The Martingale system is a type of betting strategy that originated from France in the 18th century. The strategy was designed for coin flipping game. If the coin comes up heads you win, if the coin comes up tails you lose. The concept of the strategy requires the gambler to double his bet after every loss, so that the first win would recover all previous losses plus win a profit equal to the original stake. The martingale strategy has been applied to roulette as well, as the probability of hitting either red or black is close to 50%.

In reality the strategy doesn’t have huge success in gambling, since the chances of a long losing streak are much higher than many people would believe. Say the roulette made 6 reds in a row, many would assume that this is the perfect moment to bet on black color, yet the machine makes a unique spin each time and hypothetically it can generate red infinitely. In other words the concept is suitable for those who have infinite wealth or enough to sustain the balance even after a long losing streak.

Of course, none of the gamblers in fact possess infinite wealth, and the exponential growth of the bets would eventually bankrupt “unlucky” gamblers who chose to use the martingale.

In terms of Binary Options, Martingale can be used not as a separate, self-sufficient trading plan, but rather as a risk management tool, that with the suitable strategy will result in a successful trading style.

Please refer to the table below, which describes the investment sequence. For the example we will assume that the payout is 85 % and the balance is 500 $.

The idea is not to jump in a sequence of Call or Put options, but to study the market short term or long term and open when you have a confirmation. This way only you can increase your chances of success to 60-70%, unlike gambling where you have only 50% and switching sides will not give you better odds.

So you start with 10 $ and after each loss you double the investment and add a small amount to cover the missing 15% payout. Note that the payout percentage plays vital role in the strategy setup and an increase or decrease must be taken into consideration.

Classic binary options will offer and expiry times from 15 minutes till 2 hours or more. Long term options in general will offer high return to your investment. While on the other hand speed trading platforms will offer low payouts 70-75%. As previously stated a change in the payout will require a change in the martingale system. Since most of the 60 second trading platforms offer fixed investment amounts (5$, 20$, 50$) it is highly recommended not to increase your investment once you reach 50 $ (10 % of your investment).

Below you will find the test results. Total profit 39.5$.