Ex-wife of the millionaire revealed his secrets of earning millions of dollars each month by trading options on VIP trading platform
The Secret of Success
Mathematician John Kelly Jr. created a staking formula that many professional traders follow to this day. Kelly states, “Playing strategy is maybe a third to a quarter … of what you’re going to get out of it. Trading strategy may be two thirds or three quarters”.
Below, we mapped the success of five popular trading systems over a series of 500 options:
Five popular trading systems compared The above graph shows the profits from 500 simulated options for the five trading systems, with a 55% probability of winning each option. The initial bet for each system was $100 (except for the bet everything method, which initially bet $1000). Each system started with a $1000 balance, and the simulation ran for each method until the 500th option or until their balance was zero).
The five trading systems are explained below:
Trading Strategy A: Bet It All, Every Time
Bet your entire balance on each option. The advantage is that if you win, you win big. The downside, of course, is when you lose, you’re out of money.
Trading Strategy B: Martingale
The Martingale system has you double your bet after every loss, so that the first win would recover all previous losses plus a profit equal to the original bet. Since a option trader with unlimited bankroll will, almost surely, eventually win, the Martingale trading strategy is seen as a sure thing by some.
Of course, no one has an unlimited bankroll, and the exponential growth of the bets in order to cover losses will eventually bankrupt option trader who use this system.
Trading Strategy C: Fixed Betting
This system requires you bet a fixed amount for each option. In this example, it is $100. With a 55% probability of winning, this method means you won’t lose your entire balance quickly. It also means any chance of winning will also be slow and steady.
Trading Strategy D: Proportional Betting
With this strategy, you bet a fraction of your balance in proportion to your edge. In this case, millionaire used the Kelly equation for proportional betting. Here your bet would be your edge divided by the odds. In this example, since the edge is 10% and the odds are evens, 10 / 1 is 10.
So 10% of the $1000 balance, i.e. $100, should be bet each time. If that option wins, the next bet would increase to $110, 10% of the new $1100 wallet. This means winnings increase quicker than in the fixed-wager system, and losses slow down.
Trading Strategy E: Fibonacci
With this strategy, you increase your bet in a Fibonacci sequence, to your losses with the next bet’s winnings. The Fibonacci sequence are numbers in the following sequence:
1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144,…
By definition, the first two numbers in the Fibonacci sequence are either 1 and 1, or 0 and 1, depending on the chosen starting point of the sequence, and each subsequent number is the sum of the previous two.
This method has similar drawbacks to the Martingale system, but it reduces how quickly the bet increases if you’re on a losing streak,as well as reducing the rate at which you win.
Which Is the Most Profitable Trading Method?
Clearly, Strategy D, the proportional betting system, provides the greatest returns, earning $18,275 after 500 options. This is not too surprising, since proportional betting appears to have a natural advantage over the others systems.
Say you’re down to your last $100, you’d be betting $10, and decreasing each time, keeping you in the game for much longer than a fixed betting system, where your last $100 would be your last bet.
The only system other than proportional betting to avoid losses was fixed betting (Strategy C), earning $6,400 after 500 options.
Strategy A, bet it all, generates big gains after the first bet, earning as much in one risk than the others do in the first seven. However, this strategy is eliminated on just the second round. The chance of making it through 500 rounds at 55% is practically impossible – although you would have earned $67 billion by option 27.
The Martingale (Strategy B) and Fibonacci (Strategy E) betting systems also start strongly, but any big sequence of losses quickly increases the required stake.
The 11-bet losing streak also affected proportional betting (Strategy D) greatly, reducing its winnings from $7,359 to $2,286 – lower than that of fixed betting (Strategy C). This shows how well fixed betting protects your profit and thus ranks as one of our best betting tips.
Which Betting Strategy Should I Choose to become millionaire?
Clearly strategy «proportional betting», this trading strategy + vip option trading platform almost guarantee you huge profits each day you use it!