Binary Trading Glossary – Common Used Terminology

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Binary Trading Glossary

When you first start trading binary options, you’ll come across numerous words and phrases that might be unfamiliar to you. It’s important to learn what they mean. Below, we’ve compiled the most commonly used terms so you can hit the ground running. Note that the binary trading lingo found on this page covers all of the major binary options platforms.

Asset – The instrument that underlies the trade. Binary options are traded based on stocks, commodities, currency pairs, and indices.

At The Money – Describes a binary option for which the price at expiration equals its strike price. There is no gain or loss for the trader.

Broker – Binary options brokers host the trading platforms from which you can execute trades. Before you can trade binary options, you must register an account with a broker.

Call Option – A type of binary option that becomes profitable when the unit price of the underlying asset rises above its strike price at expiration.

Charting – The practice of plotting an option’s price at successive points in time. It is a tool often used to aid in technical analysis.

Commodities – Basic goods that are either grown – e.g. sugar, coffee, etc. – or mined (or drill) – e.g. gold, oil, etc.

Currency Pair – A FOREX rate determined by matching the value of one currency to the value of another currency. For example, the Euro and US Dollar form a currency pair (EUR/USD). The price of the binary option changes as the exchange rate between the two currencies moves up and down. https://www.bestfxbrokers.com/binary-trading/trading-school/beginner/forex/

EMA’s / Estimated Moving Averages – indicators you can use to see moving averages of underlying assets price movements.

Expiry Time or Expiration – The point at which the binary option expires. The underlying asset’s price at expiration is compared to its strike price to determine whether the trade is in the money, out of the money, or at the money. Every binary option comes with a predetermined expiry time.

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Fibonacci Retracements – Fibs or fib lines are created via measuring very specific points in a price movement. These are used as an indicator to help determine what a price is likely to do. https://www.bestfxbrokers.com/binary-trading/guide/fibonacci-retracements/

Fundamental Analysis – A method of analysis that uses macroeconomic and microeconomic data to forecast the future price of an underlying asset. Macroeconomic signals include interest rates, unemployment rates, and inflation. Microeconomic factors are those that affect supply and demand.

In The Money – Describes a binary option that is profitable for the trader. For a call option to be in the money, the underlying asset’s price at expiration must be greater than its strike price. For a put option to be in the money, the asset’s price at expiration must be less than its strike price.

Index or Indices – Comprised of multiple stocks. The index’s value reflects the individual prices of the underlying securities. Examples include the Dow Jones Industrial Average (DJIA), S&P 500, and Nikkei 225.

Market Price (Of Underlying Asset) – The current quoted price of a binary option’s underlying asset.

Touch / No Touch Binary Option – A type of binary option for which the trader predicts whether the underlying asset’s price will reach a specific target price prior to expiration. A touch binary option (sometimes called a one touch option) is in the money if the asset’s price reaches the target, even if it drops below before expiration. A no touch binary option is in the money if the asset’s price fails to reach the target. https://www.bestfxbrokers.com/binary-trading/trading-school/beginner/touch-no-touch-options/

Out Of The Money – Describes a binary option that produces a loss for the trader. A call option is out of the money when the price of its underlying asset at expiration is less than its strike price. A put option is out of the money when the asset’s price at expiration is greater than its strike price.

Platform – Used by binary options brokers to allow individual traders to executes trades. Although the major platforms are similar in many ways, each also presents unique features.

Put Option – A type of binary option that becomes profitable when the unit price of the underlying asset falls below its strike price at expiration.

Range Option (Boundary Option) – A type of binary option for which the trader predicts whether the underlying asset’s price will end within a specified price range, or outside of it.

Rebate or Refund – The amount returned to the trader if a binary option expires out of the money. Typically, the rebate is expressed as a percentage of the investment amount.

Strike Price – The price of the underlying asset at the time a binary option is exercised.

Technical Analysis – A method of analysis that uses previous market data to identify trends and forecast the future price of an underlying asset. Signals like trading volume and price are charted in order to note probabilities of future price performance.

Trading Minimum – The minimum amount required to execute a binary option. This amount varies by broker http://www.binaryoptionsblacklist.com/trading/minimums/.

It’s unnecessary to memorize the definitions provided above. Instead, become reasonably familiar with them and refer to this page whenever the need arises.

Glossary

Find out Everything Necessary About Binary Options Trading Quickly and Easily!

Learning how to trade with binary options could be a tough task for some of you. Regardless you are a beginner in trading in general, or you have never had anything to do with binaries, an education in advance can guarantee your fastest and biggest profits by all means. And if you thing that you will have to read dozens of book, spend hours in the local library or even attend specialized trading courses, we have to tranquil you at this very moment. Don’t worry at all, because becoming familiar with the binary options and learning how to trade with each of them will cost you nothing and will take few days or even hours. To make this happen and become possible, have a glance of our detailed and top-to-bottom glossary that is especially devoted to binary options trading activity! Are you ready? Well, let`s get started, then!

Glossary of Common Terms in Binary Options Trading

To make the information easier to be consumed and realized by you, we will begin our education with some common terms and basic words from the binary options trading glossary. Eventually, we will advance and in the end of the article, you will be almost ready to join the market with confidence and great hopes for great profits.

Binary or digital options, as well as nothing options, are the same terms that correspond to the something. These are trading instruments that have only two possible final outcomes. The trader can either win, or lose, which is a consequence that the name of this term hides, too. The binary options involve some fixed payouts. They are significant for the moment after the underlying stock meet or exceed its predetermined threshold. The amount of binary options payouts in general can be determined in the beginning or before you finally make your trade, but binary call options, on the other side, might have the opposite way of trading direction.

The term is always met in a binary options broker review and it is linked to your final outcome. In few words, the payout is the amount you earn from a successfully made trade, be warned that often the binary options bonus is not a part of the payout

A strike price is usually influenced by the price of the underlying security. This happens, when the certain binary option is purchased. When the expiry time comes, the price of the underlying security is compared to the strike price, so the trader can find out whether the binary option gains value (“in the money”) or loses it (“out of the money”).

Usually traders and brokers call it underlying asset. This term is linked to the type of item that a trader trades on. In few words, this is the asset in which you are purchasing an option against. The asset can be currency pair like USD/GBP, USD/EUR, commodities, indices and stocks like those from Microsoft, Apple Inc and many more.

The market price is the current underlying asset value. You need to know it in order to find out whether your trade is wining, or a loss.

The expiration is the expiry time or date, where the value of the underlying asset is compared to the strike price to your payoff. At expiration, the option becomes void or predetermining your final outcome of the certain binary options trading action.

Top Glossary Additions for Advanced Traders

Now, let`s skip to some more specific terms in binary options trading. Here, you can meet some words that will be eventually parts of your successful advanced binary options trading experience. Get your pencils or focus immediately and begin the second binary option glossary course.

With this term, we show the position in which the binary is in when it reaches the expiry time neither in-the-money nor out-of-the-money. However, this must happen at the same price at which you have purchased the option or determined the future price.

The early closure is the moment, when you receive the chance to close an option and expire it almost at once even by confronting the preliminary contract of the deal.

You do know most types of binary options by all means. However, in case you meet the inbound option during your trading activity, be aware that this is an option on Boundary (Range) binary option activity. It is linked to the moment, when the underlying asset expires inside the higher and lower limits of the price you have determined or chosen.

You will see it any binary options trading website you appear. This amount is the amount that has been taken from your e-wallet, when you purchase an option and make a trade. Classical investment amounts vary from $1 up to $1000. Some brokers limit the value of the investment amount you can make for particular binary options.

The refund term explains a part of the full amount from your binary trading investment. It is given to you, when your option expires at-the-money. Most of today`s brokerage websites refund the traders a portion of their investment on average around 15%. However, always check out the refund amount for each broker you become a member of.

This term is linked to the best part of the entire binary options trading activity. When your trades are wining and you want t take the money back out of your trading account, you can do it only by applying for a withdrawal. In most cases and in many binary trading brokers, this process of financial transaction into your bank account and from your website account can take some time. The payment method you have chosen – debit or credit cards, bank wire transfer or some of the popular e-wallets like Moneybookers Skrill, Netteler, PayPal and etc can also determine the duration of each withdrawal processing time. Keep in mind that a withdrawal will cost you little fees, although many of the most reputable brokers allow one free withdrawal per 1 calendar month.

Probably, you will have to reach a particular level of perfection in binary trading till you get to the point of this term. However, it is our duty to explain it to you in short and simply now. In general, hedging is a purchase an asset or option with the aim of risk reduction from a certain trade in a contrarian direction in some other market place. Many of the high stake traders in binary options trading use this technique to achieve wonderful final results.

Over the Counter

We finish our binary trading glossary with the over the counter term. With it we determine the market place, in which the assets are traded directly between two parties without – aka with no broker’s interference or mediation.
Learn this glossary and become even more advanced in binary trading! With these terms you can easily get the slight idea of this trading activity without even bothering yourself with boring reading or studying for ours. Besides, we have included the most significant words that you will meet in binary option brokers by all means. So whether you are in your beginning of the education, or about to enter a website, have these glossary terms by your side and revise the terms in it once in a while – just like that in case you have forgotten or missed something from your binary learning plan! Have a great studying!

More binary trading termins and main aspects explained in separate articles:

Binary Options Glossary

Trading with binary options, as you probably know, requires you to be a real pro in all of the terms and basic rules of this activity. For this purpose it is strongly recommended that you become aware of those words with important meaning which you will encounter during your trading activity. Be aware that most binary options brokers provide some glossary packs too, but in most cases this pack of terms is usually quite limited. We are about to disclose to you everything that you really need to know, so if you are motivated and focused enough, let`s get started with the quick and effective education course now!

Common Glossary For Binary Options Trading – Basics

Let`s begin with some of the most common terms from the binary options trading glossary. After all, proper and gradual learning is the most optimal course. Besides, by studying the glossary step by step, it will be easier for you remember the most significant words from the binary options glossary!

Review

Review

Asset

The asset is the underlying tool or instrument that is chosen for binary options trading contract determinations. Assets can include stocks, indices, commodities and the different currency pairs you trade with.

At the money

With this term, we talk about the instant in time, in which the targeted value of a binary option becomes the same as the price of the underlying asset selected by the trader.

Current price

The current price is the value (the amount) that is determined in almost real time and it is the opposition of the most price information that is in many cases delayed by a particular period of time – about 15 minutes.

Time of expiration

Usually known as expiry time, with this term we point to the date or the time, when the value of the underlying asset will be compared to the strike price in order to form the final outcome or your payoff. At the expiry time (time of expiration) the binary option you traded then becomes void and ceases to be traded.

In the money

If a binary option is in the money, then it has value upon the expiry time. Usually, a put binary option is in the “in the money” status when the underlying security price is below the strike price. Alternatively, a binary call option becomes “in the money”, when the underlying security price goes above the strike price.

Strike price

Speaking of strike price above, let`s figure it out what this term means. The strike price, in a few words, is determined by the underlying security price at the very moment when the binary option is purchased and the contract is made. Once the binary option reaches its expiry time, the underlying security price must be compared to the strike price in order to see if the binary option has won, or lost its value, or in other words whether it is in the money or out of the money.

Payout

The payout is the value of money that you as a trader receives as a profit from binary options trading activity as to a particular binary trade.

Boundary instrument

This is a kind of a tool that is applied by the traders in order to make the prediction about the underlying asset value – and to be more specific, whether this value will expire during or out of the set of ranges – simpler and quicker.

Glossary Terms for Advanced – Learn the Following, too!

Even though a little bit more specific, the following terms from our glossary are also important to be learnt, known and applied during your binary options trading activity. We divide our specially tailored glossary in two parts in order to simplify it for you, and to offer you a quick pause during your learning process. But let`s not lose any more time, and begin with the next portion of significant binary options additions in our fantastic and helpful glossary!

Bear market

This is where the market (that is usually referring to a financial or stock market), prices are almost in all cases in a downward trend.

Bull market

This is where the market (that is usually referring to a financial or stock market) prices are almost in all cases in an upward trend.

Commodities

Commodities are the types of assets that you can purchase a binary option to trade in. In general, the commodity is a physical object and it can be a precious metal – gold, silver and etc – as well as a manufacturing resource like cotton or even petrol. The price of each of the commodities we have chosen (and the rest of them) is determined according to many economic factors and changes.

Currency

Currency is another asset that you can trade with. Note that currencies usually come in pairs, and the most common among them – USD/GBP, EUR/CAD and etc – may be found in almost any binary options broker.

Currency Price

The currency price is the other name of the market price term. This is the present value of the underlying asset and it is always announced in real time – i.e. with no delays by the financial information provider.

Deposit

The deposit is the amount of money you invest with a binary options broker, when you complete a registration and create an account. This is the total value you put into the brokerage e-wallet of yours to make trades with.

Early closure

The early closure is the moment when the traders receive the possibility to close a binary option which then, instantly causes it to expire, ceasing the contract.

Index binary

With the glossary term index binary we describe the binary option which has underlying an asset that is measured to an index. Such binaries can be understood by these examples: Dow Jones, FTSE-100 and etc.

Investment amount

When you purchase binary option to trade it, you pay a particular value and this is the investment amount. These amounts – prices – vary according to the binary option, the market, as well as the broker you are signed with – from $1 to $1000.

Refund

Popular in trading experience in general, this glossary term refers to the entire (or a part of) amount of your investment you have returned to you in a situation when the binary option expires at the money.

Return

The return amount is the amount that you earn right after the purchased binary option expires in the money. The return value ranges according to the instrument you have traded with your binary. The particular asset you have chosen, as well as the broker type you are trading on, also affect for the return value. Since the return value is always pre-determined, you know in advance the eventual loss or profit you will get from the purchased binary.

Stock

A type of asset, this is the financial share of a company – for instance Microsoft, Samsung, Twitter – and etc which you trade with.

Withdrawal

When you reach a moment that you have earned a fair sum of money from your binary options trading activity, then, you will want to have this money withdrawn from your brokerage account and deposited in your your debit card or bank account. To receive this money, you will have to make a withdrawal. Note that the withdrawal methods and terms and conditions are different between brokers, and depend on the broker you are trading in with binaries.

Charting

With charting you practice plotting a binary option value at some very beneficial moment of time. Charting in general is a tool and it is a way of trading with binaries. The main purpose of charting is to be helpful with technical analysis.

Technical Analysis

And since we have mentioned it, let`s explain the technical analysis term, too. This is the analysis – and the usage of it – when you want to undertake research in advance and to find out additional data points in order to make your prediction of the prices and the market movements of the assets you have chosen more optimal and profitable.

Feel free to start your learning course with our helpful and very useful binary options trading glossary now! We are sure that it will be very supportive to your overall education in the field, so do not lose any more time and start learning right away! Good luck!

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Good Choice for Beginners!
    Free Trading Education, Free Demo Account!
    Get a Sign-Up Bonus Now!

  • Binomo
    Binomo

    2nd in our ranking!

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