Ladder Trading

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In continuation of our series on binary options bets, we will discuss the Ladder binary option trade. It is a new variety of binary options trading which was introduced by IG Markets and is gaining popularity. A Ladder option is a type of binary option trade in which the trader is given a range of price levels which are lined at equal intervals like a ladder, for the trade to finish higher or lower than, at the end of the trading day.

More simply put, a ladder binary option specifies that the market has to rise beyond a certain price level, after a certain period while the trade is active.

What this means is that there are several price levels to be set, and several periods to be set. The price levels are arranged just like the rungs of a ladder. You want to perform a ladder trade with three price levels: How do you trade this for the trade to be profitable? In setting your trades, the first thing to do is to choose an expiration time, which for the purpose of this example, we will set to hrs.

The next thing is to look at the array of the trade this way:. What this means is that the trader has to do his analysis on how the price action of the EURUSD will look like on the trading day, and then choose from any of the ladder trade options. One strategy that a trader can use to play the ladder trade is the pivot point strategy. To use a pivot point strategy, the first thing to do is to plot the pivot points on the charts of your chosen asset using a pivot point calculator. This will show as three lines of support S1, S2, and S3a central pivot point and three lines of resistance R1, R2, R3.

The chart below illustrates how pivot points will look like. Next, use the pivot points as guides to what the price could do during the day. Since we are using an intraday expiration, the trader could use a 1-hour chart for analysis. Typically, you would be looking at prices that are just above support levels for a bearish market, or in a bullish market, look for prices that are just above resistance levels that have been breached to become intraday supports.

With those points in mind, you can look at ways to set your trades, using these levels as a benchmark to set your ladder rungs. You would typically be looking at setting your ladder price levels at about five pips above the necessary levels. That way, you can be sure that your trade has a sure chance of success. You can trade the ladder strategies with brokers like IGMarkets.

Please practice making simulated trade calls using a demo platform. You can download a platform from FxPro, a forex broker that also offers trading in crude oil, spot metals and index futures, hence it is a good place to practice trade calls. The next thing is to look at the array of the trade this way:

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Ladder binary options are the most risky and difficult options to trade. However if you know how to trade these options they are most profitable. Binary Options Ladder is the variation of the well-known option One touch.

If you remember, One touch options have only one strike level. If during the expiry time the price reaches this level, the option is in the money. Ladder options, instead of one strike level, usually offer five strike levels. Thus, the trader can choose the strike level that he or she thinks the price can reach during the expiry time. Thus, the trader has an opportunity to earn extra profits because of his or her knowledge and analytical skills. However, as known, we have a greater risk with a higher gain.

It should be noted that binary options brokers offer a limited number of assets for Ladder options. As a rule, four to six currency pairs are the most popular among traders. When you select the Ladder option, you receive the asset price chart with five target strike levels.

If we expect that during the expiry time the rate of the British pound against the dollar will rise, then we consider only the target levels above.

The first strike price is at the level of 1. Its payout is only We predict that the price will rise more, so the probability that the price will reach 1. So, the risk is smallest, but the smallest risk offers the smallest payout. The second strike price is 1. In this case, the payout is Accordingly, we have a higher risk than in the first case and, therefore, our profit will be higher. The third strike price is 1. Accordingly, the risk is three times higher than in the first case, and hence, the payout is The fourth and fifth levels give the highest rates, This is possible if the market volatility increases significantly, for example, during the release of an important report, with unexpected results.

If we consider that during expiry time the price can rollback the probability is minimal but possible , our profits will be maximal: You can trade Ladder options at any time, regardless of the session and the market volatility. The only thing that you should consider is the trend and strategies to trade binary options Ladder. When trading Ladder options, you should have a good and simple price chart that will help you determine the current situation in the market.

To understand the probability of achieving any strike price, it is necessary to draw support and resistance lines on the chart. The broker gives us targets 1. The current price is 1. That is, even the highest strike price, 1.

As we know, the price overcomes the support or resistance level as the result of important news or reports. Accordingly, the probability that the price can reach the highest strike price during the expiry time, one hour, is maximal, so we can buy option CALL. It is worth noticing if strike prices are higher than support and resistance levels; it is necessary to use news trading strategies. Also, the binary options trading strategy Fibonacci levels is actively used.

These levels help determine when the price can change its direction or continue it. Thus, we can determine what level to choose, and it is possible to obtain greater profits. Binary Options Ladder is the most profitable, but at the same time the most risky, form of options. We can confidently say that the Ladder options are not for beginners. They require knowledge of fundamental and technical analysis.

Ladder is selected by traders who trade one asset for a long time and know all its features. Traders prefer the Ladder, in some cases, to significantly increase profits.

Binary options trading are known as such because there are basically two outcomes only: Thus, he will receive the agreed payout. Thus, he loses his capital or investment. Oftentimes, binary options trading are also known as all-or-nothing options trading or digital options trading.

Composition of Binary Options Trading At the onset, there are 4 main components of digital options trading: The investment amount is the money the binary trader pays his broker at the beginning of the contract.

The expiration is the date and time the contract will end and will serve as the deciding factor if the price of the underlying asset has risen or fallen in comparison to the purchase value of the asset, which is the initial price of the asset at the start of the contract. In some instances, some brokers pay option refund to the trader. It is a percentage of the investment amount returned to the trader if he makes the wrong decision. The article is written for informative purposes only and it is not financial advice.

The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.

Skip to main content. How to trade Ladder binary options You are here Home. Some tips that will help you trade Ladder binary options. What is the Ladder option? Advantages of Ladder options: When and how to trade Ladder options You can trade Ladder options at any time, regardless of the session and the market volatility. Conclusion Binary Options Ladder is the most profitable, but at the same time the most risky, form of options.

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