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Martingale’s tactic and binary options. Increase profits
Today we will deal with Martingale strategy and its use of binary options in trading. This strategy is one of the oldest. Its meaning does not require special skills in trading. This strategy has many adherents and opponents. So, where is the truth?
How it works
Martingale is a special strategy based on the algorithm for calculating the necessary amount of funds, so that in case of loss of these funds, calculate and lay out the right amount that will not only cover the loss, but also bring profit.
The history of this algorithm dates back to the 18th century. Previously, it was widely used in the game industry. But now, after many years, I got the adaptation for use in different spheres.
Model the situation
You’re making a deal. Forecast the future value of the option. Imagine that the price of your transaction is $ 1. You made an erroneous forecast. To reimburse your unprofitable deal, you need to make the next successful $ 2. In that case, you will override the loss and get income.
Adaptation of Martingale in the financial market
Algorithm, or Martingale strategy, found its supporters and fans in the financial world. In trading with binary options, the probability of profit to loss is 1 to 1. Forecasting the risk of losing money and making profits has become much easier. Many traders successfully use this strategy for waiting and making a profit.
How to apply this scheme correctly
The main rule of applying Martingale strategy for traders is the doubling of the bet with the wrong forecast. It sounds pretty simple. But it’s worth remembering that traders use this strategy in conjunction with their modifications.
The principle of the strategy is really simple. But it is comparable to a high level of risk. To cover the loss, you need to apply it several times. Train on a demo account. Learn to apply this strategy in conjunction with others. Do not resort to using this strategy without a cold mind.
Do not immediately run and test this strategy in practice. First you need to plan your actions. Then you will already know, this strategy fits into it. And also, whether it is worth using it, when and how, for what circumstances.
We provide the necessary stock of money
To learn how to correctly use this strategy and make it into the list of your profit-making tools, you will need to test it for a start. To do this, you need to have a planned stock of cash. The amount of investment that you can use to achieve this goal.
Using Martingale’s algorithm with binary option strategies
The Martingale algorithm itself is not a strategy to the full. This is a good tool that can be successfully linked with their top strategies of trading binary options and make them even more profitable.
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Train on a demo account
Training in using this algorithm is best done on a demo account. This significantly reduces the risk of loss of investment. You will first need to practice properly in order to be able to make a decision at the right time.
If you have the patience to learn how to use this algorithm. The profits do not have to wait long.
Martingale on a trend is a version for traders who, at the stage of training
Study break-even trading. Martingale on the trend is the simplest principle in order to save the deposit from bankruptcy and increase capital.
No matter how many you have shoveled the most different thematic information on the Internet, no matter what number of trader services intended for trading binary options you have tried, you will sooner or later make sure that most of the currently existing binary market trading platforms are equipped with very scantily. Their software is primitive, and management is inconvenient in the work, and even about the visibility of the processes produced – and there is no need to speak. And, of course, accordingly, conducting trading on this type of terminal is often impossible in cases where you want to engage in a truly profitable high-precision mathematical trading strategy (not necessarily, by the way, such a strategy will be difficult). In principle, such terminals can not fully utilize all the potentialities of such a highly profitable trading instrument, such as a binary option. After all, a hairdresser can not cut a client’s hair well with blindfolds and blunt scissors? That’s the same with binary options. For profitable trading, a private investor of a binary exchange, like a hairdresser, needs suitable conditions and tools. Due to the aforementioned very common misunderstandings with obsolete or frankly fraudulent terminals for trading, a huge number of potential private investors, desperate and disappointed, leave the stock exchange with nothing – without ever knowing that there are high-tech modern trading platforms. And let them only a few, but if you apply them to virtually win-win trading systems, then you will never leave the stock exchange empty-handed, and you will not want to finish, but on the contrary – continue and improve your work as a private investor of the exchange of binary options. After all, those traders who tried this trading system on fraudulent terminals and considered it unprofitable, think so only because of misunderstandings, because on the modern proven trading platform, the Martingale system will generate revenue always provided a number of simple rules of operation are observed. Your profit, no matter how trite it sounds, will pour into your pockets in the river. For example, with reliable brokers, the terminal of a highly professional level is equipped with all the functions, tools and favorable conditions necessary for the trader’s productive work, which allow to apply the above mentioned and many other trading systems in full. So, get the maximum financial “exhaust” from them. At this trading terminal we successfully tested, and further together with you we will master Martingale’s strategy in combination with the simplest principle of conducting trades in the direction of the trend movement.
