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Can Martingale strategy be successfully used when trading binary options?

Martingale strategy

The Martingale strategy seems to be an infallible system for binary options traders, but it requires deep pockets and total commitment from those who use it

Very few people don’t know what the Martingale strategy stands for, but while many understand its utility when playing roulette or blackjack, using it when trading binary options remains a mystery. The question is whether this system can help traders offset their losses and stay profitable on the long run, and how can it be adjusted for these financial instruments. Essentially it compels you to double the amount wagered after each loss, hoping that eventually the losing streak will end and all losses will be recovered.

Trading application of the Martingale

Using the strategy when playing roulette is very simple, because players need to choose a type of bet that has roughly 50% chance of ending with a profit. They keep doubling the amount until they win and this is pretty much it, but if the martingale is intended to have a trading application, then the rules need to be expanded. A good example comes from those binary options that have currency pairs as the underlying asset, and the trader expects one to gain value over the other.

The payout depends on how ambitious the forecast is, so if you expect the EUR/USD to rally from 1.293 to 1.300 over a short period of time, you will gain more than predicting an increase to 1.294. Those traders who intend to use the martingale, will open subsequent positions for all the values ranging from 1.293 to 1.300. They start with one lot for 1.294, continue with two lots for 1.295 and double the lots for each consecutive value because this will also trigger a steep increase in the pips count.

Binary options traders beware

While everything sounds great on paper and the martingale promises to help traders recover all of their losses, this is a flawless strategy only in theory. The same risks that threaten marking the users in roulette apply to binary options trading, because those who use the strategy need to have deep pockets and the desire to risk losing huge amounts. A system that starts with just a few dollars wagered can force the trader to commit thousands in a relatively short period of time, all in the name of chasing losses.

On the good side, traders don’t face the limitations of regular roulette players using the Martingale, because they don’t have to worry about the roulette limit. In addition to that, currencies get devalued but they never reach zero which means that at least in theory they can’t lose if they have enough money and are fully committed to the cause. Another advantage that binary options traders using the Martingale strategy for currency pairs enjoy, is the fact that they earn interest in the currency they own. Knowing this many prefer to buy currencies that carry a high interest rate while using the Martingale strategy.

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About 

Hi, my name is Frankie and I am a 28 year old blogger. Most of time I read and write about things I love.
The beauty of being a freelancer is that time is always on your side and if you do everything with moderation, it is possible to enjoy the best things in life. On a more lucrative side, I had a short affair with the attractive world of binary options trading and stock markets, but I found it to be more profitable to make forecasts than to open positions.
I guess some passions are born well before we actually have the means to chase our goals. I’ve always loved travelling so I channel all my energy and resources in this direction, and I like to believe that I’m finally catching up with my dreams. When I’m not visiting new places, I try to enjoy the great outdoors as often as possible, or at least stay in shape by playing tennis. While I’m only a shadow of my former self and this sport tends to get increasingly difficult as I grow older, I have no intention to quit any time soon.

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