MUST READ - Binary Options Brokers Warnings
(+) You must always be careful when trading with binary options brokers, some of them that look to be legit and even are regulated have turned out to be nothing more than boiler rooms and bucket shops.
(+) When first dealing with ANY binary options broker first deposit a SMALL minimum deposit for trading.
(+) Never take ANY bonuses! After making profits from first trade ask for an immediate withdrawal.
(+) If you are called on the phone and asked to make any LARGER deposits ALWAYS say NO.
(+) After making a successful withdrawal of first profitable trade + deposit amount you can start to trust the broker.

Binary Options Glossary of Terms

Asset

An item that you can trade. Also known as a trading product or financial instrument. For Example:

Stocks: Microsoft, Yahoo, Amazon, etc.

Commodities: Gold, Silver, Corn, Oil, etc.

Currency pairs: Euro-Dollar, Dollar-Yen, Pound-Dollar, etc.

Indices: Dow Jones, DAX, Nikkei, S&P 500, etc.

Binary Options

Options provide an investment with the odds fixed in advance – the potential payout and risk. Also known as digital options because they have two possible absolute outcomes.

Call Option

A type of binary option that becomes profitable when the price of the asset rises above its strike price at the time that the option expires.

Currency Pair

The rate of a currency is determined by matching it with another currency. For example, the Euro and US Dollar form a currency pair (EUR/USD). If the value of EUR/USD rises, it either means that EUR is increasing in value, the USD is decreasing in value, or both.

Expiry Rate or Expiry Price

The price of the binary options contract at the time the option expires (trade closes). The price of the asset at expiration is compared to its strike price to determine whether an option would expire at a profit, which is called “In the money” or a loss, called “Out of money”.

Fundamental Analysis

A method of financial market analysis that uses macroeconomic and microeconomic data to forecast the future price of an asset. Macroeconomic signals include interest rates, unemployment rates, and inflation. Microeconomic factors are those that affect supply and demand.

Index / Indices

An Index is a list of securities such as Apple and Microsoft, representing a section of a financial market such as the Technology sector. This list acts like an imaginary portfolio – for example, if it rises in value, it means the sector is rising in value. It can represent a broad portion of a given market, or focused around a particular industry.

Examples: Nasdaq, Dow Jones, Nikkei, FTSE, Hang-Seng.

Investment Amount

The amount of money that a trader invests to purchase an option. The payout given in case the option expires in profit, is calculated as a percentage of the investment amount, for example 75%.

In The Money

A binary option that would produce a profit to its holder, if it would expire now. For a Call option to be in the money, the price of the asset at expiration must be greater than its strike price. For a Put option to be in the money, the price of the asset at expiration must be less than its strike price.

Out of The Money

A binary option that would produce a loss to its holder, if it would expire now. For a Call option to be out of the money, the price of the asset at expiration must be less than its strike price. For a Put option to be out of the money, the price of the asset at expiration must be greater than its strike price.

Payout

The profit when a binary option expires. More often, this is a term used for an 'In-The-Money' trade, but many contracts also include a smaller profit percentage on Out-Of-The-Money trades.

Touch / No Touch Binary Option

A type of binary option for which the trader predicts whether the price of an asset will reach a specific target price before expiration. If the price of an asset reaches the target, the option will expire in profit even if it drops below before expiration. A No Touch binary option is in the money if the price of the asset fails to reach the target.

Platform

Used by binary options brokers to enable individual traders to execute trades. Although the major platforms are similar in many ways, each also presents unique features. A platform can also refer to a software supplied by a Binary Options Signals Service or Auto trading robot.

Put Option

A type of binary option that becomes profitable when the price of the asset is below its strike price at expiration.

Range Option

A type of binary option for which the trader predicts that at expiration time, the price of the asset will be within a specified price range, or outside of it. Also known as Boundary Option.

Rebate or Refund

The amount returned to the trader if a binary option expires at a loss (out of the money. Typically, the rebate is expressed as a percentage of the investment amount, and could be zero or a small percentage of the investment.

Strike price

In binary options, it is usually the price of the asset at the time of opening the trade. For example: the current price of Gold is 1200, and the trader enters a Call option with the expiry time of 10:00am. This means the trader is betting that at 10:00am, the price of Gold would be higher than 1200, which is the strike price.

Technical Analysis

A method of analysis that uses past market data to identify trends and forecast the future price of an asset. This is usually done by using graphical indicators and other drawings plotted on the charts.

Trading Minimum

The minimum amount of investment that a broker requires to execute a binary option trade. This amount varies by broker. Some enable small amounts such as $5 USD, some limited to $25 or more.