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The principle of the strategy, which is based on the tactics of Martengale, is very familiar to all lovers of gambling.
The successful application of Martingale tactics can be seen in roulette betting.
The percentage of winnings for players who use the principle of doubling down is very high. But, for the application of tactics, a significant initial deposit is needed.
In this regard, most gaming establishments have introduced restrictions on the maximum bet amount, which makes it impossible to use the Martingale tactics.
When trading binary options, there are no such restrictions, which is a big plus for those who use this tactic.
Basis of the martingale tactic
This tactic was the idea of the mathematician Paul Pierre Levy, who lived in France. Everything is based on the application of probability theory.
Thanks to this, the Martingale tactics, after its release in a wide public circle, has gained admirers in the face of many professional players. At the very beginning, the tactic was not called that and was called "doubling down".
The tactic is as follows:
- First, the trader opens a position.
- When an open position makes a loss or the probability of its winning becomes zero, it doubles.
- In the event of a subsequent victory, the player covers not only the loss, but also receives an additional win.
The mathematical explanation for this is simple: according to probability theory, where there are only two options for solving a problem, the distribution of the result will always be equal to the 50/50 ratio, or tends to such a result.
This is a classic coin toss example, but the same side of the coin cannot always come up, so martingale works best on binary options, not forex.
Using martingale in binary options
In addition to casinos, martingale tactics are successfully used on binary options, but this style of play does not work on Forex, read why.
On BO, the principle of operation is similar to playing roulette, but here we use real assets that are subject to patterns, and not to the chaotic algorithm of a slot machine.
Therefore, the martingale is quite a working trading tactic, the main thing is to observe the risk management and the doubling ratio of positions.
Trading is carried out in such a way that in the event of a losing trade, each subsequent position will be doubled until the trader receives a win.
But, since in binary options, with a positive result, we do not get + 100% to our bet, but have a fixed % payout, which of course is less than 100%, then in doubling it is necessary to use a coefficient that adds % to doubling.
All this is calculated according to the following formula:
- X - the amount of the very first bet when trading using the Martingale system;
- Y - the sum of all previous transactions;
- K is the percentage of profitability for a correct forecast;
- S - the amount of the next required bet according to the Martingale system;
So you can calculate your further positions without calculators, for example:
Your initial deposit is 1000$. When working on martingale, it is recommended to start with minimum rates, for example, at 5$.
If use quality strategies or at least signals, then the risk of getting a series of losing trades of more than 5 is extremely rare, almost unreal.
Usually, the martingale is calculated by a coefficient of 2, but according to experts, this is too much, it is enough to use a coefficient that will be equal to the percentage of payouts.
For example, for the selected asset 70%, it means that after each losing trade, we should add up all the losing positions and divide by 0.7% in order to cover the previous loss and still earn.
Here is a simple scheme of actions:
Bet 5$ = received a loss;
We put the next bet not 10$, but 7$, based on: 5+(5/0.7)=12$ and again a loss
The next one will follow the same formula: 5+(17/0.7)=29$. Where 17 is 5+12, the sum of previous trades.
For convenience, you can download Excel document with this formula for calculations.
In general, trading binary options using Martingale tactics is quite simple, the main thing is to follow the rules of risk per trade.
How not to drain the deposit when working on martingale?
In fact, it is as difficult to drain a deposit as it is to disperse it. Quite a controversial issue about martingale. Many people say that it is impossible to trade with martingale, but in fact, large deposits are dispersed by traders using martingale.
Just to work on martin, you need a deposit of at least 1000$, the minimum of 250$ may simply not be enough for you to cover a possible series of unprofitable positions.
What are the advantages of martingale?
- You can very quickly disperse the deposit;
- If you use proven strategies, the number of unprofitable series is reduced to the minimum possible (approximately maximum 3).
The principle of trading with the anti-martingale is exactly the opposite of the usual martingale.
When trading with the anti-martingale, we increase the rate not after the loss, but vice versa - after the profit.
It looks something like this:
- The first bet 5$ is profit;
- The second bet is already 10$ - we get a loss;
- We start the third bet anew with 5$ - again a loss;
- Fourth 5$ - profit;
- Fifth 10$ - profit;
- The sixth 20$ is profit.
The usual martingale seems safer at first glance, because according to the anti-martingale, when you increase your position after each profitable position, a possible loss can simply cover your entire deposit.
For beginners, it is recommended to overclock the deposit according to the classic martingale scheme, but the deposit should start from 1000$ with a minimum rate of 5$.
Accordingly, if your minimum bet is 20$, then to apply the martingale, your deposit must be at least 4000$.