Binary Option – Martingala Method
The Martingala method means that although it is easy to be wrong on a bet (on a coin toss, for example), it is very difficult to be wrong many times in a row. Just like the toss of a coin, it is similar to think of market prices going up and down (although there is a certain relationship with stock trading).
In this example a player will bet that the coin will fall on tails and he loses. It is perfectly normal. The probability of winning was 50%. However, if the player bets tails, then he loses, and keeps losing several times in a row, each time has a higher chance of resulting in a winning bet. The system that involves being wrong several times in a wrong developed into a Martingala system.
How to do the Martingale system?
A player bets 1$. If he wins, he takes it; if he loses it, he leaves his bet.
The player loses because of the 50% chance of losing.
Now the player bets 3$, double the initial bet +1$. If the player wins, he gets 3$; if he loses, he leaves it.
Now the player bets 7$, double the initial bet +1$. This is repeated until the margin is widened as comfortable as it is possible.
How does the Martingala method work?
The probability of losing 1 time is 50% (very high)
The probability of losing two times in a row is 25% (high)
The probability of losing three times in a row is 13% (important)
The probability of losing 5 times in a row is 3% (non-negligible)
The probability of losing 10 times in a row is 1% (almost negligible)
The probability of losing 20 times in a row is 0.0001% (almost impossible)
It’s a matter of waiting for the losing streak to break. And the basis is that sooner or later, it always happens at some point. The method works in theory, but in practice, it is difficult to implement.
Let’s say our player bets 1$ every 5 minutes. With this system it is possible to win 12$ per hour. This is not as much. We can assume that a player can play for 10 hours without rest, 22 working days per month, but several of your business expenses and taxes half of what you earn takes. So, the player earns about 1300$ per month. The probability of catching a bad run of 20 negative points is very low, but to be able to maintain a considerable profit margin it is necessary to bet more than one million dollars to do so.
For starters, it is not easy to have a system with an accuracy rate above 50%. And if it’s not possible to do so with the Martingala method, it is best to let it go. The reality of trading is that it is not random. This is a great advantage. If traders are good and they are able to identify good windows of opportunity with high probability of success, they can apply Martingale in very specific moments.