In order to list all those characteristics of the trading terminal that attract more and more stock traders of binary options on it, this article will not suffice, only its main advantages will be given here:
- Due to the fact that the trading platform is equipped with a large window for asset price charts, additional convenience is provided for the most detailed technical analysis. Also, before the traders, it is possible to predict the nearest direction of the trend movement – you will agree, it is almost impossible to do this in a narrow trading window.
- Provide long-term and medium-term forecasts on the direction of the movement of asset prices helps and the function of reverse scrolling of quotes in time. The whole history of the price movement you can see, just using this useful option.
- You will never suffer from slippage and will always enter the market at the value of the asset you saw when you clicked on the trading button – the deal opens here for 1.7 milliseconds! This is an absolute record among the most technically advanced terminals of the binary options market to date.
- All transactions that a private investor will open at this trading terminal will be displayed visually level-by-level, which is an undoubted advantage in trading.
- The 87% profitability of options contracts for trading on popular Binomo assets – also makes this platform one of the most attractive in the modern binary market.
- 1 USD – the minimum contract. That is, using only one US dollar, you will be able to open a deal and receive 85% of the payment on it.
- The threshold for entering the market is only 10 US dollars, so that even a trader who does not have a significant starting capital will be able to trade.
- The registration process is quick and easy, you do not need to go through lengthy procedures for account verification, here you are asked for a minimum amount of data. However, be sure to provide true information about yourself so that you do not have overlaps and delays in withdrawing funds to cards and payment systems.
- The platform also includes trading accounts in euros and rubles (you will not lose money on converting funds into rubles when you are interested in immediately spending them).
- The free high-quality training provided to each volunteer consists of interactive training aids, webinars with the possibility of communication with the teacher, a database and video lessons. Having passed this course, you will already have all the necessary primary skills for future trade.
- The “demo” terminal, which completely copies the real trading platform of the broker, provides an unlimited account of (renewable) virtual funds, with which you can both perfect your trading skills and test independently created or untested new trading strategies.
- Insurance system up to 30%, regulation of the company’s activities through the regulator, protection of your funds by the Compensation Fund – here are a few more points in favor of choosing reliable broker.
- All of your financial transactions that you make on the terminal, as well as personal data of customers are reliably protected by the use of modern electronic encryption protocols.
- A huge number of payment systems allow you to choose the most suitable way for you to transfer and withdraw funds from your account.
- The withdrawal of profit is made in the shortest time and without delays.
- Technical support is open 24 hours a day, qualified and polite specialists will always help you to solve the issues arising during the bidding process.
- The company is interested in expanding and maintaining the client base, which positively affects the quality of its services. Traditionally held traders’ tournaments on a demo account allow winners to get their first real money on a deposit without investing a penny.
- The comfort of the interface provides an incomparable convenience with any other terminal in conducting trading operations.
- Directly to the terminal is built an indicator set of high-precision forecasting tools, and the platform is equipped with a graphical set that helps in the work of a private investor.
So, it is decided – we trade, but how to increase your income?
First of all, you should reduce the possibility of financial losses to almost zero, respectively, and your income will increase:
- To reduce the likelihood of financial risk, we follow the principle of “Trade in trend” – so we very significantly reduce exchange risks, just a few times.
- To derive in the profits those transactions that were unsuccessful, we use the principle of “Martingale”.
