As with all binary options strategies, the triple ladder strategy is going to require both technical and fundamental analysis to be completed. Ladder strategies are typically grouped into the category of advanced strategies. However, the version described below is not overly complex and could easily be used by beginner level traders.
Ladder trades are named such because of the price action they are linked to and how they are executed. This strategy is of the trend variety, with the trader trying to establish whether the price of a chosen asset is going to climb up or down the ladder during a specified period of time. This particular method makes use of three different options, three different entries, and three different expiry time periods.
The strategy itself is extremely basic – identify a price trend and then enter into three successive trades. All three trades should include the same selection, either Put or Call. All three should also carry the same expiration time, allowing them to close either at the same time, or one right after the other. The investment amount could vary, but since this strategy is more about odds than anything else, using the same amount makes more sense than using varying amounts.
The reason for executing only three trades is because price trends can be fickle. There needs to be enough time for trade execution, yet not so long that the trend has time to reverse. This binary options strategy can be used with various short-term expiry times, but the 60 second trade tends to be the best selection during times when the prevailing trend is not extremely solid and subject to reverse at any time.
Brief price pullbacks are likely to take place during even the strongest price trend. The use of three different positions provides some protection against this. With three positions open, one can go into the loss category and you’d still earn money. For example, say you purchase three $10 options that offer a return rate of 80% and two of the three finish in the money. The total return would be $36, then subtract the $10 for the losing option, leaving a profit of $26.
The best case scenario is obviously for all three positions to finish in the money, with the worst being that all three trades close out of the money. The difference between these two extremely different outcomes is analysis. It is vitally important to have checked to see if any market news is impacting the price of your chosen asset, and equally important to have verified that an active price trend is currently taking place within the technical chart of your choice.
This particular ladder strategy is a mix of odds and analysis. It could be said that when purchasing any three positions, one is likely to finish in the money. However, analysis is what makes the difference and provides the possibility for all three trades to be profitable. The primary difference between gambling and binary options trading is analysis, so be sure to research each trade to the best of your ability.