Martingale is a system that is getting a lot of attention on the internet, on both the forums and the websites devoted to casino games, bets, or forex or binary options trading. This delivery system is of interest to internet users. We will now show you what the martingale is and how to use it in your trading sessions on your binary options platform.
The martingale is not really a binary options trading strategy like the others; in reality it is a money management strategy rather than a trading strategy. It is a delivery system that is often applied by bettors in various areas (casino games like roulette, sports and horseracing bets) as well as by most binary options traders. Designed in 18th-century France, this strategy aims at doubling the bettor’s bet after every loss so that the first realized gain reimburses the previously incurred losses in addition to making it possible to realize a profit equivalent to an initial bet unit. The martingale strategy was developed by its inventor, Mr. Martingale, who applied it to the roulette considering the probability of winning (between the red and black) is 50% (if we exclude the number 0 (green )).
Let’s illustrate how the martingale operates through a practical example of using this method on binary options.
Let us suppose that we take a position upward on the price of the EUR / USD currency pair and we take a call of $ 10, but a few minutes later our prediction proves false. The price turns against us and we suffer a loss. As the martingale dictates it, we thereby double our next position and we buy again, but this time in the amount of $ 20; we lose again. A third position (CALL) is taken on our platform whereby we double our bet once again and invest $ 40. Again, luck is not on our side as we suffer a third consecutive loss.
So far, we have accumulated an equivalent loss of – $ 10 – $ 20 – $ 40, or – $ 70 in total.
In our fourth position, we bet $ 80 (2 x $ 40) and we finally win the transaction. Our yield on investment is 90% on this trade, thus we earn a profit of $ 80 x 90%, or $ 72 of earnings, which erases our cumulative loss of $ 70 and allows us to accumulate a profit of $ 2.
Now let’s suppose that our fourth consecutive trade would have been a losing one; our accumulated loss would have been – $ 10 – $ 20 – $ 40 – $ 80, or – $ 150. We would then have doubled our bet in the fifth trade by betting $ 160 if such trade was a winning one with a yield on investment of up to 90%. We would have cashed in a gain of $ 144, which would not have covered our cumulative loss of $ 150, but would have reduced the loss of only $ 6.
As we can see, the martingale is not a strategy that will make you rich on binary options. However, it can help protect one’s capital, recuperate losses when the series of losing traders is relatively short, and significantly reduce the amount of losses if the bad prognoses accumulate for too long.
There are certain situations that should be avoided if you decide to speculate with the martingale through binary options. Please be aware that just like volatility, changes in the trend is the enemy of the martingale. Avoid using the martingale during economic announcements (strong market fluctuations) and on the 60-second binary options; hence, you should avoid dealing with changes in trend movements and high volatility.
If you wish to use the martingale, make sure you have sufficient money on your trading account. As you may have seen in our previous example, when the losses accumulate, the amounts of bets calculate very quickly and lead to investing increasingly significant amounts of money and therefore risking more money. Thus, it is necessary to have a strong deposit when practicing binary options trading via a martingale system.
If you want to practice the martingale binary options, be sure to choose a binary options broker that accepts martingale; i.e. an authorized and regulated binary options broker that will not put obstacles in your way. TopOption is an example of a regulated binary options broker with which you can practice binary options trading using the martingale. The TopOption broker is owned by Safecap Investment Ltd., which is regulated by the CySEC (Cyprus), the AMF (France), the CNMV (Spain), the CONSOB (Italy), the FCA (United Kingdom ), but also by other international financial regulators, hence making it a relatively serious broker that is worth favoring.
Please also note that by opening a TopOption account via a link on our website, you will be entitled to a 100% negotiated deposit on bonus, while the broker does not offer this type of bonus in normal times. The BonusBinaryOptions.net guarantee is another benefit that you can enjoy as a reader and visitor of our website.