What is The Binary Option Ladder Trading Method?
Welcome to the Investors Trading Academy talking glossary of financial terms and events.
Our word of the day is “Binary Option Ladder Trading Method”
Ladder binary trading is the newest style of binary options trading, this where the trader receives several price levels, which are located at an equal distance from each other in the likeness of the ladder. Simply put, binary options ladder indicates the level to which the price of an asset should change for a certain period until the option is active.
This means that the trader must set these levels and time periods. For successful trading, the price should go through these levels as the stairs of the ladder. You can also choose to build a box around the asset with a trade above and below the current price level. There are many choices and strategies that you can use to trade Laddering on a binary option platform. Ladder trading is the step towards moving to forex and commodities trading without increasing risk.
Let’s imagine that USDJPY is trading at 99.75 and you want to use the ladder when trading binary options with your broker. You want to make a trade using a ladder with three price levels: 99.50, 101 and 101.40. Each step farther from the current price offers a higher payout. You can then step your trades up using smaller trading amounts with higher payouts.
We can interpret this as follows. In order to make the first transaction successful, the USDJPY should be closed above 99.50 at 12.00. In this case, the trader will receive a 25% yield. For our second transaction, the currency pair should close above the 101 at 12.00. In this case, the trader will receive 95% yield. And in order to make a profit for the third transaction, USDJPY should be closed above 101.40 at 12.00. This will guarantee us a yield of 300%.
In order to trade using binary options ladder, the trader must analyze the market and determine how quotes of currency pair will move during the day, and then select the levels or steps in accordance with the appropriate price moving.
By Barry Norman, Investors Trading Academy – ITA
Online trading - 2015 - 12
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