Many money management options are applied in the binary market function; among them, the Martingale method is getting popular every day. To make sure that we’re on the same page, remember that this methodology is designed to manage capital and not to find optimal entry points. If you keenly observe certain rules, any trader can bring home profit, regardless of how many losing trades he has. Read the information below and see what you can learn.
Martingale Money Management Strategy
Martingale method on binary options is easy to use and understand, and due to no requirement of complex calculation, it also has an acceptable level of profitability. For these reasons, this method is preferred by both beginners and professionals. It has a fun origin; in the 18th century, gamblers used to apply this method to get sure wins. The theme of the strategy is you have to double the amount of investment of the subsequent transaction while losing the previous one. There is a limit to the wrong prediction, so by doubling the amount of investment, the trader is bound to make a profit eventually, which will not only return your lost money but also will give you a certain reward.
In this way, even if the negative forecast outweighs the positive ones, you are still allowed a steady income. However, using this method would require an impressive deposit, since you’ll need to invest quite a lot. So it is safe to start the game with the least amount of bet every time.
Just like the probability theory, it is based on the Martingale strategy assumes two types of possible situations, which makes the probability of a correct forecast 50/50, either the price goes up or down. All the traders have to do is to wait for the right transaction, despite the failed forecasts.
Layout of the Strategy
Because of its effectiveness, most gambling houses do no appreciate it and do whatever they can to stop its application. But since trading is not identical to casino games, no broker has banned its use yet. Depending on the traders’ self-discipline, style, and rules of risk management, his success depends, one of the best things about this strategy is, it doesn’t need any special preset and fits just into any style. You won’t need to change a thing for this to work.
To get a reasonable profit, you’ll have to understand the amount of money to invest in a subsequent transaction after a failed forecast. The level of profitability, as well as the number of trades closed with a minus, determines the amount of each subsequent investment. Most trading resources provide a Martingale online calculator for simplified operation. You’ll need to start by calculating the size of the deposit you might need for trading, which is done by adding up the sums from all presented series, with the initial parameter set at least $6.736. But it can be reduced by squeezing the first investment. Also, by strictly following the chosen trading algorithm, you can minimize the possibility of the appearance of losing trades.
Determining the Direction of the Trend
One of the most vital things to take into consideration about martingale strategy is seeking the most appropriate point to enter the market. During the large backdrops of economic, even using this method isn’t recommended. If you keep the relevant factors in mind, the positive expectation from the trade goes up to 50% or as high as 80%.
Rules of Trading
Supposing you invested $20 in a trade, which leaves two possible scenarios – you either won the trade or lost the money. In the second case, if you want to apply the martingale strategy, then follow the below instructions.
- Make the subsequent investment immediately after closing the previous transactions.
- Keep the value direction movement the same as the previously lost transactions.
- Same expiry date or time.
- Make the next investment at least twice the previous one. It is wiser to determine the degree of increase by the yield of binary options.
The buyer options don’t affect the strategy, be it both higher or lower. But the level of return by any particular broker can make a difference. Mind you; you’ll need a fairly decent amount of deposit because if you run out of it before reaching the expected profit, the loss will be on you.
Things to consider before using this option
Unlike most of the transaction strategy, the Martingale method can be used in any situation. To minimize the chances of losing, you should consider setting the expiry time more than 15m. But you can alter it as you wish, depending on your strategy. Finishing by highlighting the importance of estimating the amount of deposit depending on the first investment.
Complying with the rules and appropriate application of the strategy can cause a breakthrough in your trading experience. In the field of binary options trading, its effectiveness has good feedback and a calculated chance of a big win. However, except having a large enough deposit this strategy can’t do much good to you, you need to be ready for at least seven losing transactions. But with deposit back up, you are good to go!