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Mathematics

Martingales and the Optional Stopping Theorem

Quick fact

A symmetric random walk, where you gain or lose one unit with equal probability, is a martingale. Yet the first time it hits either +100 or -100, the expected value is 0, matching the starting value—even though you stop at a random time that depends on the process itself.

Why this is interesting

Imagine you are at a casino with an unbeatable betting system. No matter how clever you are, the casino always wins in the long run—but why? The answer lies in a deceptively simple property called the martingale.