# Using Martingale Pattern with Binary Options Trading

By | November 20, 2013

Wednesday, November 20th, 2013 by Michael Freeman

One of the most talked about trading patterns, and the most commonly used probability technique in the gambling world is the Martingale Trading Pattern. Get an inside look into the Martingale Technique and it’s application with binary options. How well does it work? Let’s start by defining it properly and see if we can apply it with binary options.

Martingale’s History

The Martingale Technique was first introduced in the late 18th century in France and was used by old-school gamblers in one of the most ancient gambling games, Coin Flipping with two possible outcomes, Heads or Tails. This technique made and still seems to make sense to gamblers in the Roulette Game which similar to Coin Flipping, provides the gambler with a %50 probability of hitting red/black.  As a golden rule, the Martingale Trading Pattern is used when the probability of winning or losing is equal to %50.

The Theory behind Martingale

Assuming there is a %50 chance to win a bet, according to theory advocates for every losing bet the gambler must double the investment which will recover the loss and break-even, even with consecutive losing trades as the investment is always double the total loss, eventually yielding a break-even. On every winning bet, which statistically occurs in %50 of the times, the next investment must remain equal to the previous investment amount. On losing investments we break-even eventually and with winning investments we generate profit.

Doesn’t it sound a little bit too good to be true?  The pattern doesn’t take into account the exponential increasing of the investment amount which is unavoidable and is required in order to stay in the game, as the goal is to double the investment and recover the lost capital on losing investments. There are no investors on this planet with an infinite budget, therefore after an X number of investments, bankruptcy is inevitable. There is a limit to how many times one can double his/her investment due to budget constraints and as we keep doubling the investment amount on every losing traders eventually we are bound to lose everything on a single and final trade!

Using Martingale with Binary Options