As the name suggests, this option expires within a minute, allowing you near instant profits. Sometimes used to describe a trade type that is extremely short termed (15 seconds up to 5 minutes in length).
The item you are investing in, the instrument that will be used to determine your binary option contract, for example: Oil, Google, Nikkei and USD/EUR are all assets you can purchase.
Every asset can be placed in one of four major asset “groups” – Stocks, Commodities, Indices and Currencies.
A term used to describe a trade that ends with a neutral result – you haven’t profited from your investment, but also did not lose. This happens when the price of the asset at the end of the contract is identical to what it was at the beginning.
A market/asset that is in a state of general decline in prices.
This is the market price in which you, as an investor, can sell an asset; this is used to help determine the expiry level for each asset.
A type of option that has a fixed payout structure when a trader correctly predicts if an asset’s price will rise or fall by a certain time.
A company or individual that act as a sort of agent offering a contract, in this case – a binary option contract on any number of assets. Brokers can have different offers, payout structures and/or conditions for investment.
The opposite of a “Bear Market” – used to describe an asset or market that is on the rise.
An option in some binary option contract types – the investor chooses this when they believe the price of the asset they are trading will finish the term of the contract at a higher price point than the one he purchased it at.
One of the asset type groups, used to describe physical goods that are traded on various markets, includes items such as gold, oil, various metals, grains and more.
Another group of assets one can trade on, most typically you’ll see two currencies as a pairing when you are required to either pick the currency that will perform better over time, or to decide if the pairing itself will reach a price level, you can also see contracts on individual currencies and their performance.
The price level of the asset you are purchasing at the exact moment the contract is executed, this price will be used to determine if the price at the end of the contract was higher or lower.
An alternative name for Binary options.
In some cases or trade types a broker allows you to exit a contract ahead of the original expiry date/time. You can take advantage of this if the market is not behaving like you believed it would.
Expiry Price / Level:
The final price for your asset/contract – this is the price which will be used to determine your final position.
Used to determine when your option contract expires.
One of the major schools of thought behind option analysis, supporters of this school believe that various world events such as political events, national economic health and many others may cause prices for an asset to move, but that the asset will always “seek” to return to its normal levels, and by studying the various economic data, one can predict where that level will be.
One of the many types of trades available – with this type of trade you must determine if your asset will expire when it is above or below a predetermined level.
The most desirable of all outcomes for your trade – means that your asset finished in a position that has brought you profit.
One of the asset groups – contains various indices from around the world such as the Dow Jones, Nikkei and Dax along with many others, trading revolves around the level of a specific index at the time of expiry.
A result of “range” trade type, where your investment finishes either inside or outside a specified range of prices, you must decide which is more likely.
The funds you put into a trade, your investment along with the amount of risk you take on any given contract will determine the payout.
Describes a situation in which your investment did not pay off according to plan and you have lost it.
Before finalizing a contract you can use your investment and risk to see just how much you stand to gain if your contract finishes in-the-money.
The opposite of “call” – you should select this option if you believe the price of your asset will be below its current level when the contract expires.
This is your net profit from a successful trade – your payout minus your investment is the amount of your return.
The final group of assets – describes shares in various companies or corporations, they can range from worldwide companies such as Google or Amazon to banks like RBS and other more specialized companies such as Boeing.
This is the price of your selected asset at the exact time you execute the contract, similar to current price.
The second of two major schools of thought behind trading, as opposed to fundamental analysis, technical analysis operates with the assumption that all the variables that can determine an asset’s price are already represented in it. This type of analysis makes use of historical data to help predict the future price of an asset.
Another type of trade that calls for the investor to decide if the selected will reach a certain price point at some time during the contract. Once the asset reaches that level, the trade is considered successful, assuming one selected the “touch” option. If one selects the “no touch” option, you would like the asset to avoid reaching the specified level to profit.
While some assets can be traded 24/7, there are some assets that are only available to trade during certain days and/or times of day, usually closely follows the trading hours of assets that are traded within or in conjunction with certain countries.