Martingale and anti-Martingale

Martingale And Anti-Martingale

Martingale And Anti-Martingale

When you’re trading binary options, the most important thing you need is to have a sound strategy, a principle that will guide your investments and help you focus. This is very important from a psychological perspective because you don’t want to be all over the place if you start losing and you don’t want to get overly excited if you start winning. At all times, you need to know what your next move is. That’s what Martingale and anti-Martingale are good at: they set rules for your behaviour, so that you don’t get carried away and that’s what we will be discussing in this article. Read on and see how these strategies work.

Martingale and anti-Martingale | Basic ideas

The main principle behind Martingale and anti-Martingale strategies is actually pretty simple. The first one says that if your prediction turns out to be incorrect, you simply need to double your next investment because it is highly unlikely that you will lose 100% of the time. However, this should be done only after an extensive analysis of market conditions. If you’re still a beginner, you should probably choose a strategy more suitable to your skill level. Anti-Martingale is, as you would expect, completely opposite. This strategy advises traders to double their investments every time their trades end up in the money, but halve them when they lose. The main idea here is to capitalize on a winning streak during periods of growth, so that you can go home with a hefty profit. However, both Martingale and anti-Martingale have their downsides, so read on and learn more.

Martingale and anti-Martingale | What to look out for

It is clear from the previous paragraph that Martingale and anti-Martingale strategies are based on trends. However, in Martingale’s case, you can’t go on doubling your investments forever. Your resources are limited and if the streak lasts you risk losing all funds in your trading account. Anti-Martingale has a similar story because if you don’t estimate correctly when your streak is going to end, you could be in trouble. You are, after all, investing MORE after each successful trade, so don’t get greedy. If you get carried away, you can easily lose more than you win. Basically, Martingale and anti-Martingale both can be used as good strategies, but they both call for moderation. Generally speaking, moderation is a very desirable trait in this business, so try to train yourself to stop while you’re ahead. In short, you need to know when to quit.

Martingale and anti-Martingale | Conclusion

In the end, Martingale and anti-Martingale offer some pretty good ideas how to trade, but just as all other strategies, there are load of factors to take into consideration when using these principles. How long is your streak? Can your budget take it? Have you researched the market thoroughly enough? Don’t go in blindly; take all these strategies with a grain of salt. The most important thing is that you are calm and assertive when making your investment decisions. If you can achieve that, you chances will grow significantly.  

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FURTHER READING:

1. Encyclopedia of Chart Patterns (T. Bulkowski, 2005)
2. Empirical Case Study of Binary Options Trading: An Interdisciplinary Application of Telecommunications Methodology to Financial Economics (G Giunta, F Benedetto – 2012)
3. Responsible Excellence Pays! (Fussler, Claude-2004)
4. Technical Analysis Of The Financial Markets: A Comprehensive Guide To Trading Methods And Applications (J. Murphy, 1999)
5. The Forex Options Course: A Self-Study Guide to Trading Currency Options (A Cofnas – 2008)

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Author: Ben Prescott
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