Betting Strategy Simulations: All-in, Fixed Bet, Martingale, and Kelly Criterion Explained

🎲 Betting Strategy Simulations: What Happens to Your Money Over Time?

When people hear about a “winning trading strategy” or a “high-probability setup,” they often imagine that turning a small account into a fortune is just a matter of repeating it over and over. But reality — and math — tell a very different story.

In this article, I’ve simulated four classic strategies used in betting, trading, and risk-taking:

1. 💸 All-in Strategy

2. 💵 Fixed Bet Strategy

3. 🔁 Martingale Strategy

4. 📈 Kelly Criterion Strategy

We’ll see how each behaves over hundreds of rounds with thousands of independent players — who goes bankrupt, who gets rich, and why.
All simulation code is open-source here: GitHub – handysofts/betting-strategy-simulations

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🧪 How We Ran the Experiments

• 👤 Number of players: 1000

• 🔁 Rounds per player: 300

• 💵 Initial balance: $100

• 🎲 Game: 50/50 coin flip

  • If heads: +100% (double your bet)

  • If tails: −60% (lose 60% of your bet)

For each simulation we tracked:

• 📉 % of players who went bankrupt

• 🏆 Top winner’s final balance

• 📊 Average final balance

• 📈 Trajectory of every player over time

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1. 💸 All-in Strategy — The “Just One More” Paradox

How it works: You bet everything on each round. If you win, you double your balance. If you lose, you lose 60%. Then you repeat.

It’s the most tempting approach — after all, if you just win a few times in a row, you’ll grow exponentially. But here’s where the “Just One More” paradox kicks in:

You might double your money once, twice, even ten times… but eventually, one bad flip wipes out everything.

In our simulation:

• ⚠️ Bankruptcy rate: ~99%

• 🏆 Top winner: $3,465

• 📊 Average balance: near $0

Almost everyone loses everything. Only a handful of lucky players survive — but that’s randomness, not skill.

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2. 💵 Fixed Bet Strategy — Safer, but Still Risky

How it works: Instead of risking everything, players bet a fixed $20 each round. Wins and losses are smaller, and crucially, you can survive losing streaks.

Results:

• ⚠️ Bankruptcy rate: ~4%

• 🏆 Top winner: $2,132

• 📊 Average balance: above $100

Fixed bet reduces risk dramatically. You’ll still see many bankruptcies if losses cluster, but the distribution of outcomes becomes less extreme — and a few players steadily compound.

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3. 🔁 Martingale Strategy — The “Double Down” Trap

How it works: After every loss, you double your next bet to recover. A win covers all previous losses plus one unit of profit.

This strategy feels unbeatable — until reality intervenes. A long losing streak eventually wipes you out, and it happens faster than you think.

Results:

• ⚠️ Bankruptcy rate: ~27%

• 🏆 Top winner: $4,792

• 📊 Average balance: above $100 

Martingale produces many small winners… and a few spectacular blow-ups.

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4. 📈 Kelly Criterion — The Math-Optimal Approach

How it works: Kelly betting calculates the optimal fraction of your balance to risk each round, maximizing long-term growth while minimizing the chance of ruin.

For our 50/50 +100% / −60% game, the Kelly fraction is about 30%. That means you risk 30% of your balance each round, scaling the bet as you grow or shrink.

Results:

• ⚠️ Bankruptcy rate: ~0%

• 🏆 Top winner: $2.86 B

• 📊 Average balance: above 1,000

Kelly outperforms all other strategies over the long term — slower growth than “all-in” in the short run, but far less chance of ruin.

The Kelly Criterion uses math to calculate the optimal bet size based on your edge and win probability.

Formula:

$$f^{\ast }=\frac{bp-q}{\mathrm{b<span\; style="text-align:\; left;"></span>}}$$

Where:

• $p$ => win probability
• $q=1-p$ => loss probability
• b => odds ratio (e.g. 1:1 payoff -> b=1)

The strategy maximizes long-term growth while minimizing bankruptcy risk.

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🧠 Key Takeaways

• 📉 All-in is a statistical death sentence — almost everyone goes broke.

• 🪙 Fixed bet protects capital but limits growth.

• 🔁 Martingale feels safe but guarantees ruin eventually.

• 📈 Kelly is mathematically optimal and balances growth with survival.

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🔎 Explore the Code Yourself

All the simulation scripts are open-source. You can run them, tweak parameters, or test your own ideas here:
👉 https://github.com/handysofts/betting-strategy-simulations

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📉 Why This Matters for Traders & Investors

These simulations mirror real-world investing psychology. Many traders use “all-in” or “double down” approaches without realizing they’re playing a negative-sum game.
Kelly-style position sizing — or even fixed-risk strategies — may seem boring, but they are the foundation of long-term survival in markets.