Crucial Binary Options Glossary To Know

As in every industry, Binary Options industry also has it’s own terminology that you should familiarise yourself with. In order to understand the industry better we’ve collected the most important terms that we recommend you to go through if you’re new to the binary market.

Mostly used binary option glossary

• Asset – in binary options industry, you’re actually not trading real assets because it’s more like a prediction in which direction the price is going. An asset can be a commodity, a stock, a currency pair or an index.
• At The Money – it is a situation when your open position either is present or ends at the same level when you opened it. Usually in this case a trader receives a refund and trade expires as it would never happen.
• Binary Options – also known as digital options. A trading instrument similar to standard option deals. A trader usually knows the potential return in the beginning and a payout is known before every trade. It’s a form of investment where traders need to predict where a price of a particular asset is going to be in a certain period of time.
• Bid – is a price that a trader is ready to pay in order to enter a deal.
• Broker – is a company that offers traders a trading platform and executes a trade deal placed by a trader.
• Call option – if a trader believes that a price of an asset is going to increase, a call option is being chosen.
• Commodity – is a product, raw material or something along those lines.
• Current price – a price that an asset is currently priced at.
• Deposit – an amount of money invested in a trading platform.
• Early closure – when a trader wants to close a trading position quicker than it’s expiring time, some brokers/platforms offer an option when traders can do it.
• Expiry price – when time of a particular deal comes to an end, an expiry price is the last price when a deal expires.
• Forex – is a currency market. Some people use Forex instead of currency exchange.
• Fundamental analysis – is an analysis where individuals or companies analyse a market based on news and various situations.
• Hedging/Fencing – is a trading strategy when a trader tries to secure a deal by buying the same asset but in an opposite direction.
• Index – indexes are being used to group various similar companies under one index. Based on a particular index you can understand how a particular market is doing.
• Initial investment – is the very first investment you make.
• Investment amount – a sum of money invested.
• In the money – refers to a situation when you’ve predicted a direction of a particular asset correctly. After a trade your position is in profit.
• Market price – is a current value of a particular asset.
• Out of the money – refers to a situation when you’ve predicted a direction of a particular asset incorrectly and your position is in loss.
• Payout – is a situation when when you receive a money from a broker/platform.
• Put option – if a trader believes that a price of an asset is going to decrease, a trader places a put option.
• Refund – is the amount that a trader can get back if a trade ends out of the money. I.e. some brokers pay 10% if your prediction was incorrect.
• Return – is an expected amount of profit that a person is going to receive for making a successful trade.
• Stock – a company share.
• Stop loss – an option to end a deal quicker than expected to cut losses.
• Strike price – a price at which a trader can exercise a put or call option.
• Target price – is a price that a trader needs to reach in order to gain profit when placing a bid.
• Technical analysis – analysis of graphic elements of a particular asset.
• Time of Expiration – end of a deal in time.
• Trader – an individual or a company that is participating in the market to trade various assets.