Martingale Strategy in Binary Options

What do you think it takes to earn money on the binary options ? There is a variety of opinions. And should be an understanding of how and what is happening on the market, and the ability to make the profitable deals, and even simple luck is essential. Every day, huge number of new people is being involved in options trading, but we must say that’s not for every one of them, this trading once could become a source of primary income. This is logical and understandable, to achieve something, first, you need a strong desire to acquire knowledge about how to achieve this, both, in theory and practice.

The Education on options trading can take a lot of time. There is a category of traders, who see trading in binary options like playing in a casino. Well, maybe at first glance, there’s a lot in common. You bet that the price of some asset will fall or rise, and vice versa, and if you guessed right, you get a prize. If the forecast did not come true, then you surely lose it all.

martingale

For gamblers, who are accustomed to the thrill, dreaming of quick money in a form of unexpected big win, trading binary options is a very attractive pastime option. Plus, there is a very interesting option – the players can limit their risks and also can buy options at different prices. That is partly controls the process, in particular, and their bets. This allows you to use binary options trading with many of those techniques that are specific to gambling. For example – the Martingale strategy.

 

Martingale Strategy

In general terms, the strategy is quite simple. You start to play (and in this case, no matter in what, cards or options), placing the first minimal bet. If you lose, then the next bet doubles. If you lose again- double again, and so on, until the moment when you finally win. If you win, then you start again from the beginning, with a minimum bid. This strategy is being used since old times by players in different games of chance – from the “coin” to poker and much more complex card games.

Pros of Martingale strategy

The main plus of strategy – is that it allows you to properly manage your deposit (score and the amount of money in your wallet). If after winning, the bet is doubled again, this could result in the loss of all that you have won previously. And if you use the Martingale strategy, theoretically, you will always win.

In addition, the strategy justifies itself, because the probability of winning ten times in a row, and the probability of losing ten times in a row is very small. For the Martingale strategy, the second statement is a principle. Since losing ten times in a row is very difficult, then the chance that you will win sooner or later, is very significant. And the more you play, the higher a chance that the prize has finally come to you. Especially, if you’ll be doing business, based on a trading strategy and the indicators, there are many strategies giving 7-8 good deals out of 10. If you play Martingale strategy, in most cases you will be able to be in green.

Cons of Martingale strategy

As for the minuses of this strategy, there are several. Let’s list them.

First minus – it works perfectly when you have a lot of money. But if you, for example, play in the casino with a thousand of dollars, you lost a hundred of dollars, lost two hundred, lost four, then you can not continue to use  successfully this strategy without additional recharge of your deposit. But you lost just three bets, that’s not a lot. In options trading, it is all the same.Unlike most trading strategies, which strictly  forbid to risk with more than 5-10% of the deposit at a time, the Martingale strategy generally does not specify the size of bets. It can be anything, and the more times you have lost (and the larger a scale of your bets), the more money you will be required with each new deal.

Another minus – Martingale strategy can not work where luck is in second place, and in the first place – the ability or knowledge. For example, at the races, where it is very important to know which horse is stronger and who the rider is, and whether health problems have these two, and other points. It is equally important to take into account when exchange trading is actually available on the market trend, and the trend, and if you do not do this, then you do not notice the obvious things for most traders, swimming against the current, or trying to manage your balloon, ignoring the wind and the availability of a ballast. Logically, it does not always lead to a successful outcome.

Third minus of this strategy is a small profit. If you have lost $ 10, then 20, then 40, then won the 80 – then you in fact just won a first bet of $ 10. That is, you have won your only one minimum bet. So the Martingale strategy is not a tool to instantly create a huge amount of money, but only one of the tools for continuous and painstaking work with binary options.

 

Applying of Martingale strategy to binary options

Only a blind player will use the Martingale to fool the market as the only strategy. If I want to use the Martingale strategy as my only strategy, I would prefer to choose a sport or blackjack for investing of money, because these are more interesting options than the complex financial instruments. We must use the Martingale in combination with other methods of trading. For example, if you are a Price Action trader, you can often predict the market in the right direction, but you will continue to lose, because you do not understand ways to manage your money. In this case, the Martingale strategy can be useful for you, because it has a fixed money management system in place; all you have to do is to apply it accordingly.

martingale strategy

 

Conclusion

If you do not have a large sum in your pocket, the Martingale can harm you. If you are not emotionally stable (or you are just starting to trade) the stress can accompany the use of this strategy, since your losses can be very high.

More positively, you still will have a slight advantage, because the currency never devalues to such an extent as to reach a zero. This means, that at some point, the price of the currency will become stronger than before, so if you would bring this matter to the end, you will become the winner theoretically. But it is only if you could handle a very large hits during losing periods, as mentioned earlier. Another advantage for binary options traders who trade on currency pairs, is that the currency, in terms of savings, will to grow over the time. Therefore, many binary traders  tend to buy the currencies, which carry a higher interest rate than others, getting pa profit in the long term, using the Martingale strategy to cover the losses.

In conclusion, the Martingale can be a wonderful method of earnings, if properly used, but it can also be a destructive method, when used blindly. Therefore, it is advisable to always think carefully and remember that experience – is the first thing you need, and it is achieved through the mistakes and you have to go through it before applying any trading strategy.