Using Martingale Money Management With Color Candle Strategy on Binomo


Martingale with candle color

There are a couple of things that can hasten your way to success. You need, among others, a trading plan, strong emotional control and a good strategy. Moreover, there are plenty of indicators that are designed to help you search for the best entry points.

Indicators help to reveal trading volume changes, identify trend reversals or determine whether the trend is going to continue in the same direction. This information is very helpful. However, the calculations behind the derivation of indicators are based on past prices. This most often causes a delay in providing the right signals. Some traders may not want to waste precious seconds. So the question is, Are there any other techniques in which you do not need to depend on indicators?

The answer is yes, there are. And today I will tell you about a trading method that only requires you to observe candlesticks attentively.

A trading method based on colors of candles

First, log into your Binomo account and choose the financial instrument. I will use the EUR/USD currency pair as an example. Set the period of candles for 5 minutes. You should openĀ  transactions that last 5 minutes. Remember to check the time carefully when you decide on the expiration time for your derivatives. Your option should cover a full 5-minute candle.

With color candle strategy you need to adjust expiration time to cover full 5 minutes candle
With the color candle strategy, you need to adjust the expiration time to cover a full 5-minute candle

The method based on colors of the candles works only when true candles are taken into account. True candles are the ones that have a full body. Special candles are, for instance, pin bars or Doji candles. You should avoid them in this method of trading.

As soon as you recognize a true candle you can open a position together with the opening of the following candle.

Money management strategy

With the color based method, it could be a good idea to implement the MartingaleOpens in a new tab. money management strategy. The Martingale system is quite challenging as according to its rules you are to increase an investment amount every time you open a new position after your last trade turned out to be a loss. The Martingale sequence ends when you end up with profitable trade, but please bear in mind the associated high risks.

Let’s take a look at the table below to see how the Martingale system looks like with 6 consecutive transactions.

Martingale table
Martingale table

Using the color candle strategy with the Martingale system on Binomo

At the beginning of a session there were no true candles visible. The market was ranging. After the first true candle appeared, I entered the market. The true candle was green (1), so I opened a buy position for 5 minutes, which was the duration of one candle at the same time. Unfortunately, my transaction lost. That is why I entered another buy position, which has lost too. But the third time my long trade was a success. With the initial trade amount of $1, a payout rate of 84% and a series of 3 trades I was able to make $3.56.

6 trade series on EURUSD
6 trade series on EURUSD

Then a special candle (pin bar) appeared so I was waiting for a true candle to open for the next transaction. Soon another bullish candle (2) developed so I opened a long 5-minute position. I gained at the fourth entry which is $9.68 according to our Martingale table.

Next, there was a bearish candle (3) which led me to open a successful sell trade with just one transaction (+$0.84).

As a result of the appearance of a green candle (4), I entered a buy transaction. It was not profitable at the first entry, but did work out at the second (+$1.52).

Another green candle (5) has brought me a profit at the very next candle (+$0.84).

Another example shows my entries in another session. The beginning was similar to the first one with the market that was ranging and the volatility was low. The true candle should show us a clear directional price movement. After the first true bearish candle (1) I entered the trade and won at once (+$1).

The next candle possible to use on the color basis was also red (2). This time I had to open 4 consecutive transactions to earn a profit (+$9.68).

The next red candle (3) prompted me to enter a sell trade. It was not a very good outcome, though. Nor was the next one. Only third trade was successful (+$3.56).

Another red candle (4) appeared so I opened another sell position. I earned a profit at the second entry (+$1.52).

Final words about the color based method of trading

A trading method that relies only on colors of candles is not too difficult to implement. The main advantage is that you do not need any additional indicators. You just have to observe the candles that develop on the chart.

Remember to enter a trade only when a true candle appears. Trading with special candles is not the best idea here. It may simply lead to unnecessary losses of money.

What you need to focus on are the full-bodied candles that appear on the price chart. Hold the position open for as long as the period of one candle lasts.

Try to apply the Martingale system together with the color based trading strategy. It may seem risky as it requires you to increase the amount you invest in each consecutive trade, but it should allow you to recover incurred losses if implemented correctly. As you saw in my exemplary trades, you do not always profit. Sometimes you will have to enter 3 or 4 times to make a gain. You would not cover for it if you put the same amount of money each time. But with the Martingale system you can have successful transactions covering for what you lost. Of course, keep in mind that it is also possible to get involved in a losing streak lasting 6 or even more transactions. You need to be prepared for that and the associated risks, and not to trade with money you cannot afford to lose.

You may be interested in reading the article about using other money management strategies on the Binomo platform.

I encourage you to practice applying the color based strategy on the Binomo demo account first. This is a wonderful place where you can train what you have learned. Share your thoughts on this technique with us in the comments section further down the site.

Wish you success!

 

 

 

Bart Bregman

Fulltime Day trading, and help Binomo wiki in my spear time to build an awesome platform to help beginners out there. #digital nomad, traveling all over the world.

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