Successful Martingale Strategy
Origins of the Martingale Strategy
- There are many roulette betting strategies out there that have been out there for years but they are a myth that they are effective. For example, there is the famous Martingale system, invented by the French but made popular by famous London Casino owner John Martingale. The idea is that when you make a bet and lose, you double down.
- Is the Martingale Strategy Suitable for Money Management? One of the main ways to sustain profitable options trading is money management. You'll want to minimize losses and increase your winning trades. This way, winners will offset the losing trades and leave you with some profit. But when you incur a loss, adjusting your trading to.
Usually more commonly associated with gambling, the Martingale Strategy is also successfully used as a betting strategy for binary options. Now you may have heard of the Martingale strategy without actually knowing what it is all about. So lets explore.
The Martingale strategy was first created by Pierre Levy sometime in the 18th century, and was first used for successful predictions on gambling bets in France. The principle is very easy. The Martingale strategy is based on what is known as the doubling down strategy. According to Pierre Levy, it is possible to successfully recover any money that has been lost in previous bets by consistently setting up bets in the same direction, each time doubling the size of the investment. The thinking is that eventually, the increased payout from a successful trade down the road would cover for any losses that had been sustained earlier.
The strategy, which was first used in the gambling tables, has been adapted for use in the financial markets, as well as in binary options. Obviously, it is not a very good idea to just keep doubling bets continuously, or to keep doing this all the time. So a modification was made to this strategy for use in forex and binary options.
The Martingale strategy was first created by Pierre Levy sometime in the 18th century, and was first used for successful predictions on gambling bets in France. The principle is very easy. The Martingale strategy is based on what is known as the doubling down strategy.
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| ✔ | 90% | $ 10 | $ 1 | ★★★★★ | Review | |
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| × | 85% | $ 5 | $ 5 | ★★★★ | Review | |
| × | % | $ 10 | $ | ★★★★ | Review |
Martingale Strategy for Binary Options
The Martingale strategy for binary options is a trading strategy which aims to recover capital that has been lost in previous failed trades by consistently doubling the investment amount in subsequent trades. The thinking behind the strategy is that by increasing the amount invested in subsequent trades, it is possible to get an increased payout if the trade is successful, thus eliminating any previous losses that may have been sustained on the account.
How to Apply Martingale Successfully
To better understand how the Martingale strategy in binary options works, the table shown below has been drawn up to enable you get a hang of it. The trader starts with a capital of $2,000 and starts off with an investment amount of $100. We will also assume that the trader’s payout for a successful trade is 80% of invested amount, and that there is no loss return (any invested amount lost = 0% payout).
Trade Direction | Trade Outcome | Invested Amount | Profit/Loss | Account Equity |
| PUT | Win | 100 | 80 | 2,080 |
| CALL | Lose | 100 | 100 | 1,980 |
| PUT | Lose | 200 | 200 | 1,780 |
| CALL | Win | 500 | 400 | 2,100 |
The first trade in this example resulted in a win of $80, representing 80% payout for an initial investment of $100. Unfortunately for the trader, the next trade was a loss. Given the fact that a losing trade can wipe out a previous winning trade of the same level of investment with residual loss on the account capital, the trader’s account went below the starting capital. We can also see the sequence of loss continued with the next trade. Now down by $220, the trader decided to employ a Martingale strategy by doubling up on the previous investment. The resulting win ended up covering the losses sustained and still left the trader with $100 extra on the starting capital.
This is a demonstration of how the Martingale trading strategy works. However some points must be duly considered.
Important Considerations
- Market conditions are not perfect, and there is indeed no guarantee that the doubled up trade will always end in profits. This element is what makes the Martingale strategy a very risky one.
- To be able to execute the Martingale strategy, the reward to risk ratios must be carefully assessed to determine the safety of the strategy at the particular time.
- Executing a Martingale strategy requires access to a large pool of capital. We can see that from our example that the strategy required the use of $900 in capital. If the doubled trade had ended as a loser, it would have led to the decimation of 40% of the account after only four trades. So the trader must be ready to deploy bank transfers to get as much deposit capital into the account as possible.
- This strategy should be used on the more predictable trade types. Using the Martingale strategy on multiple options is not a good way to deploy the strategy. It is best to use the Martingale strategy on the Call/Put trades, as this is the most straightforward binary option to trade.
How to Use the Martingale Strategy in Binary Options
What is the best way to deploy the Martingale strategy in binary options?
- Only Use Predictable Financial Assets
It is important to trade the Martingale strategy with assets whose movements are more predictable. Assets that are prone to making wild swings in price movements are not suitable for Martingale-based trading.
