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 S3 , a 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:More...