Business and Personal Finance Dictionary

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• MARTINGALE
  
  1. A device that keeps a horse's head in position with its rows of teeth more or less horizontal. 2. A gambling strategy that involves betting one unit, then doubling the bet, until the gambler wins. The strategy appears to assure the gambler a profit of one unit at the end of each string of bets. The problem is that the gambler's -- and house's -- resources are finite. Consequently, the strategy isn't operational. 3. A stochastic process for which the expected change equals zero, e.g., equivalent martingale measure (q.v.). Application: During the 1960s the martingale stochastic process was a standard model for a fair game, hence for stock price movements in an efficient market.
  
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