How to trade on a trend, even a novice knows, everything is simple:
- Through the extreme points of the quotes chart, we draw a trend line (as in the picture below) – in this case these are the minimum price values of the asset’s value, and the trend is directed upwards:
- Transactions we will conclude by the principle of “on a rebound” from this graphic line (as shown in the picture):
- What to do if your stock exchange deal was not closed the way you expected and caused you a loss? – Just wait for the moment when quotes “break” from the trend line! At this point, open the transaction “double-volume appendage.” So you do not just block the received financial losses, you will earn a profit! Doubling can be continued until the moment you close the trade contract in your favor and you do not go into the “plus”.
- Do not forget that risk management was not invented from idleness and control the size of trade contracts being opened. Everything will depend on the trading strategy used. With simple trading on a “go-live” trend, it is not necessary to overestimate the size of transactions to more than 2-3% of the value of the deposit capital. If you’re, in combination with Martingale, apply any super-profitable trading system, sometimes it is allowed to overstate the size of the deal-the “makeweight” (as much as 10% of the volume of your financial depot). Usually in the description of strategies it is mentioned about the maximum permissible sizes of trading lots.
REMEMBER, also about THAT:
– Involved in the work on the exchange of binary options the simplest method of “Trade in trend”, you, however, already significantly reduce the amount of losses, which means that you will need less doubling. The more accurate the system, the less often you will have to apply the Martingale principle in work.
– Trading in contracts from 1 USD, at the Martingale terminal, a private investor of the exchange reduces the risk of bankruptcy and significant drawdowns of the deposit account by several times.
– The most successful time for applying the principle of “Trade in trend” is the opening hours of the American and European trading sessions, when the exchange has the highest volatility of quotations of assets.
So, following the above tips and best practices, you can achieve in a very simple way that your losses will be reduced to almost zero. Let us recall once again that Martingale works in combination with a variety of existing trading systems. However, if you are a beginner in binary options, then do not grab at once for complicated multi-component strategies and do not overstate the value of contracts! The quieter you go, the further you’ll get! Good luck, friends!
“General Risk Warning: Binary options trading carry a high level of risk and can result in the loss of all your funds.”
Forex Trading the Martingale Way
Would you be interested in a trading strategy that is virtually 100% profitable? Amazingly, such a strategy exists and dates all the way back to the 18th century. The Martingale strategy is based on probability theory, and if your pockets are deep enough, it has a near-100% success rate.
The Martingale strategy was most commonly practiced in the gambling halls of Las Vegas casinos. It is the main reason why casinos now have betting minimums and maximums, and why the roulette wheel has two green markers (0 and 00) in addition to the odd or even bets. The problem with this strategy is that to achieve 100% profitability, you need a significant money supply and in some cases, your pockets must be infinitely deep.
A martingale strategy relies on the theory of mean reversion, so without a large supply of money to bore positive results, you need to endure missed trades that can bankrupt an entire account. It’s also important to note that the amount risked on the trade is far greater than the potential gain. Despite these drawbacks, there are ways to improve the martingale strategy so you can improve your chances of succeeding at this very high-risk and difficult strategy.
What Is the Martingale Strategy?
Popularized in the 18th century, the martingale was introduced by the French mathematician Paul Pierre Levy. The martingale was originally a type of betting style based on the premise of “doubling down.” American mathematician named Joseph Leo Doob continued the work of Levy in working on the martingale strategy, as he sought to disprove the possibility of a 100% profitable betting strategy.
The system’s mechanics involve an initial bet; however, each time the bet becomes a loser, the wager is doubled such that, given enough time, one winning trade will make up all of the previous losses. For instance, the 0 and 00 on the roulette wheel were introduced to break the martingale’s mechanics by giving the game more than two possible outcomes other than the odd versus even, or red versus black. This made the long-run profit expectancy of using the martingale in roulette negative, and thus destroyed any incentive for using the strategy.
To understand the basics behind the martingale strategy, let’s look at an example. Suppose we had a coin and engaged in a betting game of either heads or tails with a starting wager of $1. There is an equal probability that the coin will land on heads or tails, and each flip is independent, meaning that the previous flip does not impact the outcome of the next flip. As long as you stick with the same directional view each time, you would eventually, given an infinite amount of money, see the coin land on heads and regain all of your losses, plus $1. The strategy is based on the premise that only one trade is needed to turn your account around.
