🎄 A Christmas Trading Blow-Up: A Hard Lesson in Risk, Martingale, and Iron Condors
This is is a textbook example of how good-looking strategies, poor sizing, and false confidence can combine into a total wipe-out.
Before anything else, a big thank you to our friend Craig for flagging this situation and making sure it didn’t slip under the radar. These moments matter — not because we enjoy seeing anyone lose money, but because they offer powerful lessons for every serious investor and options trader.
What happened over Christmas 2025 is a textbook example of how good-looking strategies, poor sizing, and false confidence can combine into a total wipeout.
🚨 What Actually Happened
A trading influencer widely referred to as “Captain Condor” — along with many followers — reportedly lost their entire trading capital over a short holiday window.
Important detail:
The broader market was calm
There was no systemic crash
This was a strategy-specific implosion
The losses were not caused by volatility spikes or black swan events. They were caused by position sizing and structure.
🧠 The Strategy: Iron Condors + Martingale = Disaster
Iron Condors themselves are not evil. They can be a reasonable income strategy when used with:
conservative sizing
defined risk
strict portfolio limits
The fatal flaw here was layering a Martingale system on top of Iron Condors.
What is the Martingale Strategy?
Martingale comes from gambling. The idea is simple — and dangerously seductive:
Start with a small bet
If you lose, double the size
When you eventually win, you recover all losses plus a small gain
In theory, you “can’t lose forever.”
In reality, you can — and eventually will.
📉 The Step-by-Step Blow-Up
Here’s how this one unfolded:
Trade 1: 10 contracts → loss
Trade 2: 20 contracts → loss
Trade 3: 40 contracts → loss
Trade 4: 80 contracts → massive exposure
Trade 5: account liquidation
By the fourth trade, the position size had nothing to do with the original risk plan. The entire account was effectively riding on a single outcome.
That’s not trading.
That’s betting the bankroll.
🎲 The Gambler’s Fallacy (The Core Mistake)
The justification reportedly used was:
“Five losing trades in a row has never happened before.”
This is the Gambler’s Fallacy.
Markets have no memory.
Just like flipping a coin:
Three tails in a row does not make heads more likely
The probability of the next flip does not change
Each Iron Condor had the same risk profile — regardless of what happened the day before.
A 3% or 5% probability event will happen if you trade long enough.
Not if — when.
📊 The Data That Traps Traders
This is where things get dangerous — because the statistics look comforting.
Looking at SPX data since 2000, here’s how often consecutive down days occur:
0 (up days): ~54%
1 down day: ~26%
2 down days: ~11%
3 down days: ~5%
4 down days: ~2%
5+ down days: well under 1%
At first glance, this makes Martingale feel “safe.”
A trader sees this and thinks:
“After 3 or 4 down days, odds favor a bounce.”
That belief is exactly what sets the trap.
💥 Why Captain Condor Blew Up Right Here
Based on the timeline, Captain Condor appears to have blown up after roughly four consecutive down days.
That is not a coincidence.
This is the point where:
Losses have stacked up
Position size has exploded
The account is fully committed
There is no margin for error
The streak itself was not extreme.
The leverage was.
🧠 The Most Important Line in This Entire Article
Rare events don’t destroy portfolios.
Oversizing into rare events does.
A 2% event is not impossible.
It is inevitable if you trade long enough.
Martingale strategies don’t fail often —
they fail completely.
🎯 Why This Always Ends the Same Way
Martingale systems share three traits:
Long streaks of small wins
A reputation for “consistency”
One loss that erases everything
This is why they make traders look like geniuses — right up until they disappear.
You don’t need a crash.
You don’t need a black swan.
You only need time.
🔒 The Grow Your Pile Rule (Reinforced)
At Grow Your Pile, we repeat this constantly:
Don’t try to get rich fast.
Try not to blow up.
If a strategy requires:
doubling down,
praying for reversion,
or betting the account to “get back to even”…
…it is not a strategy.
It is a countdown.
🧩 Final Thought
Iron Condors didn’t fail.
The market didn’t crash.
Risk discipline failed.
Thank you again to Craig for calling attention to this. These reminders — especially during calm markets — are invaluable.
Because the most dangerous trades are often placed when everything feels safe.
Protect the pile.