The Ladder binary option is unique. It does not have just one strike price but at least 5 strike prices. These strike prices are located above and below the market price of the asset.
The Ladder option presents several payout opportunities with one single trade, if price action can trigger as many of the listed strike prices as possible.
This is how a Ladder option is shown is displayed on the platforms:
- MetaTrader 4 Indicators: Box-breakout.ex4 indicator (default setting).
- Preferred Time Frame(s): 1 minute, 5 minutes, 15 minutes, 30 minutes, 1-Hour.
- Recommended Trading Sessions: Any time. Depends on when the indicator signal appears on the chart.
- Instruments: any
Trade Example (click the image for full size):
The strategy kicks off with the Box-breakout.ex4 indicator draws two horizontal and vertical lines to secure a colored area on the charts, which we shall henceforth call “the zone”.
Price action is expected to move around from the upper border to the lower border of the zone until it breaks out of one of the borders.
The arrangement of strike prices in a Ladder option is such that there will be at least 2 or 3 strikes on each side of market price when the trade is initiated
The strategy is to use the direction of the box breakout to determine whether price will stay BELOW or head ABOVE each strike price as the trade progresses.
Once a strike is attained, profit is made. Here is how the box breakout is used for this trade.
TRADE ENTRY RULES
- Allow the price action to break out of one of the borders of the zone. In this chart example, the breakout occurred to the upside.
- Look at the various strike prices as well as the market price. Which strike prices are located above or below the market price? Which ones are located along the price action’s path and which ones are away from it? In this example, we see three strikes in the pathway of the upside price movement which is expected after an upside break.
- The answer to the point above will indicate whether to choose the Above option or the Below option for each strike price. For this example where price action is expected to keep moving up, the logical choice would be ABOVE.
- The trader will have no control over the expiration. The aim of the trade is to get as many payouts as possible, so it makes logical sense to allow the trade to get to the end point to see if the goals for the trade will be achieved.
About The Trading Indicator
The Breakout-zones.ex4 indicator is a simple indicator which helps the trader detect areas where price action works within a range.
When there is a breakout, it can be adapted for use in trading the Ladder option.