Examples of the Martingale Strategy in Action
|Your Bet||Wager||Flip Results||Profit/Loss||Account Equity|
|Heads||$ 1||Heads||$ 1||$11|
|Heads||$ 1||Tails||$ (1)||$10|
|Heads||$ 2||Tails||$ (2)||$8|
|Heads||$ 4||Heads||$ 4||$12|
Assume that you have $10 to wager, starting with the first wager of $1. You bet on heads, the coin flips that way and you win $1, bringing your equity up to $11. Each time you are successful, you continue to bet the same $1 until you lose. The next flip is a loser, and you bring your account equity back to $10. On the next bet, you wager $2 hoping that if the coin lands on heads, you will recoup your previous losses and bring your net profit and loss to zero. Unfortunately, it lands on tails again and you lose another $2, bringing your total equity down to $8. So, according to martingale strategy, on the next bet, you wager double the prior amount to $4. Thankfully, you hit a winner and gain $4, bringing your total equity back up to $12. As you can see, all you needed was one winner to get back all of your previous losses.
However, let’s consider what happens when you hit a losing streak:
|Your Bet||Wager||Flip Results||Profit/Loss||Account Equity|
Once again, you have $10 to wager, with a starting bet of $1. In this scenario, you immediately lose on the first bet and bring your balance down to $9. You double your bet on the next wager, lose again and end up with $7. On the third bet, your wager is up to $4 and your losing streak continues, bringing you down to $3. You do not have enough money to double down, and the best you can do is bet it all. If you lose, you are down to zero and even if you win, you are still far from your initial $10 starting capital.
Trading Application of Martingale Strategy
You may think that the long string of losses, such as in the above example, would represent unusually bad luck. But when you trade currencies, they tend to trend, and trends can last a very long time. The key with martingale, when applied to the trade, is that by “doubling down” you essentially lower your average entry price. In the example below, at two lots, you need the EUR/USD to rally from 1.263 to 1.264 to break even. As the price moves lower and you add four lots, you only need it to rally to 1.2625 instead of 1.264 to break even. The more lots you add, the lower your average entry price. Even though you may lose 100 pips on the first lot of the EUR/USD if the price hits 1.255, you only need the currency pair to rally to 1.2569 to break even.
This is also a clear example of why significant amounts of capital are needed. If you only have $5,000 to trade, you would be bankrupt before you were even able to see the EUR/USD reach 1.255. The currency may eventually turn, but the downside to the martingale strategy is that you may not have enough money to keep you in the market long enough to see that end.
|EUR/USD||Lots||Average or Break-Even Price||Accumulated Loss||Break-Even Move|
Why Martingale Works Better with FX
One of the reasons the martingale strategy is so popular in the currency market is because, unlike stocks, currencies rarely drop to zero. Although companies easily can go bankrupt, countries cannot. There will be times when a currency is devalued, but even in cases of a sharp decline, the currency’s value never reaches zero. It’s not impossible that a currency could reach zero, but what it would take for this to happen would be a global economic nightmare.
The FX market also offers one unique advantage that makes it more attractive for traders who have the capital to follow the martingale strategy: the ability to earn interest allows traders to offset a portion of their losses with interest income. This means that an astute martingale trader may want to only trade the strategy on currency pairs in the direction of positive carry. In other words, they would buy a currency with a high-interest rate
The Bottom Line
A great deal of caution is needed for those who attempt to practice the martingale strategy, as attractive as it may sound to some traders. The main problem with this strategy is that seemingly sure-fire trades may blow up your account before you can turn a profit or even recoup your losses. In the end, traders must question whether they are willing to lose most of their account equity on a single trade. Given that they must do this to average much smaller profits, many feel that the martingale trading strategy offers more risk than reward.