- Combine the Martingale Strategy with Trend Line Trading
Trend lines are usually used to demarcate areas of support and resistance by connecting the price lows and price highs respectively. Support and resistance areas are important because they provide a sound technical basis for possible price reversals or even price breakouts. This puts an element of predictability into the trade and therefore gives the trader a clue as to when to “double up” the investment.
- Deploy Price Action to Your Benefit
Price action trading using candlesticks is a time-tested method of predicting price behavior. Candlesticks can give an indication of what the buyers and sellers are doing in a market. So by studying the candlestick patterns, you can tell when prices are about to move in a certain direction. This takes away the gambling component from the Martingale strategy and makes for more successful predictions.
- Trade During Times of Peak Market Activity
All financial markets have periods of peak activity. Use this information to your benefit. For instance, the forex market has two periods in the day when two trading zones have a time overlap. This is the peak of trading activity for currencies in the overlapping zones. The stock markets have trading hours and have periods of increased activity within those trading hours.
- Use Sound Money Management Techniques
In the execution of the Martingale strategy, it is important to ensure that sound money management techniques are used. The 3-5% rule in terms of how much exposure of capital can be accommodated in active trades must be followed. This means that the initial set of trades conducted on the account should be done with the minimum trade size, so as to allow for expansion of the trades when the need to double up arises.
- Ensure the Trading Account is Well Funded
One of the key money management principles requires that the trading account must be well funded. This is perhaps the only way to accommodate increased investment into active trades without putting the rest of the capital in great jeopardy. It is important to note that not all Martingale trades will pay off at the first instance. How do you survive in the market if the doubled investment ends in a loss? It is by having a good reserve of trading funds. If you do not have access to such a cash reserve, please leave the Martingale strategy to those who do.
FAQ’s
Q: What is the Martingale Strategy?
Answer: It is a betting strategy. It comes originally from the world of gambling but can be used for binary trading too. The basis of this strategy is how much to raise each investment amount depending on whether you lose or win the last trade. The strategy states that you should double up your bet each time you lose the trade before. If you win you should keep the same amount that you have previously bet.
Q: How safe is the Martingale Strategy?
Answer: How long is a piece of string? It really depends on your success levels with the trades you are placing. For instance let’s assume you are having a bad role and you have had 5 losing trades in a row. You started by investing $100, on the second losing trade it goes up to $200, then on the third trade to $400, $800 and then finally by the fifth trade you will need to invest $1600. That’s a huge amount for one trade and it means you will need to have a huge amount of starting capital, as you will lose $3100 in just five trades. If you have a huge bank roll its worth considering as a betting strategy, however it goes against most traders’ capital management and risk management strategies.
Roulette is without question one of the most popular casino games. It can be played with no skill and you can find a roulette table almost in just about every casino in the world, online or live.
Roulette is purely a game of luck, but if you learn these roulette strategies, you can significantly improve your odds of winning.
Above all, it’s important to keep in mind that all gambling games are nothing more than entertainment. The casino wants to cash in on your desire to win. Therefore, they make it very hard for you to not only realize how much you are losing but to quit playing whether you’re up or down.
There are more strategies and systems out there than I could possibly cover in one post, and each of them claims to be the most successful roulette strategy.
So, rather than cover every situation under the sun, I’ve chosen to focus on four of the most popular roulette betting strategies.
These strategies will help you hedge your losses and maximize your enjoyment.
Finding the Most Successful Roulette Strategy
There are lots of different bets you can make playing roulette, although most beginners bet on either red or black or a number. That’s fine, but there are tons of other bet combinations you can make.
While this is a game of chance, and you’ll need some help from good old lady luck to go on a streak and win big, using a proven and effective roulette betting system to win can help.
Under each roulette strategy below, I’ll give a brief description of how it works. I’ve tested these strategies over a countless number of spins of the wheel, and the results are clear. These aren’t new roulette strategies but are some of the best-known and battle-tested systems available today.
How To Make Martingale Strategy Work
1 – The Martingale Roulette Strategy
One of the advantages of the Martingale roulette system is that it’s incredibly easy to understand. In effect, all you need to do is double the size of your previous bet until you win.
The theory is that when you eventually do win, you’ll win back everything you have lost and the value of your original stake. This system only works on even money bets like red or black.
Let’s say you start by betting $5 on red and lose. Using the Martingale system, you double your next bet to $10 on red, for example. If you lose again, you double your next bet to $20, and so on.
Using the example above, if you won on the $20 bet, you would have won back $40, covering the $15 you had previously lost, plus the $20 stake, and putting you up $5.
Yes, to a certain degree.
You can profit from it short-term, but the key is knowing when to get out. If you keep betting, the odds of roulette will catch up with you, or you’ll hit a table limit which doesn’t allow you to double your previous bet.
