In this section I included commonly used terms with Binary Options Trading. Many of the terms have multiple meanings but in this binary options dictionary you will find definitions specifically relating to the industry. Find a term missing? Email me at [email protected] I appreciate any contributions and I will be sure to add relevant terms in necessary.
Asset (underlying asset) - Is an ownership agreement on an option, in Binary Options the ‘digital option’, which gives the right to sell or buy based on a predetermined agreement.
Binary Options Signals – In reference to binary options trading, signals are trading directions sent out via email or SMS through a web-based or mobile platform instructing traders on how to execute trades. Many Binary Options Signals services are now available with competitive prices. Check out the complete list of Binary Options Signals services.
Bonus Incentive - In relation to Binary Options, cash bonuses are common and are usually granted with an account restriction. The depositor gets a cash incentive in return for a commitment to a predetermined volume of trades, which is necessary for the depositor to request a withdrawal.
Candlestick Charts - These technical analysis real-time charts assist with reading market trends and are mainly used with Price Action Trading and short-term investment. Candlestick charts are made up of bars consisting of the asset’s open,high,low and close price and these figures are used to determine if the “bulls†or “bears are in control. Check out the complete Candlestick Charts Guide.
Call Option - An upward prediction is referred to as a Call Option, the trader takes a position that the asset’s price will increase within the given time frame.
Expiry - For every binary options contract there is an expiration date which can be manually changes prior to each trade. The trades outcome is determined based on the final price level (Expiry) at the end of the given time frame once the asset expires. If the asset ‘Expires In The Money’ the price level changed in benefÃcio of the predicted level while if the asset ‘Expires Out Of The Money the price level changed against the predicted price level.
Fundamental Analysis - The study of the economic factors that may directly or indirectly affect the asset’s price click here now level. Fundamental Analysis deal with ‘Why the price is changing’ while technical analysis deals with “How the price is changingâ€. The study of ‘why the price is changing’ requires extensive research in the search for indicators and major events that can include the asset’s price, signaling the predicted direction. Learn more about Fundamental Analysis in my YouTube Video.
In-The-Money – A successful prediction is referred to as an In-The-Money prediction where the traders receives a predetermined payout instantly into his account. The payout is usually between %60 to %85 on In-The-Money trades. Call Options require that the price of the asset expire above the purchased price level, while put options require that the price of the asset expire below the purchased price level.
Investment Amount - The sum of money used to fund the binary options trading account. The minimum required is between $100 and $500 with the on-line brokers.
Out-Of-The-Money - A losing prediction is referred to as an Out-Of-The-Money prediction where the trader loses his ‘trading amount’ invested once the Option settles at his expiration price.
Payout – The cash amount funded into the traders account instantly upon the expiry of a winning trade. The payout for a Binary Option is determined in a form of a ‘digital contract’ where the agreement is set in advance. The payout is between %60 and %85 on winning trades.