Using Martingale for forex trading
Forex trading is an excellent way to increase your capital quickly if it is done properly. Being able to increase your win rate and recover fast any possible loss is every trader goal. Therefore, several techniques and diverse strategies have been created to accomplish this task. Using Martingale for forex trading is one of the oldest forex trading methods.
What is Martingale?
Martingale strategy was invented in the 1820s as a betting technique. It is used in any bet with only two possible outcomes such as flipping a coin, roulette for black or red bets or any imaginable bet in which there is 50%/50% probability for any of the only two possible outcomes. The Martingale technique applies perfectly to forex trading and binary options since there are only two possibilities results for a currency quote. The exchange rate either can increase its price or decrease its price.
The Martingale technique consists in doubling the amount of money for your next investment, after any loss you have. It requires that you buy twice as much as your lost in the previous trade each time you have a forex trading lost. The rationale behind this technique is that once you have a loss of money, you need to recover from it before you can get any profit. Therefore, applying the Martingale recommendation, you will recover your money in your next win, and you will get profits faster than just wait until your future profits sum-up to cover the previous lost. Notice that you are required to double the previous amount of money you lost even when you have two or three consecutive lost.
· Double your amount investment after any lost, if you lost 100 USD from forex trading, you would need to invest 200 USD in your next forex trade to recover the amount lost. You will do it consistently to get the Martingale benefits of recovering your lost with your next win and get profits.
· Do technical and fundamental analyses. Before your next trade, you need to go over the reason for your misinterpretation of the market signals and the wrong price anticipation. You have to be sure you are reading the charts and the indicators properly.
How to Use Martingale on Forex Trading for Binary option
1. You place your order buying a put or a call
2. You wait for maturity and corroborate if you end in the money.
3. If you end out of money, you will increase your stake to the double of the previous invested amount. This increase will be twice the previous amount until you end in the money.
4. Your place a new order buying a put or a call for the double of the previous invested amount.
5. After applying Martingale if you end in the money, you return to your regular trading amounts.
6. You need to be consistent each time your options end out of the money
7. Create a money management plan and follow it to the letter
Benefits of using Martingale on Forex Trading
Straight forward technique
Easy to follow instruction and a repetitive call to action pattern
Fast money recovery after a loss, once you end in the money
It can be applied at the same time that any other technical and fundamental analysis
It works well with your trading strategy and your money management plan
What you have to consider when using Martingale to Forex trade
Establish your loss limit. Since financial resources are not unlimited, you are required to manage your investing money wisely. Even the most successful brokers know that there are some losses during each trading month. Most traders set this loss limit between the 2% to 6% of the total investment capital for a period. You have to be careful when you are applying Martingale strategy to be sure you won’t run out of the money while waiting for the winning trade. A money management plan is 50% of the equation to become a profitable trader.
Watch your win rate; your winning rate or the percentage of your bids, which end in the money. It is a direct reflection and assessment of your trading strategy and your trading skill. Your win rate should always be above 80% to be safe and get profits from your trading investment. The higher, the better, If your winning rate is lower than 75% or it is decreasing, you need to go over your technical and fundamental analyses to be sure you are doing it right, and you understand the market signals. Each time you end out of the money you need to go over the data and try to figure out, why you misread the signal or what indicator failed to show the information.
Martingale is a technique, not a strategy; you need to develop your investing strategy learn to recognize the diverse market signal and price patterns. You have to choose your indicators and oscillators. It is mandatory that you become a proficient trader and master the strategy you have to decide to follow for Forex trade. Afterward, you can select to use Martingale as a supporting trading technique. Notice that you are required to do the technical and fundamental analyses, and anticipate the price moving direction based on the studied data before you even consider any trading bid. It is paramount this point. Otherwise, you might be just guessing or betting like in the roulette.
Martingale for Forex trading is based on the recognition of previous price pattern, the analyses of economic projection, and international affairs data to anticipate the forex exchange rate. Nobody can foresee anything; Price anticipation is based on data analysis not in fortune tellers or guessing. When you mix a great strategy, good trading skill and Martingale technique your profits increase steadily and in a short period.
Martingale as unique strategy gets benefits only when the trader has bottomless pockets. He can handle repetitive losses without risking his trading capital and eventually when his bid ends in the money; he will recover all lose and get profits from it.
In a nutshell: you will increase your stake to the double of the previous invested amount after any loss until you recover the amount lost and get profits.