Binary Options Strategy – The Ladder
Today we would like to introduce you to a very simple yet logical system for trading option contracts based on a special betting mode. Special technical forecasting tools or fundamental analysis approaches are not used here — it’s only pure logic and mathematical calculation. This technique can be a useful auxiliary to any technical trading strategy.
So, in order to apply the binary trading strategy Ladder, you need a trading platform with a non-stop trading mode (meaning no restrictions on the number of simultaneously issued options), as well as technical ability to track the executed contracts on the quotation chart. The optimal example of such trading terminal is the Binomo broker’s platform, where the open transactions are displayed in the form of price levels on which the options were issued.
In this strategy, the principle of managing the trading result lies in the creation of additional option positions while monitoring the market movement, as well as in the logical way of issuing contracts when the quotations move contrary to the investor’s initial forecast. For example: you have issued a DOWN options, but the price starts to rise:
In this situation, the trader has two options — to see his contract turning unprofitable or correct the situation by issuing an additional contract in the direction of the initial forecast, but with a more favorable price:
Thus, we average the final trading result by a package of contracts, and we can expect to compensate for the main losses on one of the options or even obtain additional profit.
If you combine this logical method with a simple approach of a technical analysis, the efficiency of the trade will increase several times. In the example below, we see a price reversing toward the predicted direction, which eventually brought us profit from all the contracts:
It remains for us to determine the most effective approach to forecasting, which will help to issue contracts properly. We suggest a simple technique of working with the trend resistance/support levels. In this mode, we use signals such as a rebound of quotes from the trend level; additional options are issued during short-term breakdowns of the trend line. In such conditions, the price returns to the trend in 85% of times:
When trading by a trading strategy, we recommend using either standard option contracts or turbo options. This way you will be able to efficiently process all signals generated by the technical strategy and make the most profit from trading.
Considering that this technique involves using a highly efficient method of forecasting the market and a mathematical approach to averaging positions that allow increasing financial results, we can count on a maximum possible capital gain, which will depend only on the investor’s personal activity in the market.
In this case we use packages of trade contracts, so the deposit security is of utmost importance. To work in a minimum loss mode, use contracts with a minimum cost. The overall risk for all open transactions should not exceed 5% of investor’s funds.