingale-series that sets unit size with a point-spread pair of limits that sets when to buy or sell. Required holdings equal a fixed unit-factor times the sum of the first and last remaining series numbers.

What a fill does to inventory

An upside-limit fill removes the two end numbers of the series. A downside-limit fill appends the prior held-unit count divided by the unit-factor, which is the scale-in-on-loss update.

After each event the working buy and sell limits are rebuilt one point-spread above and below a new base-price taken from the last transaction. If the newly required holding already matches inventory, the event produces no size change and only the base-price and limits update.

When a cycle can close

A cycle-close arrives only after the two-off-on-gain and one-on-on-loss updates have eliminated every series number. For a starting series of 1 through 6, the designed cycle increment equals 21 times the unit-factor times the point-spread.

The same rules accept any starting series, including a single 1, any fixed contracts-per-number unit-factor, and a paired long-and-short cycle on one instrument.

How peak capital can exceed the opening outlay

Peak capital can exceed twice the opening outlay because a losing run can lengthen the series without a stated theoretical bound. Documented exposure-brake choices include widening the point-spread, adding a stop, suspending automatic series updates, and diversifying across names.

Capital path of a scale-in-on-loss cycle in a 20% decline

The source table tracks every fill of the 1-2-3-4-5-6 series while price drifts from $10 toward $7. Cash committed starts at $7,000, is pulled as deep as $16,300 after the sixteenth trade, and still finishes at the locked-in $2,100 gross profit once the series is empty. That gap between the opening outlay and peak buying power is the cost of waiting for the cycle to close.
The source table tracks every fill of the 1-2-3-4-5-6 series while price drifts from $10 toward $7. Cash committed starts at $7,000, is pulled as deep as $16,300 after the sixteenth trade, and still finishes at the locked-in $2,100 gross profit once the series is empty. That gap between the opening outlay and peak buying power is the cost of waiting for the cycle to close.Illustrative common stock · Eight-week cycle

The source fixes a 100-share factor and a $1 point spread on an eight-week drift of about 20%. Ten losing fills and eight winning fills still complete the cycle; a longer losing run has no theoretical cap on cash required.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
2 of 9 in the Martingale sizing system track
19891-8 pp.Next on Martingale sizing systemShorter series need fewer recovery hits and raise scale-in cashShare size is the sum of the remaining numberSeries extremes times the baseShareUnit, so a 1-6 series with a 100-share base opens at 700 shares.
All readings on this track · 9 readings
  1. 1988Modified-martingale progression lists and ruin bounds
  2. 1989Scale-in-on-loss on a tempered-martingale-series with a fixed unit-factor
  3. 1989Shorter series need fewer recovery hits and raise scale-in cash
  4. 1990Recovery sizing as a series procedure
  5. 1990Reverse-martingale pyramiding after clustered wins
  6. 1993Test Martingale against fixed size before you pyramid
  7. 1998The runs-test as a contract-sizing gate
  8. 2004Scale-in on a two-close reversal instead of using a price stop
  9. 2012Four-level risk sizing when stock margin caps fixed fractions
By fieldSizing and leverage42 readingsBy year198983 readings
All 9 readings tagged Martingale sizing system
Also on Martingale sizing system5 readings
2004Scale-in on a two-close reversal instead of using a price stop1989Shorter series need fewer recovery hits and raise scale-in cash1990Reverse-martingale pyramiding after clustered wins1993Test Martingale against fixed size before you pyramid1998The runs-test as a contract-sizing gate