BINARY OPTIONS: Binary options are a type of digital trading option. This option is set with a fixed amount of payoff over a set time period.
FIXED AMOUNT: A fixed amount means that the amount of the potential profit has already been determined before the trade is placed.
IN THE MONEY (ITM): This term is frequently used to mean that the options trade that has been placed by the trading broker has reached the amount of profit that was predetermined.
OUT OF THE MONEY: This term is used to mean that the trade that was placed did not reach the expected profit. Out of the money can be a result of a trade that has gone in either direction.
CHANGE IN DIRECTION: The trade that has been placed will change directions many times over the course of the contract time. The contract may be for 15 minutes, or the contract may be for one hour. Over the course of the allotted time, the trade will move up and down over a certain range of prices.
DIFFERENCE IN PRICE: This is usually what a stock trader is referring to when the stock selected for purchase has increased or decreased in price value. A stock trader is different from an options trader. An options trader is not as concerned about the change in prices of the underlying asset. The options trader watches the changes in direction for the option and may profit in either direction.
MOVEMENT IN MARKET: The movement in the market means that the option that has been called up for purchase or put out to sell has changed in direction. Based on the type of option, the change in direction and movement of the market can produce profits for the investor.
CALL: A call is a trading order that says that the trader has called up to purchase or buy the option or binary option. The investor has purchased the binary option and is expecting that the movement in the market will produce certain profitable gains.
PUT: A put is a trading order that says that the trader has put the option out for sell. This could mean that the trader feels that the order will go up or down, but the trader is expecting a profit by putting the option out.
OPTIONS EXPIRATION: An options expiration says that the contract that was purchased has ended. At the end of a contract, the investor has gained from contracts that are in the money, and the investor has lost money from contracts that are out of the money.
BINARY TRADING: Binary options trading is a form of investment that can generate a certain amount of profit. The standard gain from trading in the binary options market is a 71% gain in the total investment.
ASSETS: Assets for trading in the binary options sector may range from trading currencies and indices to trading commodities and stocks. A broker places the trading order in the various options markets.
SUPPORT LEVEL: Support level is a type of technical analysis that is used with binary charting. A trader would use the support level or the bottom level of options value to determine the next movement of the option that is being traded.
RESISTANCE LEVEL: Resistance level is a type of technical analysis that is used with binary charting. This is the highest level of value or top of the charting patterns that a trader would watch. A trader watches these charting features to determine where the digital option will move next. If the option moves in a positive direction for the trader, then a certain type of order would be placed with the expectation of making a profit from the trade.
BREAKOUT: When an asset makes a strong move above resistance to the upside. If you have 60 second options in a breakout you can almost guarantee a win.
BREAKDOWN: When an asset makes a strong move below support to the downside. If you have 60 second options in a breakdown you can almost guarantee a win.
STOCK BINARY OPTIONS: A binary option on an available stock such as Apple or Google.
INDEX BINARY OPTIONS A binary option on an available index such as the Dow Jones, SPX 500, or Nasdaq as an example.
BINARY OPTIONS REFUNDS: Not all brokers allow a refund when the option expires, but some do. A refund occurs when the binary option expires and the broker returns or refunds a portion of the investment back to the trader. Also known as cashback.
ONE TOUCH: One touch refers to the binary option having to touch a certain level 1 time either on the down side or the up side depending on which side you chose. The asset only needs to hit that mark one time inside the expiration period. This is why its called one touch.
HIGH / LOW: When you choose the high / low option you are presented with the option to pick one or the other. If you pick the High your asset needs to expire above the High level that is earmarked when you buy the option. The low would require the binary option expiring below the low that was set when you purchased the binary option.
FOREX: Forex is currency exchange trading. When you trade forex you are trading currency such as US dollars, Euros, Japanese Yen, or British Pounds as an example. Forex requires significant leverage. Losses and Wins are not fixed and can get out of hand quickly depending on how many pips the currency moves.
FOREX vs BINARY OPTIONS: We covered what Forex is above, but how is it different from binary options? Binary options are fixed investments typically smaller than traditional forex trades that have a limited risk. With one binary option if you risk $100 that is the maximum you can possibly lose. With Forex you can assume the risk of $100, but if the currency starts moving fast against you could be down $500 very quickly sometimes much more if you don’t have a stop in place. There is no time limit with Forex. The trade ends when you end it. Binary options are fixed risk and fixed time expiration. Binary options are significantly easier to trade and the one benefit of binary options is that you have an ending point. Speaking from traditional stock/forex trading experience a bad trade can continue to be a bad trade if you trade on emotions and wait for a trade to turn in your favor. However, that might never hap happen and you end up with a MASSIVE loss. Fixed time per trade is actually an advantage to prevent MASSIVE runaway losses.
Many Forex traders are starting to turn towards Binary Options as an alternative because the risk is lower with humongous gain potential.
RETURN: Refers the potential gain you can make if you are correct. Trading returns with binary options range from 71% up to 400% or more.