Glossary Know About Common Binary Option Terms through Binary Options Glossary When you are attempting to carry out the terms in binary options 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.
Ask Price 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. 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. 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. Bid Price 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 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 how easy can you make money predetermined threshold price.
Broker 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. Bullish Market 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.
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You will be buying time to improve your success ratio. Call Options A trade that closes at a higher price terms in binary options what it is purchased for is known as a call option. Close 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.
Commodities Commodity is a general term given to the raw materials produced by various sectors like food, metals, etc. Examples are: Oil, Coffee, Silver, Gold, etc. Currencies Currency is an asset that you use to trade.
Day Trader A trader who opens single option positions or multiple option positions and ends it within the same trading day is called terms in binary options day trader. Deposit 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.
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Early Closure Early closure is when a trader closes an option immediately before it gets expired and before a contract ceases. Expiration Time 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. Fixed Return This means that the profit amount never changes, even if the asset value changes.
Fundamental Analysis 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 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. Index The index represents a broad portion of a particular market. It can also be focused on any particular industry.
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Investment Amount It is the amount that a trader puts from his pocket to buy an terms in binary options. 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. This term is often used to describe a winning trade. Last Trading Day The last trading day strategy 60 seconds off levels 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. Outbound Option 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. Payout The financial profit or return that you get when a contract expires is known as the payout. Platform 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.
Put Option 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. Refund If your option expires at-the-money, you will get a portion or the full amount that you have invested as a refund.
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Resistance Level This is a price level beyond which the security or the market price will not rise. Return 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. Stock Exchange This is the place where shares and stocks and other securities are sold and bought.
Stock This is a term given to the asset of a particular company that is available for trade in the financial stock market.
Terms associated with binary options trading explained.
Strike Price 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.
Trading Range This is the range between the lowest and the highest terms in binary options where the actual stock is traded.
Underlying Assets This is an asset that forms the basis of an option and they include indices, stocks, currency pairs and commodities.
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The underlying assets are not limited to the above mentioned asset types. Volatility The rapid changes and the huge fluctuations that the financial market sees is called volatility. Withdrawal 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?
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