The Latest Money Management Strategy on Binary Options – Martingale
Among the huge number of strategies that are applied in the binary options market, the Martingale method is currently very popular. Let us clarify right away – the presented methodology is not designed to find optimal entry points to the market, but to manage capital. With the strict observance of certain rules, each trader, regardless of the number of losing trades, can bring his trade to profit. As it turns out, you will learn from the information below.
Binary option money management strategy – martingale
The Martingale method on binary options today is widely used by both professional traders and beginners due to its simplicity, the lack of need to make complex calculations and an acceptable level of profitability. And this system appeared in the 18th century and was used by many participants in gambling to get permanent winnings.
The essence of the strategy is reduced to doubling the amount of the investment of the subsequent transaction when making a losing previous one. Wrong predictions cannot last an infinite number of times. That is why, doubling the amount of the invested amount, the trader will eventually make a profitable deal and not only return all the money spent, but also receive a certain reward.
Thus, the Martingale strategy allows you to get a steady income, even if the number of negative forecasts exceeds positive ones. However, to use this method of money management you need to have an impressive deposit, and it is better to start the game every time with a minimum bet.
The binary options martingale system is based on probability theory. Since in this type of trading only two situations are possible (either the price goes up or down), then, without even considering your decision, the probability of a correct forecast is 50/50. The main task of the trader is waiting for a profitable transaction, not considering the previous failures. If the Martingale method for binary options is supported by technical analysis of the market situation, then excellent results can be achieved.
The effectiveness of the Martingale strategy has been proven in practice more than once by many gambling fans. It’s not for nothing that gambling houses do everything possible so that customers cannot apply it in practice (they change conditions, set the maximum bet amount, etc.). However, trading binary options are significantly different from casino games.
No broker currently prohibits the use of strategy. The success of each trader depends only on his style of trading, following the rules of risk management, and self-discipline. With all this, the binary options money management method Martingale fits almost any trading tactic and does not require any special settings, as well as presets.
It is only important to understand how much money you need to invest in a subsequent transaction after a loss-making one, in order not only to serve your own expenses but also to get a reasonable profit. The size of each subsequent investment depends on the level of profitability, as well as the number of transactions closed with a minus. To simplify such calculations, you can use the Martingale online calculator for binary options, which is provided for free by many thematic resources.
In the presented example, the trader plans to start trading with a minimum investment of $ 30, with a broker rate of return of 81%. Taking into account the initial data, it will be necessary to invest $ 67 in the opening of the second transaction after the first loss, in the third – $ 150, in the seventh – $ 3735.
Thus, it is possible to calculate the size of the deposit that a trader will need if he seven times in a row incorrectly predicts the behavior of the market. For this, it is necessary to add up all the sums from the presented series. As can be seen, the size of the deposit when using the Martingale strategy on binary options with the given initial parameters should be at least $ 6,736.
You can reduce this amount by reducing the size of the first investment. In addition, in order to minimize the possibility of the appearance of a series of losing trades, you should strictly follow the chosen trading algorithm:
Determine the direction of the trend;
Set the most appropriate point to enter the market;
The acquisition of the option should not be performed against the backdrop of important economic events.
Taking into account all the factors described above, the positive expectation from the deal can be significantly increased from 50% to 80%
To understand the principle of the strategy, we consider a simplified example of trading in which the profit of an option is 100%. If a trader has acquired a binary option “Higher” for $ 20, then there may be two possible scenarios:
The value of the asset went up and the user earned + 100%, that is, $ 20;
The value of the asset went down and the deal became unprofitable, and the trader lost $ 20.
Consider what to do in the second case. Using the Martingale strategy for binary options, a trader needs to make a new deal, but only one that will meet the following requirements:
- The acquisition of a binary option immediately after the close of the previous transaction;
- The direction of the value movement is the same as in the previous unprofitable transaction;
- The expiration time is the same;
The size of the investment should be increased at least twice. The degree of increase is determined by the yield of binary options. For example, with a profitability level of 80%, the size of each subsequent investment should be increased by 2.2 times.
