Martingale Strategy or Martingale Trading Strategy is a system which originated in Roulette and Gambling. What is Martingale Strategy? Is Martingale safe to use with trading? This and more in our Martingale trading and strategy educational review for binary options trading.
How did the Martingale Strategy Originate?
Wikipedia describes the Martingale system as A martingale is any of a class of betting strategies that originated from and were popular in 18th century France. The simplest of these strategies was designed for a game in which the gambler wins his stake if a coin comes up heads and loses it if the coin comes up tails. The strategy had the gambler double his bet after every loss, so that the first win would recover all previous losses plus win a profit equal to the original stake. The martingale strategy has been applied to roulette as well, as the probability of hitting either red or black is close to 50%.
Will the Martingale Strategy work for Binary Options Trading?
In binary options trading the strategy with Martingale is also based on the probability theory. Since the platforms of binary options trading provide a very simple way in which to take trades, the same principle of probability can be used.
Technically, all you have to do is take a trade in one direction, always betting on the same direction. When a trade is lost, you simply double up your trade stake and take the trade in the same direction.
In the very popular video presentation by Keith Jones we are told that he tries a variation of this strategy. Keith Jones takes trades starting off at $5 and keeps up the trading pace at $5 until he loses. Once he loses he doubles his trading stake. According to Keith Jones in this video you can make as much as $1 per minute trading his strategy. According to Keith Jones a 70% payout is required for a 60 second trade, which should be taken according to market sentiment. READ FURTHER – WE DISPROVE IT WITH REAL LIFE TRADING!
In principle if you start off with a $5 trade with a minimum payout of 72 % you should be covering your losses simply by doubling up your capital.
In reality we have discovered that the percentage of the payout needs to be higher than 72%. This article about the Martingale strategy in binary options is intended to disprove the myths. In principle and on paper the Martingale strategy can earn you money trading online. However, one needs to have a large and ample capital, plus nerves of steel in order to make any money from the Martingale Strategy.
Here is an example of a trading exercise executed in the video below using the Martingale Strategy with a 72% payout
Trade 1: $5 = LOST -$5
Trade 2: $10 = LOST – $10
Trade 3: $20 = WON – Payout of $14.40
Net Loss is $0.60 cents
Take the scenario a little bit further and assume you also loose Trade 3 and you take Trade 4 at $40. At 72% payout, this is how the situation looks:
Trade 1: $5 = LOST -$5
Trade 2: $10 = LOST – $10
Trade 3: $20 = LOST – $20 – total loss so far $35
Trade 4: $40 = WON – Payout of $28.80
Net Loss is $6.20
Therefore with a payout of 72% the Martingale strategy of doubling your trade value does not really work. You need at least a 90% payout in order to cover your losses.
Alternatively as we did in our trading session you will have to increase your trades to more than double in an exponential manner.
In this nerve wrecking session, we have traded live on our Tropical Trade platform and managed to earn $55 in 20 minutes, but not before risking at trade of $600 to cover all previous losses.
Watch this video showing how to use martingale strategy in live trading or continue reading
Trading History Using the Martingale Strategy
Is the Risk Value worth the Effort when using the Martingale Strategy? Watch this video and decide whether you can stand the pressure to trade using the Martingale Strategy.
Without any knowledge of binary options, the martingale strategy is not profitable. If you are a new trader, you will definitely need a good signal provider in order to give you direction for your trades.
Pros and Cons Using the Martingale Strategy
Here are the Cons of Trading Binary with the Martingale strategy:
- You will need to have nerves of steel to keep trading and to recover your losses.
- You will need to have a big capital because the speed at which you can burn your account is too fast and without the buffer of a large capital you will not be able to recover your losses when using the Martingale strategy.
- If you try to use this strategy without consulting an excellent signal software, but rely only on the preferences shown by your broker, the results can be catastrophic.
Here are the Pros that the Binary Option Sheriff can see using the Martingale Strategy.
- If you have a good market analysis, or a good signals indictor, which are based on strategy, the Martingale Strategy can be a good way to recovering losses. Longer term trading in binary options such as 30 minute trades actually pay out close to 90%
- Combining a good signal software, or creating your own signals through learning how to trade binary options, you can achieve good results. Given that most of the trades will be winner trades from good strategy, doubling up on a lost trade can recover your losses. In this case only using the Martingale Strategy can help you with seeing a positive growth on your capital.
Best Signal Software to Combine with the Martingale Strategy
- Copy Buffett – this software is incredibly easy to use and the strength signals can be modified depending on your risk appetite. Executing manual signals with Copy Buffett will ensure that you have a good success rate. At a success rate of 85% you experience a higher rate of in the money trades. Once you have a losing trade, you double your trading value on the next signal.
- CodeFibo – This innovative Software is also giving signals based on the strength of the probabilities of winning. The frequency by which the signals are given is higher than that of Copy Buffett but the success rate is a little bit lower at 75%
- Neo2 – This software is based on the analysis of solar data. The signals can be executed manually on separate platforms or even your personal platforms which you can in turn execute at lower values.
Best Broker for Binary Option using Martingale Strategy
When choosing a Broker to execute the Martingale Strategy there are some very important factors that you need to take into account. The value of your initial investment is essential. Secondly the starting value of your trades is also very important. You will want to start with a low trade, ideally as much as $5! The third and very important factor is the pay-out rate. Higher paying brokers are preferred when using the Martingale Strategy.
- Tropical Trade. Tropical Trade fits all the bills. You can start trading with just $5 and your initial investment can be limited to $250. Although we do not recommend taking a bonus, Tropical Trade offer a 100% first deposit bonus with no upper limit.
- Porter Finance. Porter Finance also have a portal which allows trades with just $5 and with an initial deposit of $250. Bonuses vary according to deposit. Verifying your account is pertinent prior to trading.
- IQ Option. IQ Option have the lowest minimum deposit at just $10. They have a great trading platform and you can also open a FREE Demo Account and practice the Martingale Strategy as detailed above.
- Banc de Binary. Banc de Binary is a good broker because it is a regulated broker by CySec and therefore offers traders protection. Banc de Binary however do not accept U.S Customers.
- Nadex: Nadex is the only regulated broker in the United States. They are serious and offer protection to their U.S clients. However the platform is a little bit complicated for new traders.
Conclusion on Trading the Martingale Strategy
Binary Options Martingale Strategy may be risky. However with sufficient information on how to take advantage of it in conjunction with good signal software systems, it can really work. If you do not know what you are doing, results can be disastrous. As such it needs to be used very carefully and only in favorable situations. If your capital is small, trading binary options with the Martingale Strategy should not be an option.
Further Reading – Sheriff University
As pointed out earlier Martingale Strategy can be a strategy to be used as a safety valve only with making knowledgeable decisions. Head to Sheriff University and learn how to trade binary. A good trade set up is your best bet to making money online trading binary options.
We are currently trading successfuly with Code Fibo signal software – click below or read Sheriff’s review: