Boundary options have been a staple of binary options trading for years. Recently, however, more and more brokers have dropped boundary options from their arsenal. The BossCapital Boundary Options are some of the few options you have left.
Boundary options work on a simple premise: Sometimes it is easy to predict that the market will move significantly, for example right before the release of big news. Since you do not know whether the news will be good or bad, however, it is hard to predict which direction the market will move in.
This situation – high volatility, but no clear direction – is perfect for trading a boundary option. A boundary option defines two price levels, one above the current market price and one in a similar distance below the current market price. These two price levels create two boundaries. To win your boundary option, the market has to break through either boundary.
There are quite a few market situations, where boundary options are the only binary option trade that allows you to make good predictions. In recent years, however, many brokers have dropped boundary options in favor of other option types such as ladder options.
Did you know that there are more than 400 operators in the binary options market?
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Ladder options require you whether the market will close above or below a certain price level. While brokers offer five different price levels you can choose from, all of these price levels are in the same direction of the market.
Therefore, ladder options are an inadequate replacement for boundary options. Instead of allowing you trade purely based on volatility (like boundary options do) ladder options still require you to predict which direction the market will move in.
Ladder options are a great instrument, but they are no replacement for boundary options, even if that is how they are often marketed. To make the most of your binary option trading, you should strongly consider using a broker that allows you to trade boundary options.
Since most brokers use an either / or approach, providing either boundary options or ladder options, you might want to think about opening an account with either type of broker. Then you would have one broker for your boundary options trading and one broker for your ladder options trading.