When you step into the field of binary options trading, then you want to try your hands on different trading strategies and see what works best for you. One of the most popular trading strategies is Ladder strategy.
The ladder means one single trade which has varying price targets. A different time frame is linked to each price. Different brokers have different rules for the ladder strategy. For example, some brokers may let you select the strike price and expiry of each rung of the ladder.
In this case, there is a payout for each rung of the ladder provided you are correct in your prediction.
Using the Ladder Strategy
When you have to use the ladder strategy, then make sure that you pick the last rung first. The interesting part is that you can look forward to the maximum payout when you select the last rung. On the contrary, the first rung of the ladder pays you the minimum amount.
If you want to get the maximum payout with the ladder strategy, then the most important rule is that you should study the chart of the each asset carefully to avoid mistakes. You can make use of Fibonacci sequencing and pivot points to get a clear understanding of the price levels.
You also need to focus on resistance and support levels. If you feel that the support and resistance levels are not predictable, then it is better that you should not place the trade in the first place. The reason to avoid weak support and resistance levels is that it becomes difficult for you to predict the final price.
Ladder Strategy Example
Let us understand the perception of ladder strategy using an example. You choose an EUR/USD pair at a strike price of about 1.325. You feel that there will be a continuous uptrend. This is why you go for the following ladder configurations.
- First, you place a call option of about $100 that expires in 15 minutes.
- In the second configuration, you place another call option of about $100 that expires in 30 minutes.
- In the third configuration, you place another call option of about $100 that expires in 45 minutes.
If the end price reaches about 1.348, then this means that all your three configurations end in the money. If the promised profit is about 85%, then in this scenario the profit will multiply, and the total profit that you get in the end is about $255 so do try out this strategy.
The only evident setback of ladder strategy is that advanced level traders can only use it. It can also be tough to deal with the rigid set of requirements that are laid down by the broker.
The smart approach is that you should only opt for the ladder strategy when you are confident about your own skills. This way you can earn a decent payout and can avoid losses.