Contents
- 1 Our martingale strategy calculator
- 2 Trading on IQ Option using candle color only
- 3 How the 6 trades went with martingale
- 4 Pros and Cons of Using the Martingale Strategy and Candle Color Trading Technique 📊
- 5 Notes for using this simple trading method
- 6 Frequently Asked Questions 🤔
- 7 GENERAL RISK WARNING
Key Takeaways🔑
| →Martingale strategy calculator helps you manage your money using the martingale money management technique. |
| →Trading using candle colors is a simple technique that doesn't rely on technical indicators. |
| →Martingale strategy works well with a high win ratio strategy, but always be prepared for potential losses. |
Our martingale strategy calculator
What you see above is a martingale strategy calculator. Many strategies for binary and digital options use martingale money management. Our martingale strategy calculator is simple. It allows you to enter the size of your first trade. Based on this, it calculates the size of subsequent ones by doubling the size of each subsequent position. You can also enter your winning rate based on your trading history, i.e. how many trades you end up with a positive percentage. Our IQ Option martingale calculator will then show you the probability of achieving n losses in a row (this number obviously decreases with each subsequent trade).
There's no doubt that indicators make a trader's life easier. Many will help you determine when the trend is likely to reverse or continue. Others will show you changes in trading volume.
However, they have one shortcoming – lag. All indicators use previous price data. Therefore reading and interpreting any indicator needs some practice.
But what if you don't want to rely on indicators while trading? Is there a trading technique that can allow you to safely trade without relying on technical indicators?
Simply put, yes.
This method simply relies on studying a candle's color and entering a trade based on this. This guide will show you how.
Trading on IQ Option using candle color only
In my example, I'll be trading the EUR/USD pair. I'll also trade the 11am to 12pm time interval. The return is usually higher (in this case it's 87%). I'll also use the 5 minute interval candles.
When trading using candle color, your objective is to identify true candles. That is a full-bodied candle as opposed to special candles like the doji's and pin bars. Once you identify a true candle, you should trade the next candle(s) that form after it.
How is Martingale calculated?
With regard to money management, I'll use the Martingale Strategy on IQ option platform. This discipline requires you increase your trade amount for each consecutive trade. I'll enter into 6 trades before closing my trading session. It is a good idea to have a limit on the number of trades allowed when using strategies that benefit from martingale.
The chart below explains how the Martingale system will be implemented.
How the 6 trades went with martingale
The first 2 trades went really well. Notice the ranging markets at the left of the chart. There's no apparent true candle so I had to wait. Once the first bearish candle developed, I entered a 5 minute sell position (next candle). The next candle was bullish, so I entered a buy position lasting 5 minutes also.
ended up entering 7 trades. Of these only one lost, one ended up even and 5 were profitable.
Does the Martingale strategy work?
As you can see above, martingale works quite well but requires a high win ratio strategy. Then the occasional loss positions are compensated by the profit from the increased positions according to the adopted table of increasing successive positions.
Can you get rich with Martingale?
Why not? Anything is possible, and martingale as a method of compensating for losing positions usually produces the desired result. Remember, however, that there are no sure things or guaranteed things in the market. Excessive series of losses may happen even if you use a highly effective strategy. Our IQ Option strategy calculator shows that with a 70% success rate, for example, making 10 losses in a row is only possible at 0.03%. In other words with a 70% success rate, the chance of a loss on 10 trades in a row occurs only 3 times per 10,000 trades. This is a very small chance, but as I mentioned it is not impossible. In the worst-case scenario you simply may not have more funds to add to your next position to increase it.
Pros and Cons of Using the Martingale Strategy and Candle Color Trading Technique 📊
Pros: 😃
- Easy-to-understand trading method, even for beginners
- Doesn't require reliance on technical indicators
- Can compensate for occasional loss positions when used with a high win ratio strategy
Cons: 😔
- Requires a high win ratio strategy for optimal performance
- Potential for significant losses if experiencing a series of losing trades
- Time-consuming to analyze price charts for the right patterns
| Martingale Strategy Benefits | Candle Color Trading Benefits |
|---|---|
| Helps manage money in a systematic way. | Simple to learn and apply in trading. |
| Can compensate for occasional losses when used with a high win ratio strategy.</td | Focuses on price action, reducing reliance on technical indicators. |
| Applicable to various trading instruments and time frames. | Effective in identifying trend reversals and continuations. |
Notes for using this simple trading method
Trading using candle colors is a simple way to make money without relying on indicators. However, your trade entry should only occur when you encounter a full-bodied candle.
This means that you'll have to spend a lot of time analyzing your price charts to find the right pattern. Overall, once you've grasped the principles behind this method, making money on IQ Option shouldn't be difficult. Don't forget to use our martingale strategy calculator available at the top of the article.
Now that you've learned this simple trading technique, try it out on your practice account. I'd love to hear your views in the comments section below.
Good luck!
Frequently Asked Questions 🤔
- Q: Is the Martingale strategy suitable for all traders?
- A: The Martingale strategy is best suited for traders with a high win ratio strategy and a solid understanding of risk management. It might not be suitable for everyone, especially beginners or those with limited trading capital.
- Q: Can I use the Martingale strategy and candle color trading technique on other trading platforms aside from IQ Option?
- A: Yes, these strategies can be applied to other trading platforms as long as they support the required trading instruments and time frames.
- Q: What should I do if I encounter a series of losing trades while using the Martingale strategy?
- A: It's important to have a predetermined trading plan and stop-loss level to manage your risk effectively. Consider reviewing your strategy and potentially reducing your trade size in such situations.
- Q: How can I improve my success rate when using the candle color trading technique?
- A: Practice is key. Spend time analyzing price charts to identify the right patterns and trade only when you see full-bodied candles. Combining this technique with other price action analysis tools can also help improve your success rate.
- Q: Is the candle color trading technique suitable for all market conditions?
- A: This technique may not work well in all market conditions, especially during periods of low volatility or ranging markets. It's essential to adapt your trading strategy to the prevailing market conditions.