Binary Options Martingale Strategy

Binary Options Martingale Strategy

Submitted by adil on Tue, 02/17/2015 - 18:49

Using martingale strategy for binary options trading has always been a controversial topic, as many believe that one can only win a limited amount of profit before his entire trading account balance is exhausted. This can actually be true unless you know how to use this strategy for binary options trading, because there are many traders, who used this strategy along with their back-tested system, and earned significant profits on their account.

Degree of Risk Involved

Every binary options trading strategy is exposed to a certain level of risk, and it is true that martingale strategy is very risky, therefore, use this strategy as a part of your trading plan if you have additional capital to bear the losses so as to avoid depletion of your entire trading balance. Besides, everyone knows that in a trading world, highly risky trades always have high rewards associated with them. For example, if you invest $50 in the binary options market and use martingale strategy, you purchase another binary option with the value of $100 even if you suffer a loss in a previous thread. And if your $100 trade also suffers a loss, you keep going and invest even bigger amount, let’s say $200, in order to compensate for previous losses and to earn profit. So, you must have a lot of patience and enough funds available in your trading account to be able to trade binary options using this strategy.

Trade Wisely

Although, a trader is required is to have a sufficient balance before employing a martingale strategy for trading, but it is equally important for him to be fully equipped with the knowledge and experience that is required to place reasonable trades after analyzing the market trends and charts. Binary options trading calls for patience, and sometimes, traders are unable to make profits with this strategy because they are emotionally unstable and end up taking hasty decisions that results in losses.

So, when you are trading in a binary options market using a martingale strategy, you must carefully analyze the market and place your trades wisely, as it requires continuous investment even after a loss in order to compensate for previous losses and to earn profit with increasing probability of winning a trade.

Martingale Strategy vs. Anti-Martingale Strategy

As opposed to Martingale strategy, in Anti-Martingale strategy, a trader decreases his investment if he or she suffers a loss. However, if your balance goes down by 20% due to losses, you must increase your investment by 25 percent when you use Anti-Martingale strategy.

Benefits of Martingale Strategy

Traders, who trade currency pairs in the binary options market, know that the currency earns interest over a certain period of time. Therefore, they purchase currency with high rate of interest to increase their earnings over a long period of time, while using this strategy to cover the losses suffered due to losing trades.

All in all, it can be said that Martingale strategy can be a great strategy for traders if they have a reasonable trading plan and trade wisely, but it can be very risky at the same time if they do not have a trading plan, or if they trade blindly without analyzing the trends. All the experienced traders, who use this strategy, advise that a trader must use trial and error approach before planning to use martingale strategy in their trading plan.