We Came Across another Binary Options Strategy and Tested It
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There are many binary options strategies out there, but most of them are losers (they make money in the short-term, but make losses in the long-term).
There are 2 reasons why most of those strategies are losers: (1) Their long-term accuracy is below 60% or even below 50%. (2) The money management styles of the strategy as employed by its users are suicidal.
There is a guru who has a large following on Twitter, Telegram, WhatsApp and Facebook. He has been touting his BO strategy as a money spinning machine. The man is a Nigerian and he’s fond of giving free cash and airtime to people online. But it’s also well-known that he has another source of income apart from trading.
The way he praises his strategy is so convincing that we decided to give it a try to see if his strategy is better than our strategy.
We opened a demo account for it, after studying his strategy and practicing it diligently. Yes we mastered the strategy. However, we cannot apply it to the live account we use for our investors. That would be stupid.
How the Strategy works
You use one-minute chart to enter your trades.
You use Volatility Index 10, and the tick is 1 or 2.
Then you watch the market and enter the direction of the candle upon retracements in price. That’s all.
After doing it many, many times. We see that that method only comes with 50% accuracy after a long period of time, though you may think the accuracy is higher than that if you find yourself in a winning streak, which is often temporary.
Then another thing is that the strategy uses a Martingale money management method. Rough example:
If you risk 20 USD and win, you continue risking 20 USD per trade. If you lose a trade, then you risk 40 USD next. If you lose that, then you risk 80 USD next. If you lose that, then you risk 160 USD next, and if you lose that, you risk 320 USD next.
Before you lose 5 trades in a row, the premise is that you’re supposed to win at least once.. And once you win, that win will recover all your previous losses at once, and then you go back to continue risking 20 USD per trade.
The problems with this system are:
You need unlimited funds to continue trading in a losing streak, so that you can recover all your funds once you win a trade. That is the secret of the strategy, not any higher accuracy. But most of us don’t have unlimited funds.
You can lose 5 or more trades in a row and that would eat deep into your account. Winning 5 trades in a row is far less common that losing 5 trades in a row. You can have nice profits quickly, and then suffer crazy drawdowns.
Conclusion: The strategy sounds logical at first, but in the end, it doesn’t make sense. It only wastes time, energy and data; as the more you trade, the more your broker and your IB get richer.
When you stay glued to your computer for a long time, you remain a slave. A free man is someone who spend a little time online and at the end, has some profits to show for it.
Our own strategy takes only 15 minutes or less to trade. And when in a losing streak, we reduce our lot sizes, to reduce losses and control drawdowns. When in a winning streak, we increase the lot sizes, to maximize profits and compound them. And idea that makes you double your risk anytime you lose is guaranteed to make your blow your account eventually.
Whether you want us to manage your funds or you want to buy it and trade it for yourself, you can contact us.
To fund and withdraw with Neteller, please visit: www.instantforex.com.ng
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