At the principle of this strategy is simply doubling the amount of the previous transaction in case of failure to obtain profitable results. The deal closed in plus, compensates all previous losses with the result of 90% of the amount by which the very first option was purchased. You simply double the rate until you win. We win only that we could benefit from the amount of the first bet. Martingale’s method was borrowed from the game of roulette, but in the case of binary options trade has been changed. In the casino there is simple doubling the rate as long as the result will not be profitable. But in this case, the player may face a force of majeure circumstances, which are:
– elementary shortage of funds on deposit for the next doubling;
– limiting the maximum bet amount (which is quite often).
The novice trader can find the same obstacles, who trades the binary options, and decided to earn using the Martingale’s strategy.
For this reason, trade Martingale’s method in its classical interpretation, the business is extremely risky and thankless, and binary options trade has made essential corrections significantly improved the profitability of this technique.
So, let’s consider variations of the “Martingale’s method in binary options trading.”
Martingale’s method + determination of the trend’s direction
First we need to choose a currency pair that has more or less expressed trend of price movement. If the trend is clearly defined, there are backgrounds to assume that in the near future its direction is unlikely to change. This observation should take into account that in conjunction with the assessment that we can ensure the application of indicators for binary options chart. Martingale’s method, together with technical analysis doubles the chances of trader in a series of profitable trades. Thus, we determine the stability of the direction of the trend and work on strategy, doubling the amount of the next transaction in the event of loss, and leaving unchanged the amount in the event of a successful outcome.
The method of “smart” Martingale
As we have discovered, the method of “standard” Martingale, though works in the real world, but it is extremely inefficient, because its using often requires a very large amount of the deposit, and the risks associated with the opening of each new order all the time increased by half, and the profit in case of success does not exceed the size of the original bet.
Over time, the Martingale’s method was adapted to the existing conditions of market trade, and acquired the name of “method” smart “Martingale”, the essence of which consists in multiplying the amount of the following after losing the deal was not twice, but a specially designed coefficient. This approach is essentially “unloads” the trader’s deposit and increases its protection against potential risks.
We call this method of calculation the compensation factor and explain the principle of its operation.
The first thing to do is to take into account the profitability of the selected asset. As you know, binary options on the currency pair, for example, it can vary from 50 to 92%. So, we need to calculate the compensation factor in the way where it is still to multiplication by his previous deal, which has become unprofitable, offset the amount of incurred losses and has brought at least a minimum income. In such cases, it is always better to start with small amounts, because, like many casino binary brokers also have limits on the maximum amount of the transaction.
If we begin with a large amount, and you may simply not have enough steps to increase while you wait for a positive result. However, even if you start with a low start, it is important to be able to stop in time, so as not to fall into a hopeless long series of losing trades. To deal with this marsh will help informal setting stop-loss level. Normally, such a stop-loss order is a certain percentage of your deposit, above which you currently do not allow to rise in the level of losses incurred by smart Martingale’s position traded. Let’s say your deposit is 500 USD. You have decided that the level of your stop-loss for the Martingale’s method is 10% of your depot. If the sum of all unprofitable trades made by one position equal to the sum of 50 USD, multiplication by the compensation factor should stop and start trading again on the same or another position.
Tactics of smart Martingale method is much more effective than the classical doubling, for two simple reasons:
– You limit yourself to loss,
– You probably have enough deposit to close positive transaction.
Williams Alligator’s indicator to Martingale’s method
But let’s back to the trend, without defining that movement trends, even “smart” Martingale’s strategy will run poorly. As mentioned above, in order to properly determine the movement of the trend and work out the strategy of the Martingale, you need to apply certain technical indicators. The most effective indicator, which allows most accurately predict the beginning and the end of the trend, called the Alligator Williams or just an alligator.
The principle of its operation is based on the application of the strategy of moving averages. Alligator consists of three colour lines: red, blue and green. The principle of operation is based on the Alligator intersection of these lines. If sliding intersects a long time, it means the Alligator is asleep, and waking up, it will be very greedy. That is, the future trend will be bright. If the trend began to decline, and bars are located under the green moving, you need to open a put option. It is desirable to do so, either immediately after moving differences or trade in the short time frames, as long as the trend line touches the green indicator. Similarly, it is necessary to open the call option if the trend has gone after the divergence of sliding over the Green Line. Trading Martingale’s method based on the analysis of the Alligator indicator – can be attributed to trade binary options strategy for 60 seconds binary options strategy with timeframes for 15 minutes.
Martingale’s strategy: conclusions
So, getting an idea and become acquainted with the basic techniques of effective using of the Martingale’s method in practice to trade binary options, we summarize all of the above and adding to the basic postulates of trading, which should never be forgotten for a successful outcome:
– the market is always in motion. Do not rely on the long trend movement in the same direction, after a long fall or rise price correction will surely come;
– issues of economic news usually increases the volatility of an asset that plays minus to the basic principle of the using of the Martingale’s strategy – trading on explicit unilateral trend;
– always start again with a minimum amount of waste in a case of successful orders;
– according to the theory of probability, each new transaction open after the closure of loss-making, increases the chances of winning.
And the final conclusion: never stop to learn and develop. Practice, the risks are on the brink, but do not forget to insure reliable, and you will definitely get good financial results.