Binary Options Martingale Strategy

binary options martingale strategy

I already went through a little bit about martingale strategy in binary options systems article, but now I thought to go it in more detail. I will reveal how does the binary option robot uses it, where it was originally invented and how you can take advantage of it, even without using the robot.

Origins of Martingale Strategy

Martingale were originally developed as a gambling strategy in the 1800th-century France as a gambling strategy. Since a gambler with infinitive wealth will win certainly, it was seen as a “sure thing” by many wealthy players. Some of them won such large amounts in a short period of time that a number of gambling joints forbid the use of the system. The simplest form of it was flipping a coin. If gambler guessed wrong, he would double his bet every time until the guess went right. If he guessed wrong, he would repeat his original bet. Let’s make an example:

Martingale Coin Flip Strategy

Original bet: $1

I’am guessing every time that heads come up. First flip is tails, I bet $2, second flip is also tails. Now I have to bet $4 according the strategy, and I hit right this time and heads comes. Now I am winning -$1-$2+$4= $1. So if I am able to double the bet always when I’am wrong, I will eventually win the original bet amount when I hit right. Even If I hit wrong ten times in a row.

And that’s where the beauty of this strategy comes, If you have a bankroll to double the bet many times it is extremely likely that you end up winning eventually. It is not unusual that gamblers using this strategy will win ten days in a row.

 Martingale and Probability Theory

In a probability theory standpoint, knowledge of past events never help predict future events. This means that expected return will remain the same no matter how many times a particular result has came up. So basically, in a coin toss if you have thrown heads ten times in a row, it is still 50% chance that it will come also eleventh time.

So what does than mean for binary options investor? It means that you should not make assumptions just based on past results. You often get valuable information from results of the past, which can be used in the future to make more profitable investments. But simply on the basis that something has happened often does not mean that it (or opposite) will happen in the future. You will also need other indicators to make such assumptions.

martingale strategy gambling

Martingale strategy originate from gambling

Binary Options Martingale Strategy

Without any software or knowledge, binary options martingale strategy is not profitable. If you are inexperienced investor, you will need reliable signal provider for your help. You can choose either fully automated binary option robot (The Real Robot or Binary Hedge Fund) or a signal provider that gives you suggestions, but you make the final investment decision ( Binary Stealth, PayDay FM or Option Bot 2.0). Let’s go through a little bit about pros and cons of this strategy.

Pros of Binary Options Martingale

  • You will rarely have a losing day. If you are one of those guys who hates to have losing day more than anything else, binary options martingale might be for you. Only thing you need find is a suitable investment which short period value changes you think you can anticipate. 60 second options are best for this use, start with small investment and double the stakes if you do not hit right.
  • It is most likely way to get steady income from binary options. If you want to have steady income from binary options, you get it by using this method more likely than any other way. Therefore, this is an excellent strategy for those investors for whom steady stream of income is most important factor.
  • If you have good market analysis based strategy, combining that with binary options martingale strategy can give you extraordinary good results. Combining this two strategies, you can achieve an incredibly good results. The best thing about this is that you do not even need have solid knowledge of market movements, but market strategy can be based fully on signals produced by robot. If you want to choose the best signals you can use a program like binary stealth, and if you want to leave this task also to robot, you can use for example The Real Robot, which you can get completely free by clicking the button below.

Cons of Binary Options Martingale

  • When you lose, losses are bigger than usually. Even if the losses are less common using this strategy, they will come at someday. Some might lose at the first time, while others it may take dozens of times. It all depends on how lucky you are and how accurate are the signals you are using.
  • If you try to follow this strategy without robot or investment knowledge, the results can be catastrophic. Even though I have warned many times, some still want to go try the Martingale without any knowledge or software. Why some people do so? Given the advantages of this strategy are so attractive that even though the loss would be likely, many still want to take the risk. Even if you try Martingale out cold, you can still have many winning days in a row.
banc de binary martingale

Most important factors when choosing broker for Martingale strategy are 1. Payout percentage 2. Possibility to start with small investment amount and 3. Possibility to raise the stakes if needed.

Best Brokers for Binary Option Martingale

When you are choosing the broker for this strategy, there are three extremely important factors that must be taken into account. At first you have to be able to start with small initial investment. Secondly you must be able to raise investment amount big enough if necessary. The third important factor is a good average return rate. I took into consideration all these factors and calculated  four best brokers to comply with Martingale.

  1. Banc de BinaryBanc de Binary have all these things in place. You can start with small initial investment and increase it if necessary, up to thousands of dollars. In addition to this you will also get a truly great 100% first deposit bonus with no upper limit. The only downside is that they do not accept US customers. Banc de Binary is also compatible with all the robots and signal providers.
  2. CherryTradeCherryTrade came into second place in the calculations due to slightly lower return rate and smaller maximum investment.
  3. Option 888. Option 888 is a newcomer in the binary options scene. But despite it’s short history, it offers great bonuses, a really good payout rate and excellent trading platform. In this comparison, it got third place largely because it is not compatible with the robot and does not accept US customers.
  4. IQ Option. IQ Option has the lowest min. deposit ($10) and the best trading platform. They also have great bonuses. They came fourth because smaller number of trading assets.

Conclusion

Binary Options Martingale is one of the best strategies if you use it with purpose and have sufficient information how take advantage of it in a best possible way. On the other hand, results can be disastrous if you don’t know what you are doing. Therefore, it should be used carefully only in a favorable situations, except if you are willing to take the risk that you lose the invested assets. Such a situation could arise, for example,when you need immediately $ 1000 and you only have $ 600. If it is almost the same to you own a $ 600 or $ 0, then it it might be worth the risk.

References and Further Reading

Effectiveness of martingale strategy in gambling and investment: KT Teoh, SPY Ng, HR Khoo, SY Voon, PL Yee

Testing the martingale hypothesis in deutsche mark futures with models specifying the form of heteroscedasticity: Thomas H. McCurdy and Ieuan G. Morgan

MARTINGALE RESTRICTIONS ON EQUILIBRIUM PRICES OF ARROW-DEBREU SECURITIES UNDER RATIONAL EXPECTATIONS AND CONSISTENT BELIEFS: Peter Bossaerts

The martingale property of prices when arbitrage opportunities exist: N Gaussel

Empirical Testing for Martingale Property: Evidence from the Egyptian and Some Selected MENA Stock Exchanges: Ahmed, Amira Akl

Michael Allen

Michael Allen is the main author at www.binaryoptionrobotinfo.com. He holds a PhD in Economics and has worked in investment banking for 24 years.