Note that the binary trading lingo found on this page covers all of the major binary options platforms. Asset — The instrument that underlies the trade. Binary options are traded based on stocks, commodities, currency pairs, and indices. At The Money — Describes a binary option for which the price at expiration equals its strike price.
There is no gain or loss for the trader. Broker — Binary options brokers host the trading platforms from which you can execute trades.
Before you can trade binary options, you must register an account with a broker. Call Option — A type of binary option that becomes profitable when the unit price of the underlying asset rises above its strike price at expiration. It is a tool often used to aid in technical analysis.
Commodities — Basic goods that are either grown — e. The price of the binary option changes as the exchange rate between the two currencies moves up and down.
Expiry Time or Expiration — The point at which the binary option expires. Every binary option comes with a predetermined expiry time. Fibonacci Retracements — Fibs or fib lines are created via measuring very specific points in a price movement. These are used as an indicator to help determine what a price is likely to do. Fundamental Analysis — A method of analysis that uses macroeconomic and microeconomic data to forecast the future price of an underlying asset.
Macroeconomic signals include interest rates, unemployment rates, and inflation. Microeconomic factors are those that affect supply and demand. In The Money — Describes a binary option that is profitable for the trader. Index or Indices — Comprised of multiple stocks. Out Of The Money — Describes a binary option that produces a loss for the trader.
A call option is out of the money when the price of its underlying asset at expiration is less than its strike price. Platform — Used by binary options brokers to allow individual traders to executes trades.
Although the major platforms are similar in many ways, each also presents unique features. Rebate or Refund — The amount returned to the trader if a binary option expires out of the money. Typically, the rebate is expressed as a percentage of the investment amount. Strike Price — The price of the underlying asset at the time a binary option is exercised. Technical Analysis — A method of analysis that uses previous market data to identify trends and forecast the future price of an underlying asset.
Signals like trading volume and price are charted in order to note probabilities of future price performance. Trading Minimum — The minimum amount required to execute a binary option.
This amount varies by broker http: Instead, become reasonably familiar with them and refer to this page whenever the need arises. Binary Options Glossary — Terms and Definitions. Your capital is at risk. Trade with caution, these products might not be suitable for everyone so make sure you understand the risks involved!More...