In our simplified example, where the return is 100%, the next investment will be $ 40. If this transaction becomes unprofitable, then the size of the next investment is $ 80, and so on, until the trader correctly predicts the market. The amount of income will return the entire amount spent and bring the expected profit.
The Martingale strategy is equally effectively used when buying options “Higher” and “Lower”. The rules by which they are bought are similar. Changes can only be affected by the rate of increase in investment, depending on the level of return offered by a particular broker.
It is important to understand that this technique will require a huge deposit from a trader, the amount of which depends primarily on the amount of the first investment. For example, a doubling of 7 transactions in a row with a purchase price of the first option of $ 1 will increase the investment on the last transaction to $ 64. At the same time, it is very unlikely that the market will move for such a long time without the slightest correction against the chosen direction, especially if you choose the right time to conclude the first contract.
There are many options for entering the market using the Martingale strategy. One of the most common is the following algorithm:
Monitor the market situation regarding the release of important economic news using the economic calendar. Different events in the world can significantly push the price of the selected asset in the opposite direction with the trader’s forecast.
Wait for the market situation, when any trend is clearly visible, and a correction emerges.
It is necessary to acquire a binary option in the direction of the existing global trend directly during the correction period.
In this case, the probability of a long trend is very high. Consequently, even with temporary price fluctuations, the Martingale method will pull out the deposit and bring the expected profit. The existing trend in the market can be determined visually, or various indicators of technical analysis can be used for this purpose. Any deviation of a value from the trend is considered a correction and is a good time to conclude a deal.
The strategy of Martingale for binary options can be used for any options for transactions. Recall once again, in the traditional view, this technique is a way to effectively manage capital. That is why it is applicable to various types of options.
The expiration dates can also be used differently, depending on the personal trading strategy chosen by the trader. However, to exclude a loss-making series, professionals recommend the use of time periods that exceed 15 minutes.
An important part of the strategy is the money management method. That is why before starting trading you need to accurately calculate the size of the first investment and the total deposit as a whole. You can determine the necessary amount of money by manual calculation or use the online Martingale calculator for binary options for this purpose.
The average level of profitability is calculated from considerations that in one trading day you can close about 30 transactions, among which only 10-15 will be profitable. At the same time, the percentage of profitability increases due to the absence of completely losing trades. So, if the input investment is $ 5, then on average the amount of profit for one trading day will be close to $ 50.
The strategy of martingale in binary options every day proves its effectiveness of the application. With proper use and compliance with all trade rules, this technique allows for a break-even trade. At the same time, you should have a huge deposit in order to be able to recapture the amount spent during a loss-making series of transactions.
Binary options trading by Martingale strategy
The martingale strategy in binary options — a very dangerous tactic, which in unskilled hands almost in a matter of moments is able to zero out the deposit. But in the hands of a professional this strategy is one of the most simplest and profitable. Despite the fact that martingale is often criticized because of the huge risk, for example, in the Forex many expert advisors are built on its principles (Boomerang, Cash Hummer). So you just need to understand how to use it, as we’ll continue.
The basics and principles of the martingale strategy
The martingale strategy in binary is simple for understanding and complex at the same time. Its essence is that in the case of an erroneous forecast the next bet is doubled. And so as long as the prediction will be correct. Example. There is a deposit in the amount of $ 100. We do forecast in the amount of $ 2 and use the martingale in case of error:
- stake 1 — 2 USD. A loss, double the bet;
- stake 2 — 4 USD. In case of success and option profit 90% profit is 3.6 USD, recouping the previous loss. Net income is 3.6-2=1.6 USD;
- stake 3 — 8 USD;
- stake 4 — 16 USD;
- stake 5 — 32 USD;
- stake 6 — 64 USD (the may may subject to additional deposit of 26 USD).
At this point, for the previous 5 bets loss would have been 62 USD, 6th forecast would be the last. If it failed, then in 6 predictions we’d lose the entire deposit in 100+26 USD! If the 6th forecast would be successful, then we would have earned 64*0,9=57,6 USD. But the total loss amounted to 62-57,6=4.4$. By the way, the profit we could get only to the 4th, inclusive of the forecast (total loss of 3 forecast — 14 USD, profit — 16*0,9=14,4. Profit — 0,4 USD).
If we started with a sum of 4 USD, the breakeven point again would be the 4th prediction: the loss amounted to 4+8+16=28 for a profit of 32*0,9=28,8. Similarly, to start from 8 USD. This means that while the yield of 90% could be start with any amount of profit we would have received anyway under the condition that at least one of the 4 trades would have been profitable.
Important! One of the main rules of risk management states that risk per trade should not exceed 2% of the deposit on the deal. And if in other policies in exceptional cases it is possible to increase it to 5%, then in martingale strategy in binary options it is not recommended to do this!
Advantages of martingale strategy:
- tactics has nothing to do with technical indicators and fundamental analysis. However, if you apply it in its pure form, but it’s just not recommended (why, I will explain below);
- with the right construction of a mathematical model and a gradual increase in the lot of the losses can be offset.
Conditions for trading with Martingale method
Two main conditions:
- the trend must be clearly rising or falling. Moreover, it is better not to take the period of expiration of 60 seconds, because even the upward trend is never a straight line;
- deposit amount must be several times greater than the amount of the bet.
The martingale strategy in binary options is often used together with technical indicators determining the direction of the trend and its strength (trend indicators and oscillators). It is the combination of these tools (and not a martingale separately) able to make a profit.
And the second important aspect is the testing strategy. Any strategy should be tested on a demo account and analyzed (the optimal testing period is 6 months). After the analysis you will see the average number of losing trades consecutively and will be able to calculate the required magnification ratio of the bet.
An example of curve of the deposit on the successful implementation of the strategy of the martingale
Main moments when it is better not to trade with this method
The use of the martingale strategy in binary options is not recommended in the following cases:
- when the market is flat — horizontal movement of the trend. This suggests that the market is experiencing a lull or investors or they are unable to determine the prospects of the asset. The possibility of chaotic price movement at this point, the biggest risks make mistakes in the forecast of the maximum;
- when the amount of the deposit is less than 4-fold amount of the minimum bet. For example, if the minimum bet is 10 USD the deposit sum is 40 USD and less.
Example of curve of the deposit of Martingale strategy with the deposit loss
From the example at the beginning of the article is shown that a simple doubling of the rate leads to a loss after the 4th prediction. So each subsequent bid must be increased by a factor of more than two-fold difference. Since this ratio depends on the profitability of the option, it makes no sense to calculate it manually each time. Open any martingale calculator, indicate the first rate, the yield of the option and receive rate values that need to be done. By driving the data from our example we get the following result:
An example of trading by Martingale
Take the demo accounts in the amount of 10 thousand USD. The yield of an option — 90%, trying to drive a bet of 100 USD and yield in the calculator and get the following grid rates: 100, 225, 506, 1139, 2563, 5767. Try to trade.
In this case, we were lucky immediately on the second transaction. The first $ 100 proved unprofitable, the second in the amount of 225 dollars brought an income of 405 USD, covering the loss of the previous deal. Despite the fact that the strategy requires a large deposit, the probability of 6 consecutive losing trades are very small.
Are you ready to trade in this method?
To understand whether you are ready to trade on the martingale system, answer the following questions:
- Is everything clear from this article? If not, write your questions in the comments;
- have you tested a trading strategy?
- are you willing to accept the loss of the entire deposit?
If the potential losses are not confusing for you, but you have thoroughly understood the principle of the martingale, you are ready for this strategy. And finally, a few final recommendations:
- Martingale is recommended to be used as a subsidiary strategy to the main tactics, based on finding a strong trend;
- no need to try to increase the bet in 2 and more times. Based on the analysis backtest you will see a number of profitable and losing trades consecutively. On the basis of these figures you will choose the optimal magnification rate so that the number of subsequent profitable trades turned off the losses of previous ones.
If you have experience with this strategy, you have any suggestions on how to improve or on the contrary you consider it a loss, write about it in the comments!
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