As binary options trading becomes popular worldwide, traders are searching for feasible techniques that will help them make money. Binary Options Martingale Strategy is one of the well-known trading tactics. But the question is: Does it really work?
The Martingale Strategy
Martingale Strategy became the preferred betting technique (particularly in the head- and-tail coin game) in France in the 18th century. For every defeat, the gambler will double up his stake, looking forward for that one win that will help him recover all his previous losses and including returns similar to the size of his bet. This system for betting is also used in Blackjack and Roulette.
In relation to binary options trading, Binary Options Martingale Strategy is applied by traders in the Call and Put binary options trading, which lets you predict if the current value of a certain financial asset will go up or down after the time expires. This somehow indicates safety of your money because your chance to win is set at 50%. Once you lose the trade, double up your investment on your next trade. If you win, you get all your money back, plus small profit.
For instance, you go for Put Option on gold and invest $20 for that trade. When time expires and you lose, you will double your stake at $40 on your next bet. When you win, you get 80% (if it’s the offered percentage payout by your broker) of your $40 plus your original $40. You get a total of $72. You earn $12. The strategy is so simple, right?
The Big Risk
Some experts view Binary Options Martingale Strategy as gambling technique. This can be dangerous as it can easily make you suffer from bankrupt. Traders without enough cash to fund losing streak prior to the anticipated win should not practice this.
Another pitfall here is the emotions of the traders. Some investors cannot hold on to a series of losses as it can easily make them feel pressured, seeing their money being easily wiped out. They will surely give up. So this Martingale strategy is designed for traders with huge capital and patience to endure losing run because no one has the idea when the losses will stop. For this reason, some experts do not recommend the use of this trading strategy.
Some believe in Martingale system, though, because it entails easy process – no reading of charts, no analysis, no technical indicators and others. They also consider this as an effective tactic to manage cash. However, effective money management using this strategy may be a lie as it involves high risk. In binary options trading, you should invest no more than 5% of your capital; it is the right money management technique. It is still best to follow this 5%-limit strategy rather than gamble all of your money for measly returns. It is best to learn the basics in trading binary options and find a reputable broker instead of trying your luck in Martingale trading system.
This reverse Martingale sets its eyes on the opposite: The trader increases its investment amount after each win then decreasing it after a loss. Here, you will take advantage of your winning rather than holding on to a losing streak.
However, some experts do not recommend the use of either the Binary Options Martingale Strategy or the Anti-Martingale. They do believe that skills and knowledge are the requirements to successful binary options trading. These will help traders predict accurate direction of the financial assets they are trading in. Binary options trading is not a gamble – it is an investment.
P.S. In order to insure any of your strategies are valid you need to choose the right binary options broker. We propose to check 10Trade review for the start.
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