Find out Everything Necessary About Binary Options Trading Quickly and Easily!
Learning how to trade with binary options could be a tough task for some of you. Regardless you are a beginner in trading in general, or you have never had anything to do with binaries, an education in advance can guarantee your fastest and biggest profits by all means. And if you thing that you will have to read dozens of book, spend hours in the local library or even attend specialized trading courses, we have to tranquil you at this very moment. Don’t worry at all, because becoming familiar with the binary options and learning how to trade with each of them will cost you nothing and will take few days or even hours. To make this happen and become possible, have a glance of our detailed and top-to-bottom glossary that is especially devoted to binary options trading activity! Are you ready? Well, let`s get started, then!
Glossary of Common Terms in Binary Options Trading
To make the information easier to be consumed and realized by you, we will begin our education with some common terms and basic words from the binary options trading glossary. Eventually, we will advance and in the end of the article, you will be almost ready to join the market with confidence and great hopes for great profits.
Binary Options
Binary or digital options, as well as nothing options, are the same terms that correspond to the something. These are trading instruments that have only two possible final outcomes. The trader can either win, or lose, which is a consequence that the name of this term hides, too. The binary options involve some fixed payouts. They are significant for the moment after the underlying stock meet or exceed its predetermined threshold. The amount of binary options payouts in general can be determined in the beginning or before you finally make your trade, but binary call options, on the other side, might have the opposite way of trading direction.
Payout
The term is always met in a binary options broker review and it is linked to your final outcome. In few words, the payout is the amount you earn from a successfully made trade, be warned that often the binary options bonus is not a part of the payout
Strike Price
A strike price is usually influenced by the price of the underlying security. This happens, when the certain binary option is purchased. When the expiry time comes, the price of the underlying security is compared to the strike price, so the trader can find out whether the binary option gains value (“in the money”) or loses it (“out of the money”).
Asset
Usually traders and brokers call it underlying asset. This term is linked to the type of item that a trader trades on. In few words, this is the asset in which you are purchasing an option against. The asset can be currency pair like USD/GBP, USD/EUR, commodities, indices and stocks like those from Microsoft, Apple Inc and many more.
Market Price
The market price is the current underlying asset value. You need to know it in order to find out whether your trade is wining, or a loss.
Expiry Time
The expiration is the expiry time or date, where the value of the underlying asset is compared to the strike price to your payoff. At expiration, the option becomes void or predetermining your final outcome of the certain binary options trading action.
Top Glossary Additions for Advanced Traders
Now, let`s skip to some more specific terms in binary options trading. Here, you can meet some words that will be eventually parts of your successful advanced binary options trading experience. Get your pencils or focus immediately and begin the second binary option glossary course.
At the Money
With this term, we show the position in which the binary is in when it reaches the expiry time neither in-the-money nor out-of-the-money. However, this must happen at the same price at which you have purchased the option or determined the future price.
Early Closure
The early closure is the moment, when you receive the chance to close an option and expire it almost at once even by confronting the preliminary contract of the deal.
Inbound Option
You do know most types of binary options by all means. However, in case you meet the inbound option during your trading activity, be aware that this is an option on Boundary (Range) binary option activity. It is linked to the moment, when the underlying asset expires inside the higher and lower limits of the price you have determined or chosen.
Investment Amount
You will see it any binary options trading website you appear. This amount is the amount that has been taken from your e-wallet, when you purchase an option and make a trade. Classical investment amounts vary from $1 up to $1000. Some brokers limit the value of the investment amount you can make for particular binary options.
Refund
The refund term explains a part of the full amount from your binary trading investment. It is given to you, when your option expires at-the-money. Most of today`s brokerage websites refund the traders a portion of their investment on average around 15%. However, always check out the refund amount for each broker you become a member of.
Withdrawal
This term is linked to the best part of the entire binary options trading activity. When your trades are wining and you want t take the money back out of your trading account, you can do it only by applying for a withdrawal. In most cases and in many binary trading brokers, this process of financial transaction into your bank account and from your website account can take some time. The payment method you have chosen – debit or credit cards, bank wire transfer or some of the popular e-wallets like Moneybookers Skrill, Netteler, PayPal and etc can also determine the duration of each withdrawal processing time. Keep in mind that a withdrawal will cost you little fees, although many of the most reputable brokers allow one free withdrawal per 1 calendar month.
Hedging
Probably, you will have to reach a particular level of perfection in binary trading till you get to the point of this term. However, it is our duty to explain it to you in short and simply now. In general, hedging is a purchase an asset or option with the aim of risk reduction from a certain trade in a contrarian direction in some other market place. Many of the high stake traders in binary options trading use this technique to achieve wonderful final results.
Over the Counter
We finish our binary trading glossary with the over the counter term. With it we determine the market place, in which the assets are traded directly between two parties without – aka with no broker’s interference or mediation.
Learn this glossary and become even more advanced in binary trading! With these terms you can easily get the slight idea of this trading activity without even bothering yourself with boring reading or studying for ours. Besides, we have included the most significant words that you will meet in binary option brokers by all means. So whether you are in your beginning of the education, or about to enter a website, have these glossary terms by your side and revise the terms in it once in a while – just like that in case you have forgotten or missed something from your binary learning plan! Have a great studying!
More binary trading termins and main aspects explained in separate articles: