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!
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.
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.
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.
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.
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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!
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.
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 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 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.
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.
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.
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.
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.
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.
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.
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.
A type of asset, this is the financial share of a company – for instance Microsoft, Samsung, Twitter – and etc which you trade with.
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.
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.
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!
The Complete Binary Glossary
Our glossary is the most straightforward path to learning binary options terminology and definitions, giving you the tips and tricks needed to guide you on the road to knowing what you’re doing when trading online.
At The Money
Refers to a situation in trading where at expiry, the strike price equals the current price. Here, there is no profit or loss for the trader.
A Binary Option is a type of trading where the gain is predetermined. It’s referred to as “in the money” when a prediction is correct at the end of the expiry period, If the prediction doesn’t come true, it’s referred to as “out of the money”. The word “binary” refers to there being a choice of only two outcomes.
A Boundary Instrument is a tool used to predict whether an assets price will be within predetermined limits by the time the expiry period comes to an end.
Refers to a facility to close an existing trade before the end of the expiry time. Early Closure is allowed by some brokers with the price of a reduced return.
The time and date at which a current trade where an option will come to an end is the Expiry Time. The whole transaction becomes void at that instance.
This term refers to the actual value of an underlying asset at the moment the expiry time of the option in trade expires.
When on a High/Low prevailing trade, you can buy an option on the condition that the price of the underlying asset will expire above the strike price.
High/Low Instrument is an instrument used with the call/put options where the High is a prediction that the price will be above the strike price and a Low is a prediction that it will end up being below the strike price.
Also known as the Range Instrument, it refers to a tool in where a trader will predict that an assets price will be between a range of two values at the end of the expiry period.
Investment Amount refers to the total sum of money put at stake for an individual stake. It is the investment amount a trader wins in case of a correct prediction or loses if the forecast does not come true.
In The Money
In The Money refers to a winning trade where a predetermined payout is paid to the trader automatically at the end of the set expiry period. Out of the Money relates to a losing trade.
Low Option is the opposite option from the High Option where a trader will speculate that the price of an asset will be lower than the strike price at the end of the expiry period.
Refers to the current or actual price of an asset in real-time. Market Price is the price without accounting for delays by data providers.
No Touch Option
No Touch Option is a trading style where the trader predicts whether an assets price will hit or fail to reach a predetermined level. The trade wins if the prediction comes true.
One Touch Option
One-Touch Option is another option where the trader sets a barrier which has to be struck or surpassed by an assets price within a fixed expiry period. The moment that barrier gets hit or exceeded the trade matures whether the expiry time has come to an end or not.
Out of The Money
A situation where a trader loses all the money he had invested in a trade and his speculation on the price movement of an assets price does not materialise.
Robot software is essentially a software program that trades for you. You still need to train it and set the parameters that it will operate within but once you have mastered that you can effectively set the program to run on autopilot and spend your time monitoring the markets and other tasks.
Refund is the money the trader gets refunded if the trade expires with a correct prediction. Each broker has his rate; some will refund the full amount while others will refund a set percentage of the investment amount.
Return is the profit that a trader will make over and above the investment amount when his prediction in binary option comes through. The return rate is the percentage of the invested amount, and it is predetermined before the trade’s executed. For example, if your investment amount on a trade is $100 and the broker’s Payout is at 80%, when you are “In the Money”, the broker will pay you $180 which represents the $100 invested amount and the profit of $80 which is your 80% return.
Sometimes referred to as the strike price, It is the price an asset must hit within a predetermined expiry period for a trader to be “In the Money”.
Refers to the instruments where the trader predicts whether an assets price will hit or not hit a predetermined barrier within the expiry period. If the barrier’s is hit or not hit depending on the option, at whatever stage of the expiry period, the trade expires instantly.
Underlying Asset is the asset type represented in a specific trade, e.g. currency, commodity, stock or index. It could also apply to a future if it is the object of trade at that particular time.
Underlying Asset Types
Refers to all the assets which are available to trade. They could be currencies, stocks, commodities, indices or futures.
Binary Options Glossary
In order to achieve success in binary options trading, you need to have a firm understanding of the terms and concepts frequently used in the industry. Without adequate knowledge of the words or phrases used in trading options, it will be very difficult for you or for any trader to enter this industry with ease.
Most binary options brokers offer their own versions of a binary options glossary. This is where you’ll find all the terms used in trading binary options. With this helpful resource, we aim to give you a well-rounded idea on what this industry is and how it works.
The contents of a binary options glossary
As we’ve mentioned earlier, you opt to have a full grasp of the nature of ZoomTrader binary options trading , its unique characteristics, and the basics of how to trade binary options. Though it doesn’t involve a step by step procedure on how to trade assets, it gives you the definitions of the words you may encounter when you enter this industry.
A binary options glossary may contain information about trading concepts and some account-related terms. The contents differ from broker to broker, depending on what a certain broker thinks would be necessary for a trader to get familiar with.
The concepts and terms are usually alphabetized to make it easier for you to find a specific word or phrase. Moreover, this allows you to connect different terms that are related to each other, and form a concrete perspective of what a word or phrase is all about. Some of the common terms you’ll find in a binary trading glossary include the “asset”, “in-the-money” or “out-of-the-money”, and “binary options” among others.
Asset index and binary options
Using our ZoomTrader binary options glossary , you can find the difference of various assets and some examples of each. Our intuitive trading platform provides you with the definitions of the common asset classes. These are the Currency Pairs, Indices, Stocks, and Commodities. You can learn about each of these asset classes and familiarize yourself with them.
Once you get to know these various assets, you can gain more confidence in trading them. Moreover, you better interpret the movement of certain assets after sufficient research of these underlying assets.
We also give you the various types of binary options available for you in our platform. You can find in our glossary the features that distinguish one binary option type form another. In fact, we have four binary options type that you can all try. These are the classic High/Low, One Touch, and Boundary trading types. We have the more advanced Short Term trade type as well.
Aside from the ZoomTrader assets and binary options, you can also learn about our platform’s expiry rates and rules as well as bid prices. These concepts are very essential, especially to new traders.
Accessibility of the binary trading glossary
You can find our extensive binary options glossary in our website. It’s available for all of our traders to use. We keep it updated with the latest developments in binary options trading so that our traders will always get ahead of the game with their knowledge of what’s new in the industry.
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