Ladder Options Definition – Binary Option Types

Do you want to have an edge in your binary options trading? If so, you must choose one of the best binary options types for making a trade. With the right binary options type, you can change an ordinary trade into a profitable one.

When it comes to popular binary options trading types, High/Low, Boundary/Range, One Touch/No Touch, and Ladder comes first. In this, the ladder option is one such trading type that most professionals use.

One thing that makes ladder options trading better than the rest is its high payout rate. When you trade binary options using this trading type, you can generate a payout of 1000% or above.

But to use ladder options trading, you need to understand the basics of this trading type. Also, you need a detailed strategy to increase your profitability.

What is Ladder Option?

A ladder option is a type of binary options trading that is somewhat similar to boundary options trading. The only difference is that there are two ranges of price limit in boundary options, i.e., upper limit and lower limit. And ladder options have five limits.

Ladder options often have five limits, but the number of limits can change depending on the types of asset and broker. Also, these limits are not divided equally. That means two limits can be higher than the asset’s current value, whereas three can be lower or vice versa.

You will be given five limits at equal intervals, just like rungs in a ladder. Then you have to analyze the market and speculate whether the asset price will finish higher or lower on the fixed limits.

In simple terms, in ladder options trading, the market must rise beyond a certain price level at a certain period when the trade is still active. Here, the price levels are arranged as rungs of the ladder.

If you want to gain profitability from ladder options trading, the asset’s price must climb up the ladder steps in a given time. Also, each price limit has above and beyond options. Some brokers represent them as call or put options.

Also, each limit has a different payout percentage. The payout rate depends on the possibility of the accuracy of predictions.

A ladder option is just like other options trading, where you have to predict the price movement you expect and in which timeframe. With this trading type, you get partial wins and losses. Since the ladder option is a little tricky to understand, professional traders mostly use it.

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Example of Ladder Option

Here’s a quick example to understand how the ladder option works.

Imagine that gold in the market is selling at 1.2789. As you have selected ladder options trading, you have three price limits, i.e., 1.2750, 1.3023, and 1.3060.

To start the trade, you are required to set a time frame. So, you have picked an expiry time of 2300hrs. You can break the payout according to the price limits.

  • Gold above 1.3060 1.50 (50% payout)
  • Gold above 1.3023 1.35 (35% payout)
  • Gold above 1.2750 1.20 (20% payout)

What does this thing mean? Well, it translates.

If you want to make trade one successful, gold must close above 1.3060. That means 1.3061 or above before the time asset reaches its expiry time, i.e., 2300hrs. If this happens, you will get a 50% payout.

If you want to make a winning trade two, gold should close above the price range of 1.3023 before expiry. That means the asset should close at 1.3024 or above. If this happens, you will win a 35% payout.

If you want to win the last trade successfully, the closing price of gold should be 1.2751 or above. If the asset expires at a higher price before the expiry time, you will win a 20% payout from the trade.

For making a successful ladder trade, it’s essential to analyze the market thoroughly and keep track of previous price fluctuations of the asset.

Why Should You Choose Ladder Options?

Since there are different binary options trading types, why should you choose ladder options? That’s because this trading type offers the highest payout rate. Also, once you have understood the fundaments of ladder options trading, you will find it easy.

There are many more reasons to pick ladder options trading. Here are a few of them.

  • Ladder options trading is not more complicated than any other fundamental options trading type.
  • It provides options during a volatile market.
  • Ladder options provide higher profitability than any other options trading.
  • In ladder options, it’s possible to make high frequency, low risk/low payout trade.

How To Win Ladder Trade?

If you want to win ladder trading, you must do detailed research and have market awareness. With accurate market knowledge, you can win the biggest payout. Also, when you have market awareness, you can eliminate the risk of losing money.

Traders can also use the right kind of trading tools and indicators to make accurate predictions. Also, it’s important to choose a broker that offers ladder options trading.

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Ladder Options Strategy

To make effective ladder options trade, you need a good strategy. Here are three of the best strategies that you can use.

  • You can use ATR and ADX to make negative predictions.
  • You can trade ladder based on moving average crossover and ATR.
  • Lastly, you can trade resistance and support level with ladder options trading.

For using these strategies, you need three different approaches. And if you use these strategies correctly, you can turn an ordinary trade into a high payout trade.

Conclusion

The ladder option is one of the popular binary options tradings that supports different trading strategies. You can pick a trading strategy or can tailor one based on your risk tolerance level.

You can also choose one of the three ways of ladder options trading, i.e., risky trading way, safe trading way, and mild risky trading way. Each of these trading methods has its pros and cons. So, you must do a proper analysis and then make a decision.

Also, you should pick a trustworthy and reliable broker for trading like Binary.com, IQ Option, Quotex, and RaceOption.

(Risk warning: Trading involves risks)

About the author

I am an experienced Binary Options trader for more than 10 years. Mainly, I trade 60 second-trades at a very high hit rate.

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