“Martingale” principle. How to earn with binary options
The information for those who don’t know – method of money management according to martingale is prohibited by all casinos of the world. All security services of all gambling houses of the world watch the keeping of this rule. You play with this approach in casino, get profit, but in some minutes a polite assistant of security comes to you and asks to go away.
On-line casinos, which are created to empty their players’ pockets, behave in another way. In this case, the system of bets is limited not to let the player run his capital efficiently, making him drain his deposit as quickly as possible. If it were not like this, during several days players, using martingale method, would ruin all casinos of the world. So, this method has a big potential to mange own capital.
However, let’s come back to options and the ways of trading with them. Brokerage companies have nothing common with casino, and they can’t control or limit their traders in choosing the system of trading binary options and ways of managing their capital. Thus, Martingale method in trading system isn’t prohibited and is often used by successful traders. But, if you use this approach correctly in your trading system, where the number of profitable deals dominates over loss ones, then you can think that you are a millionaire.
If you are here now, it means that you are looking the answer for the question how to earn with binary options and you are trying to understand how fast you can earn with them in general. We want to make you glad this approach is found and now we are going to tell you about it.
If you don’t know yet what is binary options, we explain you in short – it is rather new highly-profitable way of trading with precious metals, currency, indices and shares in financial market. But, in the difference from trading in financial markets of Forex, binary options trading are much easier and the matter here is to make the right choice – what side the price will go in the nearest time, up or down. Thanks to its simplicity, binary options are clear for everybody. To make everything clear, we explain everything with one example.
This screenshot is the picture of working atmosphere , which includes everything to move to your first real earning. Green color is the color of the asset, with which we open a deal. This asset can be any financial instrument, which are in trading terminal in enough quantity, and it is indifferent for our strategy.
Orange square, which is at the side of the name, gives a possibility to open submenu and choose any asset easily, where the chart will have directed moving up or down. By yellow color is marked the percent of profitability from binary option trading. Our asset has the percent of profitability 70%. Time is marked by red color, which is left till the expiration time of the given option.
We can choose another expiration time, however. We choose the nearest not to wait for long. Below, we see the line chart of the price of our asset and keys-pointer – “up” –“down”. If we think, that the chart will go up to the moment of expiration time of a deal, we will press “Up, that is “Call”. If we think that the price will go down – press “Down” that is “PUT”.
For example, nowadays, we think that the price starts its lowering and press “PUT”:
After click on the key of terminal, additional service window is opened, where we need to put the sum, with which we will buy the option. We put 100$. After it, under the line “Sum” will appear automatically counted sum of profit and loss.
Thus, if the price, as we suggested, will go down, as a result of our deal we will get the profit in the size of 170 $, which consists of the starting lot 100$, with which we bought binary option, it is 10$ of profit. Pay attention that we needed for it several minutes. If we would make a mistake and the prognosis of price moving direction will be wrong, we will lose not 100$, but 85$, because a trading broker gives me back 15% from the size of a deal in the case of loss.
However, if to take into consideration financial assets market, the price of which is in constant moving, loss deals happen rather seldom.
It is everything that we need to know about binary to start earning. There isn’t anything difficult. Everything is simple and clear. However now let’s come back to the beginning of the strategy and remember that our trading must let us earn a million dollars of the USA, that is we must trade without loss.
Our strategy consists of four points, and we must follow them. In another case, you can close this page with this article and start using the trading strategy. Do you still want to earn a fortune? So, let’s continue:
1. we need to choose any chart, where there will be vivid moving up or down. It doesn’t matter what this asset will be. The most important thing is to see that 10 last minutes to the expiration time of option the quotation chart of our financial tool shows clear one side moving.
2. open your deal in the direction, which is moved by the curved line on the chart.
Taking into account the fact that in binary options trading there are only two variants where: the price will go up – the price will go down, any deal has 50% of probability to win, that is rather good prognose and chance to get profit. However, to increase your chances, you need to open deals of analogical direction with price moving on the chart.
Such necessity is based on technical analysis, where trend (tendency of price moving) will continue its moving further, but not turn back. That is why we can say for sure that for the last 10 minutes to expiration time of a deal, the price will move in this direction. Thus, if the chart goes up – it means CALL, if the price moving goes down – PUT.
3. As the financial market can be unpredictable, and it doesn’t matter what analysis a trader uses, no one is insured from losses. Thus, to come out from slumps and to compensate his own temporary losses, we will use the martingale principle. Let’s explain how it works.
For example, we choose option and close the first deal 600 rubles. After it we wait the expiration time of the option. If this deal is profitable, we get the profit to71%, which goes to your deposit. After it we close a deal again for the next option in the same size.
If the deal is a loss one? In this case w will do the following.
The martingale principle bases on the theory of probability, according to it 50% of our deals have chances to close with profits. At the same time, there are 50% of loss deals. But taking into account that in trading technical analysis is used, we decrease their number in two times and two loss deals one by one happen more seldom than getting two profitable deals one by one. Not mentioning three or even four loss deals at the same time, it happens very seldom.
That is why, if we got loss and lost 85% (as 15 % from loss a broker gives back), it is necessary to apply martingale principle and – that is we change the option and put the lot in two times more than a previous one. If the second order has given you a lot, we change it to the third option. If in the first deal we put 600 rubles, in we put 1200 rubles in the second deal, and 2400 rubles in the third one.
The results of this trading are rather easy to predict. For example, if the first bet was 600 rubles, and it was loss, our loss with insured sum of return is 510 rubles, when we put 1200 rubles for the next option, in the case of profit we get 856 rubles. We take away from it the previous loss of 510 rubles and get the profit from two deals 346 rubles.
If the second deal was also loss and you lost 1020 rubles and other losses, you got in the previous deal 510 rubles, finally we have 1530 rubles of loss and we compensate it, betting the next deal on 2400 rubles.
If the third deal is profitable, we will get the profit of 1704 rubles, which will compensate losses in 1530 rubles and give us 174 rubles of profit.
Let’s suggest that we had three loss deals, one by one , it happens very seldom of course, but we won’t exclude such variant. Then our losses will be 3570 rubles for three orders.
After it, it is necessary to make the fourth bet of 4800 rubles. But, we remember you, that according to the theory of relativity, where the general number of profitable and loss deals is 50/50, it is practically impossible to get four identical results. Thus, the fourth deal will give us the profit of 3408 rubles, and we compensate losses, we got from three loss deals 3570 rubles. In conclusion of four orders our loss was just – 162 rubles. However, four loss orders, one by one, are practically impossible, because we constantly enter the side of price moving.
Of course, this example is taken with minimal bets in 600 rubles, if you trade with them, the profit is not so big. However, you should agree that this system can help us to come out of losses and can give us constant profit.
The work of this strategy wasn’t tested with other types of options.
In this trading strategy it is necessary to use classical binary options, where the expiration time is 16 minutes.
As a rule, during a day with this strategy you can close about 30 deals. It is clear, that some of them will be as a way to compensate deals. But, about 10-15 deals will be profitable. In this case, the percent of profit increases not because of big lot, but because of absence of loss deals. Thus, if you use entering lot 5 USD, the size of your profit a day will reach 50 USD.
Rather important part of the strategy is the way of money management. That’s why, before the start of trading with this system. It is necessary to count the starting size of the deposit correctly, which is necessary for trading. If our deal is 600 rubles, for martingale trading we must have on our deposit the sum of not less than 28000 rubles, because we must be ready to any situation, including one when we will have to increase the deal in 5 times.
At the same time, even the simplest calculations tell us about the fact that with minimal bet in 600 rubles, we will have constant profit, not less than 10 000 rubles.
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