If that happens, as it has to me, you’re in too deep. It is probably best at this point to cut your losses and start over with your initial bet.
2 – The Paroli Roulette Strategy
If you believe in hot streaks and dry spells, which we’ve all endured when playing roulette and other casino games, the Paroli or ‘Reverse Martingale’ is likely to be right up your alley.
When using the Paroli system in roulette, the idea is to do the exact opposite of what you do when using the Martingale, increase the size of your bets when you win and lower them when you start losing.
This way, you take advantage of win streaks when they occur and reduce your risk when lady luck decides to head out for a bite to eat or shine on one of your fellow gamblers for a while.
An Example of the Paroli Roulette Strategy At Work:You start by betting a smaller amount such as $5 per spin on red or black, even or odd, or high/low numbers. As long as you keep losing, you keep betting $5. When you win, you double the size of your bet to $10. If you win again, you double it again to $20, and so on.
The intelligent readers among you have probably already figured out that this roulette strategy requires perfect timing. If you keep doubling your bet and you lose, you’ll wipe out everything you have won plus a few bucks. Are you seeing why this is called the reverse Martingale, yet?
In order to use the Paroli system to win at roulette, you’ll need to get out after a few wins in a row. Yes, it can cause your bankroll to grow quickly, but it relies on the winning streak lasting, and as all experienced gamblers know all too well that lady luck leaves just as fast as she arrives.
While I won’t suggest using the Paroli system for anything other than short pops when it feels right, I nonetheless wanted to make you aware of the option. Should you ever find yourself getting hot, you may want to press your luck.
3 – The James Bond Roulette Strategy
The James Bond roulette strategy is among the riskiest of those listed here, but its creator, Ian Fleming, claims that it is “foolproof”.
To use the James Bond strategy, you need to place multiple bets worth $200 on a single spin. The idea is that you cover most of the possibilities, and you come out in profit no matter what happens. Of course, there’s always the possibility that the improbable happens and you wipe out.
Bet $140 on the high numbers from 19 to 36, risk $50 on numbers 13 to 18, and stick $10 on the zero for insurance. Note that this is based on a European roulette wheel, where there is only one zero to consider.
You have most of your bases covered here, but keep in mind that if numbers 1-12 come up, you’ll lose the lot. But what happens if you win?
- If numbers 19 to 36 come up you’ll win $80.
- If 13-18 show up, you’ll be up by $100.
- If the zero shows, you’ll win $160.
So, does the James Bond strategy really work? In theory it holds some water, in application it’s buyer (or bettor) beware. It is probably best to leave this to fictional British super-spies.
4 – The D’Alambert Roulette Strategy
The D’Alambert strategy is undoubtedly one of the safest roulette strategies. It involves way less risk than some of the others you see here, but as a result, the potential payouts are lower, too.
When using the D’Alambert roulette system, you increase or decrease bets by one unit, rather than doubling them like you would when using the Martingale or Paroli systems.
For Example:Start by placing a $5 bet on odds or evens. If you lose, increase your bet size by $1. If you lose again, increase it by another $1, for a $7 bet, and so on. This is far less risky than the Martingale and Paroli systems, but when you run the numbers, you’ll see that the potential payouts won’t cover what you’ve previously lost like the others.
In this example, let’s say you win on the fourth bet with a total bet size of $7. We’ll win $7, get back our $7 stake, but we’ll have lost $6 in the runup to the bet. Therefore, we will have won only $1.
Once you win, you’ll need to begin decreasing your bets by $1, taking risk off the table with the thought that any win streak can only last so long. Of course, this also reduces the potential profits you can make when win streaks do finally roll around.
The D’Alambert system is for risk-averse players, but we still wanted to give it a try in our hunt for the most successful roulette strategy.
Conclusion
After trying the most popular 4 roulette strategies over countless hours at the table, I’ll let you in on a secret. There’s no such thing as a roulette strategy that works every time. All of these strategies have flaws and none of them increases your chances of winning roulette mathematically.
Martingale Strategy Stocks
When looking for a roulette strategy to win, keep in mind that there are endless numbers of marketers out there who want you to believe that they have the best roulette strategy ever that will allow you to win consistently.
I am here to let you know that’s a load of you know what, roulette odds don’t change because you’re using what you think is the most successful roulette strategy, and the house always has an edge no matter what bet you make.
I’m not saying you shouldn’t play roulette. It’s undoubtedly one of the most fun games in the casino and wins can grow dramatically when you do finally go on a hot streak.
However, I am saying that most systems don’t improve your odds in the long run, and you shouldn’t believe they will actually help you win roulette more often.