The Mathematics and Logic Puzzle Pieces!
The last part of your Binary Options Strategy puzzle is optional to start with and completely logical after y’all gain a little feel. In one case you lot accept mastered the timing and choosing the correct trades y’all volition have some trading history commencement to build up. This should be done via a demo account in the very first and then using small coin as you lot progress. Once you start getting more trades right than wrong you will have accumulated your own personal trading history to review, this is your weapon. You lot will now be able to introduce a mathematical edge in the order that they are presented on this page
if your personal results allow it.
The first border y’all tin can gain is through compounding your profits, the second is a low adventure and very calculated martingale. The latter is very optional and only y’all will know if yous have the tummy and skills for it as fourth dimension progresses.
Compounding Profits Application
In a previous lesson nosotros have already talked most the concept of compounding so you should already empathise information technology. Here is the compound sequence upwards to a maximum of 6 similar before and based on eighty% returns with $10 starting stakes.
Costless Compounding Profits Worksheet Here
| Merchandise # | Stake Amount | Trade Profit | Running Profit | Secured Profit |
|---|---|---|---|---|
| 1 | $ten | $eight | $8 | $0 |
| ii | $x | $8 | $xvi | $i |
| iii | $15 | $12 | $28 | $3 |
| 4 | $25 | $twenty | $48 | $eight |
| 5 | $40 | $32 | $80 | $30 |
| half-dozen | $50 | $40 | $120 | $120 |
Now yous demand to figure out if it is for you based on your ain personal trading history. If for example it looks like 3 wins in a row seems to be your maximum frequent winning streaks and so you lot should consider only performing a 3 trade compound, so reset or stop for the twenty-four hours. Either 3, 4, or 5 win streaks can be more assisting through compounded stakes vs basic stakes as long as you stop and reset afterward. Let’s accept a look at the numbers again to understand that.
| $10 Stake with 80% Payouts | Basic Stakes Results | Compounded Stakes Results |
|---|---|---|
| Win 3 in a row, so reset | $24 | $28 |
| Win 4 in a row, and then reset | $32 | $48 |
| Win 5 in a row, then reset | $twoscore | $80 |
| Win vi in a row, and then reset | $48 | $120 |
The numbers don’t lie and anything from 3 wins upwards will pay off with compounding but only if yous stop for the twenty-four hours, or reset back to initial stake size once the win streak is complete. This is very important considering if yous exercise go along compounding until a loss then compounding simply makes sense if your win streaks are five-6. Winning 5 followed by a loss won’t give you whatsoever extra profit than if you didn’t compound. It would just serve the purpose of giving you lot that risk for the 6th win with no consequence if your 6th trade loss. If your 6th trade lost information technology would just be the same every bit if you didn’t compound at all and then at that place is goose egg lost and nothing gained. If you practice smash the sixth win though you will become a much greater reward for compounding, just like if you decide to cease at the 5th consecutive win, that too provides a significant greater reward. The chart in a higher place shows you that even if you reset at iii or 4 wins in a row and the reset or stop for the day information technology is as well worth it.
Y’all tin simply estimate how far to take compounding based on your ain results or the results you are getting from a indicate provider. If you stop and reset after three, 4, v, or 6 wins in a row then compounded stakes volition pay yous more than than bones stakes, Just ONLY IF Yous STOP AND RESET. The consequences of continuing to compound and getting a loss before the 6th win need to be considered, this adjacent table of numbers says it all.
| $10 Stake with 80% Payouts | Bones Stakes Results | Compounded Stakes Results |
|---|---|---|
| Win 1, Lose 1 | $-2 | $-2 |
| Win two, Lose 1 | $vi | $six |
| Win iii in a row, Lose 1 | $14 | $1 |
| Win iv in a row, Lose 1 | $22 | $8 |
| Win 5 in a row, Lose i | $thirty | $xxx |
| Win 6 in a row | $48 | $120 |
If you tin can get 6 wins in a row 2 or 3 out of 5 days / sessions then compounding is the clear choice. A 6 trade win streak pays you near 3 times more than than having a 24-hour interval or session where you win eight and lose 2 in no item order using basic stakes. If y’all decide to cease at five then compounding even so pays you double what you would get off of a ‘win 8 and lose 2 in no particular order using basic stakes’ mean solar day. Stopping at 4 gets you a niggling actress and stopping at 3 not so much when compared to a ‘win 8 and lose 2 in no particular society on basic stakes’ day.
