Binary Options Trading Glossary
60 - Second Option:
This type of option expires within a minute, allowing you to make quick profits. This term is also sometimes used to define a trade type that is really short termed (ranging from 15 seconds up to 5 minutes).
The instrument that will be used to define your Binary Option contract, for example: Gold, Microsoft, Dow Jones and GBP/EUR are all assets you can trade.
All assets are defined as part of one of the following asset “groups” – Indices, Commodities, Currencies and Stocks.
Used to define a trade that ends with a neutral result. This means your investment did not lose or profit. This usually happens when the price of the asset at the end of the contract is equal to what it was at the beginning of the contract.
Bear / Bull Market:
“Bear” markets or assets are ones that are in decline, where as a “Bull” market or asset is considered to be one that is in a trend of rising prices.
The reason we’re all here. A type of option that comes with a fixed payout that varies with the size of the investment, and the prices for each asset.
A person or company that acts as an agent to offer you a Binary Option contract on one or more assets. Brokers can have diverse offers, payouts and investment conditions.
Call / Put Trades:
If you believe the asset’s price will rise, select “Call”. If you believe the asset’s price will fall, select “Put”. The end result is determined by the level the asset ends up at.
A group of assets, commodities usually describe physical goods that are traded on many different markets and include items such as coffee, gas, precious metals, grains and more.
A group of assets where two difference currencies are paired together for you to trade on. Simply choose the currency that will perform better over time or to decide if the pairing itself will reach a specified price level. You can also invest in contracts on a single currency and its performance.
Current Price / Strike Price:
The price level of the asset you are investing in at the exact moment the contract is executed. This price will be used to determine if the price at the end of the contract will increase or decrease.
Some brokers allow you to exit a contract before the original expiry time/date. This can be useful if the market is not behaving as you believed it would.
Expiry Price / Level:
The price for your asset at the time the contract expires – this is the price which will be used to determine your final position.
Determines when your option contract expires.
A major school of thought in option analysis. Supporters believe that numerous world events, such as national disasters, political events and many more, cause asset prices to move, but the asset will always “pursue” a return to normal levels. By studying the economic data, you can predict (analyze) what that level will be.
When your asset finishes in the position you predicted and you profit from your trade, you’re “In-The-Money”.
A group of assets, indices contain each index from each country from around the world, including the S&P 500, FTSE and Bovespa. Binary Options are traded around the level of the index in question.
The two possible outcomes of “range” trading - your investment finishes either inside or outside a specified range and you must decide which outcome is more probable.
The funds you put into a trade which when added to other factors, will determine your profit.
When your investment was not successful and you made a loss, you’re “Out-Of-The-Money”.
Prior to a contract becoming final, you can use your investment, risk and a few more factors to determine your potential return on investment.
A group of assets describing shares in various companies or corporations ranging from international companies, to banks and any other publicly traded company. Microsoft, eBay, Capital One and Chipotle are all examples of stocks you can trade on.
Another trading school of thought opposed to fundamental analysis, technical analysis assumes that the variables that determine an asset’s price are already reflected in that price. This type of analysis relies on historical data to predict the future behavior of an asset.
This type of trade calls for the Investor to decide if an asset will reach a certain price point during the life of the contract. Once the asset reaches that level, the trade is successful and yields a profit (assuming the trader selected the “Touch” option). If the trader selects the “No Touch” option, the asset must NOT reach the specified level for a profit to be turned.
Some assets are traded 24/7, but others rely on the availability of the markets they represent. This means their availability changes to rteflect the specific market. For instance, trading on the Yen is usually only possibly during the operating hours of Tokyo’s Stock Exchange.