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.
Best Binary Options Brokers 2020:
Top Binary Options Broker 2020!
Best Choice For Beginners and Middle-Leveled Traders!
Free Demo Account!
Free Trading Education!
Big Sign-Up Bonus!
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.
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!
Know About Common Binary Option Terms through Binary Options Glossary
When you are attempting to carry out the binary options trading, you will come across many terms and phrases that you have not heard in your life before. It is very important for you to know some of the common terms and phrases used in binary options trading before stepping into the binary options trading league.
The following are some of the most common terms and phrases that will help you get started and to do well in binary options trading.
This is the price that a seller is asking for an asset or a security or is the price that an investor is willing to part from his end for the asset.
The asset is the item that you are trading on and is often referred to as the underlying asset. The examples of assets include: Commodities (Gold, Silver, Oil, etc.), Currency pairs (USD/EUR, USD/GBP, etc.), Indices (Dow Jones, S&P 500, etc.) and Stocks (Google Inc, BMW, Mercedes Benz, etc.)
At The Money
This is a unique situation in binary options trading where the purchase price of the trade ends up being the same price at the close of the trade. The trader will not encounter any gain or loss for this trade.
This term is used to describe a stock or a financial market’s price is on the decline.
The investor will be able to sell an asset or security at the bid price. This is the price at which a potential buyer is ready to buy your asset.
Binary options or digital options or all-or-nothing options give you only two outcomes, either you win or you lose and hence it is termed as binary. The trader will predict the direction of the trade for a particular asset or security and the payouts is fixed after the asset meets or exceeds the predetermined threshold price.
You should register your account with a broker before you start binary trading options. A broker will host the binary trading platforms from where you will be able to carry out your trades.
If the prices of a group of securities are rising or is expected to rise in a financial market, then it is said to be a bullish market.
Buy Me Time
This feature will permit you to add time to your opening positions as well as extend their expiration period. You will be buying time to improve your success ratio.
A trade that closes at a higher price than what it is purchased for is known as a call option.
Close means that it is the end of the trading day and it is the time for the final prices of the day to be calculated.
Commodity is a general term given to the raw materials produced by various sectors like food, metals, etc., that is used in trading. Examples are: Oil, Coffee, Silver, Gold, etc.
Currency is an asset that you use to trade. The currencies are traded in pairs like USD/GBP, USD/EUR, USD/ASD and many more.
A trader who opens single option positions or multiple option positions and ends it within the same trading day is called a day trader.
The deposit is the term given to the funds that you add to your trading account to carry with trading. The adding of the funds to your trade account is called the deposit.
Early closure is when a trader closes an option immediately before it gets expired and before a contract ceases.
The Expiration Time is the time at which an option expires. The option that is expired is void and cannot be traded. The expiry times of binary options can be: 1, 15, 30 and 45 minutes or an hour, 24 hours or weekly.
This means that the profit amount never changes, even if the asset value changes.
One of the basic ways to evaluate stocks is the fundamental analysis. This analysis is on the basis of the current political and economic data. An asset is analyzed by taking a look into various factors that could affect its price like weather, global economic conditions, financial policy, etc.
Hedging is a risk management strategy that is employed to offset or limit the loss probability from the variations in the prices of currencies, commodities or securities. It involves taking equal and opposite positions in two different markets to reduce the loss.
The index represents a broad portion of a particular market. It can also be focused on any particular industry. Its examples are: Dow Jones, Japanese Nikkei, American Nasdaq, French CAC, British FTSE, etc.
It is the amount that a trader puts from his pocket to buy an option.
In The Money
In the Money is a term used in binary trading when the purchased option by a trader turns profitable from the trader. If you make a high (call) option and the option’s price go beyond the target price during expiration, then the option is known as in-the-money option. This term is often used to describe a winning trade.
Last Trading Day
The last trading day is the last day where you will be able to open or close a trade in a market. It has got nothing to do with the expiry date in trading.
This is a term used when the underlying asset expires outside the set lower and higher price limits of the target prices.
Out of the Money
If the strike price of a call option is greater than the market price for an underlying option after its expiration, then it is known as the out of the money option. This term normally means a loss for the trader as he or she makes no gain with the trading.
The financial profit or return that you get when a contract expires is known as the payout.
This is the place where the brokers of binary trading allow traders to execute their trades. There are several types of major platforms and most of them perform in a similar fashion, yet each one has its own unique feature.
You can opt for binary put options if you believe that the value of the item that you are trading with will decrease in price before the expiration time of the option. If the strike price decreases during that time period, you stand to win money based on the percentage set before you started bidding.
If your option expires at-the-money, you will get a portion or the full amount that you have invested as a refund. If the option expires out-of-money option, then the broker might even refund you a portion of your investment in the binary trading and that would be around 15%.
This is a price level beyond which the security or the market price will not rise.
Return is the money that you will be making after the expiry of an option. The return will depend on the item that you are trading with as well as the brokers. The return value will be mentioned to you before you make a purchase so that you will always know whether you can make a gain or stand to lose through the binary trading. For example: if you invest $100 and the return for it is 25%, then you will gain $125 after the expiration of the option.
This is the place where shares and stocks and other securities are sold and bought.
This is a term given to the asset of a particular company that is available for trade in the financial stock market. Examples: Vodafone, Barclays, Google Inc, Apple Inc, Facebook, etc.
The strike price of an underlying asset is the price at which the call or the put option is exercised. One of the key decisions that a trader needs to do is to pick the strike price. The strike price has a good control over the option trade.
This is a helping tool that will allow you to check out the other trader’s position directions and you can even mimic the behavior of the other trader to your advantage.
This is the range between the lowest and the highest prices where the actual stock is traded.
This is an asset that forms the basis of an option and they include indices, stocks, currency pairs and commodities. The underlying assets are not limited to the above mentioned asset types.
The rapid changes and the huge fluctuations that the financial market sees is called volatility.
Binary trading options is not just about making investments, it also involves withdrawal or getting the money out of your trading account. The withdrawal from your trading account can happen at any time and largely depends on the broker, the method opted for withdrawing money and also the cost.
Have we left out any binary options terms from this glossary or the definition is wrong? Let us know via the contact form and we will add some new terminology if need be.
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.
Best Binary Options Brokers 2020:
Top Binary Options Broker 2020!
Best Choice For Beginners and Middle-Leveled Traders!
Free Demo Account!
Free Trading Education!
Big Sign-Up Bonus!