Binary Options Terminology

A new binary trader and any person with an eye for binary trading should understand that terminology is a key and essential element of binary options. Newcomers need to have basic knowledge before they start trading, and the information they obtain has to be well-organized and clear.

The optimal way to study binary options basics is to get a manual with distinct and intelligible content. It is not too hard to find relevant learning resources in the web in multiple languages. What you can discover online regarding studying binary options basics of course is not restricted to just issue-related text books; you can as well obtaing other types of relevant information, e.g. video courses, articles with analysis and recommendations on binary trading, comments, binary options ratings, and more.

Binary options trading is not as difficult as it may appear at first sight, especially if the new trader already has some theoretical and practical knowledge about it. Once you already know the binary options terminology, this means you already know the basics of this business. Besides, you have to be able to make sober estimates of far reaching promo videos which offer prospects of earning over $1,000 per hour; any trader’s success begins with mastering the binary trading basic terms and principles.

Binary Options Key Terminology

1. Deposit. This is the sum of money the client deposits on the account opened with a brokerage company to start trading. Minimum deposit amount depends on a particular broker; there are companies that allow entering the market with as little as $1, whereas well-established and reputable brokers usually request to start with at least $100-$200.

2. Investment. The money to buy options with.

3. Binary option. The investor forecasts the trade direction: whether the value of a chosen asset will go up or down before the fixed expiration time of the option.

4. Call (Up) option. The trader buys expecting the option’s value to go up after purchase.

5. Put (Down) option. The trader buys expecting the option’s value to go down after purchase.

6. Strike price (Exercise price).This is a fixed price of an option at the moment of purchase (“Call) or sale (“Put”).

7. Basic asset. Any financial instrument can be the basic asset, e.g. currency pairs, shares, securities, indexes or commodities.

8. In the money. This means the trader gets profit after the option expires.

9. Out of the money. This is the opposite term meaning the result of an unsuccessful trade.

10. Expiration. In binary options a trader is free to choose expiration time of an option. This can be end of the month, end of the day, or end of this hour. The term means exactly this time.

11. Option execution rate. It is estimated after the option is closed. It is set against the rate of the purchase price, and so it becomes clear whether the trader is in the money or out of pocket.

These are the basic terms that novice traders need to learn by heart: before starting trading for real, one has to be certain about the products’ peculiarities, their main features and business vocabulary.

Once the trader has gotten through the basics, the time is ripe for real binary trading, which can well be successful.

How to choose a binary options broker without mistakes, such as bumping up against dishonest fraudsters?

Binary options, such as Anyoption or TopOption, have good reputation, and lots of information about them and other companies can be found in the web. Moreover, it is possible to read binaries clients' reviews and to get acknowledged with brokers' ratings, thus getting the general idea. Of course, every trader has personal preferences, so it is recommended to try the broker of choice first and only then to make the final decision.

In any case, decide in favor of reliable and trustworthy brokers known to your friends or contacts from practical trading experience. Such brokers normally receive mostly positive reviews and notices (however, they never are 100%, because it is impossible to satisfy each and every client).

Check out the information about OptionFair and other companies featured on our site.

10 trading mistakes pros make

Trading Forex can be easy and profitable but only if you know what trading mistakes to dodge. Find out what are the ten most common trading...

The effects of inflation on the economy

A comprehensive look at what inflation is, how it impacts the economy, why it matters to traders, and how to make trading decisions using inflation data...

How greed might stop you from profit

Overcome the biggest obstacle in Forex trading, greed, and give way to profit making. Understanding the mood of the market is vital, not just for opening...


What pair is the most difficult to trade?

On Forex, a currency pair is the main trading instrument. Traders usually choose major currency pairs, the so-called majors. But there are other currencies available...

How to reduce your risks

Forex is continuously gaining popularity among people interested in the financial markets. However, every trader fears losing money. Learn how...

Understanding of Crypto Trading

Cryptocurrency trading, or more briefly crypto trading, is simply the exchange of cryptocurrencies. Just like in Forex, you can buy and sell one...


Virtual Private Server (VPS)

VPS (Virtual Private Server) hosting allows Forex traders to run automated algorithmic strategies, including EA's (expert advisors) on a Virtual Machine...

Swing trading made simple

Swing trading is one of the four major trading styles used by investors. It refers to investments with asset holding periods lasting from over...

5 Common Forex Trading Approaches

When it comes to trading, some take an organic price action approach; reading the market and making subjective trading decisions based on recent...

  


Share: