How to Trade the Ladder Option Break Strategy

****Strategy Outline****

Intro: Ladder Option Trading Vocabulary

Step 1:  Sign up with one of our recommended brokers featuring Ladder Options
Step 2:  Browse assets and ­ analyse the market
Step 3:  Part 1 – Identify Indicators (established indicators generate a safe trade)
a) Identify volatility
b) Identify currency correlation
c) Identify trend patterns
Part 2 – Choose Asset (low volatility generates a safe trade)
Step 4: Set up trade
a) Choose expiry time
b) Choose buy (up) or sell (down)
c) Choose which Ladder line to trade
d) Choose % return in investment
Step 5: Recommended investment per trade
Step 6: Selling a trade

Ladder Option Trading Vocabulary

First learn the Ladder option trading vocabulary, vocabulary words will be indicated in blue throughout this study guide. You can refer back to the vocabulary list for clarification.
– Ladder 
Ladder is also known as the LDO, it is the trading option that is used to perform the Ladder Option Break Strategy.

ladder options

– Ladder Trade Line
There are 5 lines to trade on the Ladder option. In the Ladder option break strategy, when you place a buy (“above”) on a line you are predicting that the price will stay above or surpass the line chosen. When you sell (“below”) a line you are predicting that the price will stay below the chosen line. You can trade any of the 5 lines.

ladder options lines

– Strike Price
The strike prices is always the current rate on the asset. The price at which a buy or sell option can be exercised.
ladder options strike price
– Asset
An asset is a currency pair. (EX: EUR/USD) 3­5 assets are available for selection on the Ladder Options. ­
– ROI
ROI is the return on your investment. The % of your return fluctuates depending on how far away the price is from the Ladder trade line. If the strike price starts off winning (projected to stay above or below) when placed, the ROI % is between 0% and 80%. If the strike price starts off losing (projected to cross a Ladder trade line) when placed the ROI % is between 80% and 1,600%.
The Ladder break strategy is a low risk trading strategy. We only place trades that are winning and are projected to stay above or below a selected line. All Ladder option break trades placed should have an ROI between 5% and 20% for the highest winning rate. Below is a perfect example of a good Ladder option break trade, here I am trading the very top Ladder trade line. The ROI is 6.27%. I am predicting that it will stay below the very top line in the next 30 minutes.
ladder options trade example
– Expiry time
This will determine when your trade expires. When a trade expires you eaither win or lose your investment. A trade bought for a prediction that it will rise above selected line, will gain a return on investment if price rises and will lose investment if price falls below selected line.
– Buy
A buy is a prediction that the price will rise.
– Sell
A sell plays two rolls with the Ladder. A sell is either a prediction that the price will fall below selected trade line, or you can perform a sell before your trade expires to cut losses if your trade goes the wrong direction. ­
– Trade Indicators
Trade indicators determine if the trade is SAFE or UNSAFE. Common trade indicators include volatility, correlation, and trade patterns.
– Out of Range
Out of range assets exceed the very top or very bottom Ladder trade line within a 12 HOUR time period. Out of range assets are TOO VOLATILE and a UNSAFE trade for the Ladder break strategy.
ladder options trade example 2
– In Range
In range assets refrain from exceeding the very top or very bottom Ladder trade line levels within a 12 HOUR time period. In range assets have low enough volatility to be considered a SAFE trade.
ladder options trade example 3
– Resistance level
Resistance levels are thresholds that hold back the strike price rising any higher. Resistance levels keep a chart in a trend or pattern. In the chart below resistance levels are indicated by and X. Resistance levels will always connect to previous resistance level formulating a pattern of an uptrend or downtrend. In screenshot the pattern is indicated as a up trend.
ladder options resistantance line
– Support level
Support levels are thresholds that hold back the strike price from dropping lower. Support levels keep a chart in a trend or pattern. In the chart below support levels are indicated by and X. Support levels will always connect to previous support levels formulating a pattern of an uptrend or downtrend. In screenshot the pattern is indicated as a up trend.
ladder options support line
– Trend pattern
Trends patterns usually have clearly defined support and resistance levels. When support and resistance levels are indicated, you can connect levels that are displayed and develop a up, down, or neutral trend. (pattern) In the screenshot below 3 resistance levels and 4 support levels have been met. A clearly defined uptrend has been displayed.

ladder options trend spotting

– Uptrend
A uptrend is a pattern developed by support and resistance levels in a upward direction. ­
– Downtrend
A downtrend is a pattern developed by support and resistance levels in a downward direction.
 – Neutral trend
A neutral trend is a pattern developed by support and resistance levels in an even direction. ­
– Volatility
Volatility is the statistical measure of the dispersion of returns for a given security or market index. In other words volatility is how active the market is. ­
– Correlation
Two assets with the same currency pair following the same trend pattern.
  • AUD/USD ­ uptrend
  • EUR/USD ­ uptrend
– Expiry time
This will determine when your trade expires. When a trade expires you either win or lose your investment. A trade bought for a prediction that it will rise above selected line, will gain a return on investment if price rises and will lose investment if price falls below selected line.
– Buy
A buy is a prediction that the price will rise. ­
– Sell
A sell plays two rolls with the Ladder Option. A sell is either a prediction that the price will fall below selected trade line, or you can perform a sell before your trade expires to cut losses if your trade goes the wrong direction.

