What is Martingale
Martingale were originally developed as a gambling strategy in the 1800th-century France as a gambling strategy. Since a gambler with infinitive wealth will win certainly, it was seen as a “sure thing” by many wealthy players. Some of them won such large amounts in a short period of time that a number of gambling joints forbid the use of the system. The simplest form of it was flipping a coin. If gambler guessed wrong, he would double his bet every time until the guess went right. If he guessed wrong, he would repeat his original bet.
Let’s make an example:
You bet $5. You win, so you bet $5 again. Then you lose, so you bet $10. You lose again, so you bet $20. You lose again, so you bet $40. You lose again, so you bet $80. Man, it’s not your night! Then you win. Your net win on that series was $5, and since you won $5 before your losing streak, now you’re ahead a total of $10.
If you could always double your bet when you lose you’d be guaranteed to always come out ahead. But in real life you can’t always double your bet. First of all, you’ll run out of money at some point and be unable to double your bet. If you start with $5 and lose thirteen bets in a row (it happens), you’ll have to cough up $40,960 for your next bet. Ouch.
Bet even if you had that much money, you couldn’t bet it anyway, since most casinos limit maximum bets to $500-1000 on a $5 table. And usually, the higher the maximum on a table, the higher the minimum, too.
So that’s the risk of the Martingale: If you lose enough times in a row, you’ll go broke and not have enough money to make the next bet, or you’ll bump up against the table limit. So while the Martingale can work in the short term, the longer you play, the more likely you are to have a long losing streak during which you couldn’t double your bets high enough. How short is short enough? Well, the shorter the better, but an hour is about right. You can certainly play for longer, but the longer you play, the more likely you are to lose.
What is martingale strategy in Forex
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 slide, the currency’s value never reaches zero. It’s not impossible, but what it would take for this to happen is too scary to even consider.
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, he or she would buy a currency with a high interest rate and earn that interest while, at the same time, selling a currency with a low interest rate. With a large number of lots, interest income can be very substantial and could work to reduce your average entry price.
Binary Options Martingale Strategy
Without any software or knowledge, binary options martingale strategy is not profitable. If you are inexperienced investor, you will need reliable signal provider for your help. You can choose either fully automated or a signal provider that gives you suggestions, but you make the final investment decision.Let’s go through a little bit about pros and cons of this strategy.
1. We make a bet of 10 Euros in point A that the rate will go down (DOWN).
2. Let’s assume that this time the bet has lost. Now we make a bet in point B and say that the rate will go down (DOWN) again, but this time we make a bet of 28 Euros.
3. IF the bet has lost again, we increase it once more and say the rate will go down (DOWN), but as we can see in the picture, point C is below point B, so we have won.
4. Repeat all of the actions mentioned above. Some time you will lose more that one bet in a row! But do not panic, just double it up and wait for winning one!
Some calculations for this example:
The amount of the invested money = (10+28) =38 Euros
Money won = 28*1.71=47.88, so, we have won 47.88-38= 9.88 Euros in 30 minutes (if we bet on 15 minute expiry time)
Advantages of Binary Options Martingale
- You will rarely have a losing day. If you are one of those guys who hates to have losing day more than anything else, binary options martingale might be for you. Only thing you need find is a suitable investment which short period value changes you think you can anticipate. 60 second options are best for this use, start with small investment and double the stakes if you do not hit right.
- It is most likely way to get steady income from binary options. If you want to have steady income from binary options, you get it by using this method more likely than any other way. Therefore, this is an excellent strategy for those investors for whom steady stream of income is most important factor.
- If you have good market analysis based strategy, combining that with binary options martingale strategy can give you extraordinary good results. Combining this two strategies, you can achieve an incredibly good results. The best thing about this is that you do not even need have solid knowledge of market movements, but market strategy can be based fully on signals produced by robot. If you want to choose the best signals you can use a program like binary stealth, and if you want to leave this task also to robot, you can use for example The Real Robot, which you can get completely free by clicking the button below.
Disadvantages of Binary Options Martingale
- When you lose, losses are bigger than usually. Even if the losses are less common using this strategy, they will come at someday. Some might lose at the first time, while others it may take dozens of times. It all depends on how lucky you are and how accurate are the signals you are using.
- If you try to follow this strategy without robot or investment knowledge, the results can be catastrophic. Even though I have warned many times, some still want to go try the Martingale without any knowledge or software. Why some people do so? Given the advantages of this strategy are so attractive that even though the loss would be likely, many still want to take the risk. Even if you try Martingale out cold, you can still have many winning days in a row.
The Bottom line
Binary Options Martingale is one of the best strategies if you use it with purpose and have sufficient information how take advantage of it in a best possible way. On the other hand, results can be disastrous if you don’t know what you are doing. Therefore, it should be used carefully only in a favorable situations, except if you are willing to take the risk that you lose the invested assets. Such a situation could arise, for example,when you need immediately $ 1000 and you only have $ 600. If it is almost the same to you own a $ 600 or $ 0, then it it might be worth the risk.
As attractive as the martingale strategy may sound to some traders, we emphasize that grave caution is needed for those who attempt to practice this trading style. The main problem with this strategy is that often, 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 is entirely too risky for their tastes.