Binary Options Brokers – Glossary of terms before trading with your broker
Here is a list of the most common trading terms used in the world of Binary Options and Forex Trading. While we don’t expect you to know every single one of them without stumbling right off the bat however, we do recommend giving this hand glossary a once over before reading any further.
It isn’t that we doubt your level of intelligence, but the world of finance, investment banking, and Forex Trading can be a little volatile. The market won’t wait for you to learn your terms, nor should it. This is serious business, and even if you don’t get good at trading Binary Options, well, at least you can sound like you know what you’re talking about.
An asset is the object of value of which you will be trading. This is more commonly known as stocks, commodities, etc.
If an option’s Expiry Price is similar/identical to its original buying price, it is referred to as being At-The-Money. In this case, instead of making a profit or losing it all, traders will actually just receive the entirety of their original investment back. Essentially breaking even.
The exciting, risky method of Forex Trading in which one either makes a predetermined amount, or makes nothing at all.
This option provides a trader(s) with a concrete, predetermined profit so long as the underlying asset’s value is higher by its Expiry Time than it was at the moment of purchase. Most common form of Binary Option.
Self-explanatory. This is the most recent value of an asset according to the most up-to-date data available.
Essentially just another name for Binary Options, once again playing off of the binary aspect of the trade.
This is the lifespan of an option, or, more accurately, the last moment of its life. If an option has not reached the desired result by this time and date, it never will (as far as the current trade/option is concerned).
Very In-depth analysis in which every potential outside force is considered, and also determined as to how it/they may/will affect the value of an option.
This is the ultimate goal every trader has for his/her option. When something is considered to be In-The-Money, it means that an option has reached (or exceeded) the desired Strike Price by its Expiry Time.
The not-as-desired outcome for an option. This refers to when an option’s value fails to reach the Strike Price by its Expiry Time.
An option that favors Out-Of-The-Money results. Traders succeed when the underlying asset price is lower by its Expiry Time than the price at which it was originally purchased.
A Range Option requires that traders predict whether or not an asset’s value will fall in or out of a particular, pre decided range come an option’s Expiry Time.
The target price. The goal. The price at which an asset must reach by its Expiry date, which determines whether an option ends in or out-of-the-money.
Speculative Analysis, mostly. Analysts look at an asset’s past trends in order to predict its further behaviors.
Very similar to a Call Option, a Touch Option asks that traders predict whether or not an asset will “touch” a predetermined Strike Price, only it must do so before its Expiry Time.