The reality is that only you can make the decision on how far to take compounding and if you lot will even benefit from it. Your trading history from your personal trading or your trading history that y’all have accumulated via a betoken provider answers the question for yous. Keep this all logical considering it is but simple math, employ it to your advantage were you can.
Low Risk Martingale Application
In a previous lesson we have already talked almost the nuts of a low risk martingale then you should already understand information technology. Martingale can go out of hand easy and become very high chance so it must be limited to just going two levels deep. This allows you to quantify what is your maximum loss so that you tin can and so quantify what is the minimum amount yous demand to consider a win. The post-obit tabular array of numbers is like to what we accept already looked at only this time nosotros volition use 80% returns to match the compounding data higher up.
Free Binary Options Martingale Worksheet Here
| 80% Returns | $ten Start | $25 Showtime | $50 Starting time |
|---|---|---|---|
| Martingale 1 | $23 | $57 | $113 |
| Martingale 2 | $51 | $127 | $254 |
| Wins Needed | ten.5 | 10.5 | 10.five |
| Losses to Lose | three | iii | 3 |
| Session Profit/Loss | $84 | $209 | $417 |
To continue in sync with the compounding results higher up yous would but really exist focused on the $10 stake column. If you lot were to use this depression martingale strategy then a 24-hour interval or session that you lot would call a loss is $84. In order to complete a loss you will need to lose 3 in a row. Once once more your trading history will prove yous how common it is for y’all to go a 3 trade losing streak. It doesn’t matter if you go them occasionally only it would affair if you got them often. Depression risk martingale is not for you if your trading history shows you frequent 3 trade losing streaks, obviously and elementary. You lot tin revisit this add together-on later once you have corrected that.
So if $84 is your losing twenty-four hour period or session, and then $84 or college is your winning twenty-four hours or session. In order to get $84 using basic stakes you will need 10.5 wins so you need to round that upward to 11 wins. That is 11 wins in no particular guild every bit long equally you don’t lose 3 in a row. The math never lies and just like with compounding only you lot can judge, via your trading history, if a low hazard martingale application is going to benefit you long term.
Compounding with Martingale
If you lot don’t lose iii in a row very often, and y’all do go winning streaks often enough, both compounding and martingale can be used in harmony very effectively. Your session loss based on $10 starting stakes and 80% returns is $84. A five merchandise winning streak gets you $80 and with 1 standard martingale win on top of that your returns would exceed $84. A six trade winning streak returns you lot much more than $84 and if you go on a ‘win, lose, win, lose, win’ sequence going all day and then every win is still counted as 1 win out of the required 11 that you need to equal what you have quantified as a loss. In fact even if you lot win 3 in a row then lose i, your next win will still exist counted against your eleven martingale wins needed, plus you get the $1 extra to add to it, and so you reset your compounding and martingale to their start points. The most important point is that if you have started compounding and yous run into a loss, your adjacent stake amount is not a martingale of that compounded amount you were at, information technology is your get-go level deep martingale amount. The compounding and the martingale take intendance of themselves individually!
To reiterate what was just said, it is recommended that you run the ii strategies in parallel but separate. What this means for you is that you take 3 options, you lose 3 in a row and you are done for the session or twenty-four hours, you lot win 11 times without any streaks, or you get five wins in a row plus ane martingale. The final pick for maximizing your profit 24-hour interval or session is to take that concluding choice to 6 in a row on the compound, this makes your winning day or session 1.5 times greater than a losing solar day when yous get a streak, and equal to a losing twenty-four hour period when y’all don’t. If you lose three in a row ii times out of five days or sessions, you will still exist profiting overall, losing 3 in a row just one time out of 5 though will exist much better for your pocket. There will exist weeks where you don’t lose 3 in a row at all plus you go some winning streaks as a cherry on height!
Source: https://electrofx.com/binary-options-trading/binary-options-strategy-2/
