This is actually one of the oldest digital options strategies. It is also likely the riskiest of all trading methods and as such has created some controversy in the industry over the years. This strategy is based off an 18th century coin toss game that originated in France. If youâ€™ve every flipped a coin and called â€śHeadsâ€ť or â€śTailsâ€ť then you already know the foundation for this strategy.
This strategy has no real analysis foundation, instead relying simply on odds. The way it works is that a binary options position is purchased and if that trade finishes in the money, the trader can move on to a different trade, or trade again using the same investment amount. But if that trade ends in a loss, the contract would be purchased again, this time doubling the investment amount.
With each losing trade, the investment amount would be doubled, meaning that when a winning outcome inevitable occurs (and it has to at some point), all of the lost funds will be returned, along with some profit. Sounds good, right? It just may be â€“ assuming that the payout rate is high enough to allow for a full return of all the lost funds, while providing at least a small amount of profit.
Another potential drawback would be the possibility that you could run out of investment funds before reaching the inevitable winning trade. If this happens, more funds will need to be deposited in order to continue on to reach the winning trade. The good news is that DigitalÂ Options accepts small minimum investment amounts, so this could lower the financial risk for traders who wish to use this strategy.
Although this binary options strategy is founded upon a game of chance, there really is no reason that everything actually be left to chance. Analysis could (and should) be used to try to determine the upcoming price movement. By completing at least some analysis, the number of trades taken before arriving at a winning outcome could be extremely small.
Note that we are providing the details of this strategy not necessarily because we recommend it, but because traders need to know about all types of different methods. This digital options strategy could be profitable if used in a sensible manner, combining analysis with the fact that no win or loss streak can carry on forever. Just be sure to do the math in order to ensure that profits will eclipse loss amounts after a streak of losses.