Martingale is one of the most famous betting strategies and it appeared in the 18th century in France. It was first developed for casino games and then it was developed for betting and became famous. The martingale strategy is used for trading as well, especially for forex trading and one of the key questions that some of you are asking is if this system could be used for binary options as well.
Let’s first explain a bit how the martingale system works for betting. You need to choose a bet with the odds of success of minimum 2.0. You then place a bet of 10 USD for example. Let’s also assume the bet will be a loss so there you go and place another bet with the odd 2.0 or higher, only this time you double the amount to 20 USD, instead of 10. If it will be successful you will gain 10 USD net profit (because you earned 40 USD, but your bet was worth 30 USD in total). In this way, you can make profits using martingale.
Can it be used for binary options trading?
The answer is NO. If you are already familiar with binary options, you most likely already know that the payoff ratios are below 100%. That means in case of a winner you barely recover your initial amount at risk. In the example above, in the case of a winner, you would have doubled your money. That is not the case for binary options.
In fact, adopting a martingale strategy will mean having the mathematics against you and the chances of you losing all your capital are very close to 100%.
Martingale is not a profitable strategy for binary options and those of you who plan to use it could better find another way.
Only if you can manage to trade binary options with a very high accuracy (85-90%) you can think about using martingale. That performance is pretty hard to achieve, especially for beginners. With that being said, you should better avoid martingale, as losing periods will hurt your binary options trading account very badly. Consider carefully the expectancy of a particular strategy before using it.