 * Proceed below to view the Ladder break strategy study guide *

Ladder Option Break Strategy Study Guide

Step 1: Select a platform that has the Ladder Option Available.

The brokerage platforms listed below all include the Ladder option feature. ( I have personally traded with these brokers, and have made numerous withdrawals from each)
Please Feel free to read my broker reviews via the main menu and be sure to check out The Blacklist to avoid getting scammed by unscrupulous vendors with crappy software
a) Open  an account with one of our recommended brokers or practice on a demo account.
10Trade – http://www.10Trade.com 
OptionRally – http://www.optionrally.com/
Interactive Option – http://www.interactive-option.com/
Titan Trade – http://titantrade.com/
Spot Option Demo – http://www.spotoption.com/
b) Choose ladder option
broker with ladder options

Step 2: Browse assets

select ladder options
Common Ladder Option assets: AUD/USD ­ EUR/JPY ­ EUR/USD ­ OIL ­ USD/JPY

Step 3: Part 1 – Identify trade Indicators Establishing 2/3 or 3/3 indicators generates a safe trade.

Safe trade Indications:
  • ­ Low volatility
  • ­ Support and resistance levels alignment and pattern development
  • ­ Up, down or neutral trend indicated. ­
  • Support or resistance level touched but NOT broken.

a)­ Volatility b) ­ Correlation c) ­ Trend Pattern

a) Volatility

The Ladder Option Break Strategy is designed for a market of low medium­- low volatility. Volatility is how active the market or asset is. To check the volatility levels for a safe trade, analyze all of the assets, search for an asset that is in range.
  •  Use 12 Hr chart for best results
  •  Browse each asset.
  •  Analyse assets that are in range.
  •  Identify which asset has the lowest volatility.
Below is a example of a highly volatile asset. A 12 hour chart is selected to review the EUR/JPY. This asset has clearly indicated that it is out of range and displaying high volatility. This is an indication of a UNSAFE trade.
HIGH volatility EXAMPLE UNSAFE TRADE
12 hour chart
EUR/JPY ­ HIGH volatility UNSAFE TRADE (out of range)
12 hour chart ladder options
This asset has drastically exceeded the very bottom Ladder trade line. Exceeding the very bottom trade line puts this asset out of range. In range is indicated by the red parentheses. With asset so far out of range, this is easily considered a unsafe trade for the LDO Break strategy.
  • ­ All assets that are out of range are strongly recommended to be avoided. ­
  • All assets that are in range are strongly recommended to be traded.
The asset I choose for the next example is in range, the overall volatility is drastically lower, creating a safer trade.
LOW volatility EXAMPLE SAFE TRADE (in range)
12 hour chart
USD/JPY ­ LOW volatility SAFE TRADE (in range)
12 hour chart ladder options safe trade
On USD/JPY there is short distance between the support and resistance levels. The asset has stayed between the very top like and very bottom of the Ladder trade lines. and lowest point. (support level) This is indication there is very low volatility on this asset. Low volatility is essential factor to creating a safe trade.
­ After identifying a asset in range with the lowest volatility proceed to step 3b.

b) Correlations

A correlation is a good indication for a more controlled, safer trade. Determine correlation by comparing the assets currency, trends, and direction. A correlation will show if assets with the same currency pair are duplicating the same up or down trend.
  • AUD/USD ­ uptrend
  • EUR/USD ­ uptrend
  • GBP/USD ­ downtrend
In the example above AUD/USD and EUR/USD are correlating.
● If any 2 assets listed above are riding the same uptrend or downtrend, and also having the currencies on the same side, the selected assets are correlating. Correlating assets are good to analyse further for volatility and clearly defined trend patterns.

c) Trend pattern

­ Link support and resistance levels.
If support and resistance levels clearly establish themselves you can link the price points together to create a pattern. View the below screenshot and notice where I have indicated each support and resistance level with an X. There are 4 support levels on the bottom and 3 resistance levels on the top of the pattern.
By linking the support and resistance levels, you are creating a defined trend. Support and resistance levels can create a up, down or neutral trend. In the screenshot below I have connected levels and a clear concise up trend has been identified.
ladder options trend
­ Connect levels along the top and connect levels along the bottom, this will produce a clear view of an established pattern or trend. The dots that connect develop a even line that correspond with the bottom to make a uptrend, downtrend or a neutral trend. If trend is clearly identified this is a good asset to trade.
­ When identifying chart patterns use the 12 HOUR chart view. ­ After identifying chart patterns proceed to step 3.

