Ladder trades are a relatively new trading option in many binary options platforms. Traders should know exactly what they are getting themselves into before they delve into ladder trades, because although they may take a lot of research and time to get right, they can be very financially rewarding when they are practiced correctly.
Ladder trades get their unique name from the methodology behind the trade type. Traders must choose three different assets and predict whether the prices of these assets will climb or descend the theoretical price ladder. Each price selection will have an assigned expiration time period — if all three are above or below the selected strike points by the expiration of the time period in coordination with your predictions, you win the trade.
This type of prediction may seem extremely difficult, but options traders have a very important advantage — they are permitted to choose both the strike points and the expiration times for each asset. This advantage allows traders to minimize risk while expanding the possible trading options available to them. However, there is a catch — the closer your chosen amounts are to the current price, the lower your eventual payout will be. In this way, traders who deviate from expected values and assume risk are rewarded for their daring with a higher payout percentage.
Obviously this time of trading requires an excessive amount of research. Traders, in essence, must correctly predict the outcomes of three trades just to win one. Both technical and fundamental analyses are necessary in order to spot price trends and decrease the amount of risk that you are assuming. Traders also have the added responsibility of researching expiration times and strike points, which makes each trade slightly more complicated. Strategies and adequate use of different trading techniques is also important in ladder options trading. The pivot point strategy, which uses an asset’s pivot point to predict future price fluctuations, is frequently used in ladder trading.
Risk assessment is also an important part of ladder trading, regardless of skill level or expertise. Although traders must take time to accomplish this assessment as well, once all of these different skills have been mastered the process itself will really not take too long. Binary options trading is certainly simple, and it is this simplicity that draws the attention of many traders, but the fact is that advanced traders should move on to more complicated forms of options trading in order to maximize their profit potential. Ladder trading fits the bill as one of these more complicated, but more lucrative, forms of trading.
Advancement in the field of binary options will come without you even noticing, particularly if you spend a lot of time trading on a particular platform. Ladder trades are definitely not recommended for novice traders, but more advanced traders are certainly encouraged to look at different types of trades once they are comfortable with the basics. Advancement is all about testing out different methods of trading to see if profit levels can increase.
We make it our mission to not recommend anything but the best – which, according to industry experts, is IQ Option, the top regulated broker for your country with a minimum deposit of ONLY $10!
Between 74-89 % of retail investor accounts lose money when trading CFDs