A new type of trade is offered by the brokers which is known as binary option “ladder” trading. With a Ladder trade, you pick an asset, and there are three different strike prices and three different expiry times. Most brokers allow you to set these strike prices and expiry times yourself. As the asset progresses through the strike prices (like the rungs on a Ladder), you are given a certain partial payout percentage.
Here is an example:
Say you are trading GBP/JPY.
The current price level is 86.90. The current time is 10 am.Three strike prices and expiry times are set:
|SL. No||Strike price||Time||Payout|
The payouts offered by broker will generally reflect how risky your trade is determined to be. If you set your strike prices really close together within a short time frame, your broker will likely offer you smaller payouts. If the strike prices are further apart across a longer time, you are predicting a bigger move, and you may be offered higher payouts.
So in the example above, where you are trading GBP/JPY, to be profitable, your trade would have to progress along the “rungs” of your Ladder as follows:
You are betting long (that GBP/JPY is going up, not down), hence
At 10:15 in the morning, GBP/JPY needs to be trading at or above 87.11%. If it is, you get 35% of your investment as a payout.
At 10:32, your asset needs to be trading at 87.34. If it is trading at or above that level, you will receive 40%.
At 10:58, GBP/JPY must be trading at or above the last level you designated, 87.50. If it is, you get 70%.
If you add up all those payouts, you get a total payout percentage of 145%. Remember, the percentages offered will depend on the perceived risk of your investment as your broker analyzes it. If your Ladder trade is too “easy” to achieve, you will be offered only small payouts. If however your Ladder trade is too “difficult,” and has no basis in reality, you are not going to win.
Ladder trades are not for beginners.