Step 3: Part 2 – Choose Asset

Choose asset with 2 or more indicators. ­

  • Indicator 1 ­ Correlation ­
  • Indicator 2 ­ Low volatility
  • ­ Indicator 3 ­ Clear trend pattern
a) Choose 12 hour chart
b) Choose asset that is in range. (If no assets are in range do not choose anything to trade, come back another time.)
c) Choose asset with the lowest volatility if there are more than one in range.
d) Choose asset with clear support and resistance levels established.
e) Choose asset with a well defined trend.
f) Choose asset with a correlation. (not mandatory)
ladder options trend
When asset is identified as a safe trade proceed to step 4. (2/3 or 3/3 indicators)

Step 4: Set up trade

­ Choose expiry time
­ Choose Ladder trade line
­ Choose ROI
a) Choose expiry time
ladder options Expiry time
Expiry times are normally between 15 min and 2 hours. Longer trades between 1 hr ­ and 2 hr is recommended for less risk.
* Proceed below for Ladder Trade Line and ROI *
b) Choose Ladder trade line/ROI ­ place trade ­
  1. Assess the chosen your asset. Determine if the strike price is nearing/leaving a support or resistance level. ­
  2. Choose a line near a support or resistance level that is NOT broken.
  3. ­ When price has reached support or resistance levels and reversed itself consider the Ladder trade line with the smallest % near a support or resistance that has been established.
USD/JPY SELL BELOW yellow line ­ 108.142
 ladder options choosing a position
Screenshot above indicates that a resistance level has been reached. The price is currently leaving the last resistance level indicated, therefore we should analyse Ladder trade lines ABOVE the 1st resistance level established.
The very top line and 2nd to top line is near the last resistance level reached. These two lines are considered a good trade, the very top Ladder trading line for 2.54% return or 2nd to top at 11.27%
Safe trade indicators for USD/JPY in the above screenshot:
  • ­ Low overall volatility (12 hr).
  • ­ Support and resistance levels alignment and pattern development.
  • Down trend indication. ­
  • Resistance level touched but NOT broken.
  • ­ Price heading the opposite way from its threshold.
I placed multiple trades on the Ladder trade line second to the top. (yellow) USD/JPY I got various returns from 5% ­ %15. Below is the screenshot of the outcome.
Ladder Option Break strategy WIN USD/JPY
ladder options choosing a position results
Safe trade Indications:
  • ­ Low volatility.
  • ­ Support and resistance levels alignment developing a pattern.
  • Neutral/slight uptrend indicated.
  • ­ Support or resistance level touched but NOT broken.
If the above indicators listed were met successfully you can COMFORTABLY take the trade. This is called the Ladder option break strategy because we trade if the support or resistance level is NOT broken.

Step 5: Recommended investment amount

The ROI on each Ladder option break strategy is 5%­20%.
Here are examples of a good investment PER trade with a given account balance. This example is based off a experienced Ladder option trader with a volume of 10-­30 trades placed a week.
Balance: $250
Investment amount per trade: $100
Profit per trade: $10
Average week: $100-­$300

Balance: $500
Investment amount per trade: $200
Profit per trade: $20
Average week: $300-$­600

Balance: $1,000
Investment amount per trade: $400
Profit per trade: $40
Average week: $625-­1.25k

Balance: $2,000
Investment amount per trade: $800
Profit per trade: $80
Average week: $1.25k­-$2.5k

Balance: $4,000
Investment amount per trade: $1,600
Profit per trade: $160
Average week: $2.5k­-$5k

Balance: $8,000
Investment amount per trade: $3,200
Profit per trade: $320
Average week: $5k­-$10k

Step 6: Selling a trade

This strategy has a 95% win rate. 5% of the time you are going to need to know how to sell a trade, selling a trade can dramatically cut your losses if you think the trade might lose.
When do I sell?
Selling a trade needs to be determined early on. There are a few indicators that can be noticed to enhance your decision to sell.
­ Strike price has BROKEN a support or resistance level. If the price has broken through the support or resistance level you have been assessing, be sure to sell the trade immediately. Once a support or resistance level is broken, the chances of a breakout is severe. A breakout usually runs the opposite direction of indicated pattern forming into a new trend and sparking increased volatility.
­ Strike price has stayed TOO close to the support or resistance level you are assessing. If the price of your asset lingers around the support or resistance level for a considerably longer time than its last level reached there is a good chance the asset my be reversing its trend. If a price lingers around a support/resistance level for 15+ minutes, that is a good indicator they asset may be reversing its trend. Sell the trade if you feel the price has stayed for too long. ­
Strike price immediately turns the opposite direction after placed This is usually a sign of a bad trade. Support/resistance levels may not have been fully assessed, market may have been too volatile, or a clear concise trend pattern was never identified. Immediately sell the trade if this occurs.
Below is a screenshot on how to sell the trade:

how to sell a trade in ladder options

­ If a sell indication has been identified click the sell button circled in red.
­ Instead of losing 100% of your investment (if lost), you can gain back 25%, 50%, 75%, even 90% in some cases. ­
This next screenshot shows a sell.
  • Initial investment: $500
  • Sold $444.55
  • Loss: $56.45

selling a trade in ladder options

Selling all of your potential losses drastically increase the potential of profiting with this system.
* Scroll down to view my statistics with this system *
Here is activity on one of my accounts. 100% wins not photo-shopped.

ladder option trade results

ladder option trade results 2

 

ladder option trade results 3
All of my trades, all wins.
Best winning record: 76 wins straight.