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Martingale System

Definition
A type of investing strategy employed by traders to capitalize on losses. As stock prices decrease, the investor purchases more of the investment in order to expand his/her portfolio at the lower price. The investor purchases more of the lower priced stocks with the belief that the price will eventually increase and net a profit. For example, an investor may purchase shares of Google at $500/share and then turn around and purchase more of the stock if it drops to $450/share. When the price rebounds, the investor receives a larger return on the investment.

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