Martingale system divided traders into two camps. Some traders call it effective and actively use it, others are afraid of using it. Martingale is a ambiguous method because some win and some lose. The secret is in the details.
One of the reasons the martingale strategy is so popular in the currency market is because, unlike stocks, currencies rarely drop to zero.
The trading market also offers one unique advantage that makes it more attractive for traders who have the capital to follow the martingale strategy: the ability to earn interest allows traders to offset a portion of their losses with interest income.
How martingale works?
Martingale is a system to earn profit by applying a special option value calculation algorithm. It is not a new invention: it was used since XVIII century. Gamblers invented and popularized it. The martingale was originally a type of betting style based on the premise of “doubling down.”
The martingale strategy was most commonly practiced in casinos. That is why casinos now have betting minimums and maximums, and why the roulette wheel has two green markers (0 and 00) in addition to the odd or even bets.
It is based on the assumption that in the case of a losing trade, the trader has to double the amount of the next trade to cover the previous loss. Let’s imagine that a trader made a deal for $1 and he lost. So, he has to make a deal for $ 2 to make up for the loss. If it works out, he will hit big.
The problem with this strategy is that to achieve 100% profitability, you need a significant money supply and in some cases, your pockets must be infinitely deep.
Martingale from financial point of view
Martingale is widely used on financial markets. As you know, the exchange trading probability of profit and loss is 1:1. To earn money the trader has to predict the movement of the price. Is it moving up or down? Experienced traders can apply martingale and increase their profits.
The basic rule is to double the value of the option after a loss. The double profit margin will cover the loss and make a profit. It is as simple as risky.
In many cases, before making a profit and cover for the loss, a trader may need to double the value of the option more than 2-3 times.
Read our recommendations and opinions of the experienced traders before you try it.
Set a Safety Margin
Remember, that you need funds to double the value of the option trading on the martingale system. On the Pocket Option platform, the minimum deal is $1. So, for the next deal you would need $2, and then $4, and so on until you turn profit.
Apply Strategy Wisely
To tell you the truth, it is hard to consider the martingale a stand-alone strategy. It is rather a trading tactics. To be on the safe side, reduce the number of doubling the option value when you try it first. Using the tactics, you can significantly reduce losses in a row and minimize the risks. Read more in the Strategies section.
Practice before you Trade Real Money
Before you use the martingale system, see how it works on demo. The Pocket Option gives each client a demo account with no limitations so you can learn without risk.
In conclusion, we want to say that martingale strategy is based on probability theory, and if your pockets are deep enough, it has a near-100% success rate.
There’s no magic secret. Becoming a financial investor takes time and dedication.